What are the differences in behaviour between forex and binary options traders?


The thoughts and pointers that follow are of little significance to traders, be they binary options or forex traders, although they could be an interesting read and an opportunity for self-reflection. They are however of great importance and use for the main players in the industry, namely the forex brokers, the binary options brokers, as well as for marketing affiliates and introducing brokers.

Indeed, with the plethora of forex brokers introducing binary options in their product offering and targeting binary options traders, coupled with the, few for the time being, brokers who set off exclusively offering binary options, but now wanting to expand into forex, it is imperative for all them to be aware, appreciate and understand the differences that exist between the traders of forex and the traders of binary options, especially in terms of their investing behaviour. Taking such factors into account gives brokers a more solid understanding of the marker and their target audience and helps them better design and develop their marketing campaigns and client retention strategies.

Another group that should find the information below useful are the many marketing affiliates and introducing brokers, a field which is experiencing a constant growth and could be very lucrative for those involved if practiced through effective referral methods. People interested in this field could also profit from attending events such as the upcoming Barcelona Expo on which we have already reported.

So, let’s get down to business: From our own experience in the industry, but also based on analysis carried out by experts through metrics and analytics, a solid set of conclusions can be drawn about the distinct differences that exist between forex traders and binary options traders.

In a nutshell, these are as follows:

In terms of their conversion rate, i.e. from registration to the actual first deposit, it can be concluded that binary options leads are significantly more likely to convert to actual depositing clients than forex leads.

However, when it comes to second time depositors, which is an important indicator regarding trader engagement, at least in the shorter term, forex traders are slightly more likely to make a second deposit than are binary options traders.

Nevertheless, as regards trade frequency the tables are once again reversed, with active binary options traders trading more frequently than active forex traders, indicating through this behaviour their overall engagement to trading.

But when it comes to trader engagement over the long term, which is proven by the traders’ survival rate, forex traders come out on top once again, since they far more likely than their binary options counterparts to remain as active traders for longer than six months following their first actual deposit.

And perhaps as a direct result of the previous conclusion, it is also evident that forex traders have a higher customer lifetime value than binary option traders, which means that their full potential value as individual customers is greater.

The last factor to examine is the dependence of brokers on VIP traders. In terms of total deposits, the top 10% of forex traders accounts for a highest share of all forex deposits when compared to the top 10% of binary options traders. According to sources, the top 10% of forex traders account for 80% of deposits, while the top 10% of binary options traders only accounts for 62% of total deposits.

Therefore, to sum things up, brokers aiming at binary options traders stand to enjoy a higher initial conversion rate, higher frequency of trades and can be less dependent on a small percentage of “VIP traders.” Those targeting forex traders on the other hand, can expect them to remain engaged in trading for a longer period and thus generate higher customer lifetime value.

All the pointers above are easy to justify when one considers the basic characteristic difference, from the view point of a trader, in trading forex and binary options. In short, binary options trading is much simpler and easier to understand, especially for beginners and this explains why binary options traders are more likely to convert to real-money traders. At the same time, just because forex trading is more complex to understand and master and requires traders to invest more time and effort to be able to trade, forex traders stay committed for longer in an attempt both to leverage what they already know and to further improve their trading skills.