Tag Archive | "forex trading tips"

Using Forex Options to Their Full Potential


Aside from signals, you can use another equally useful instrument in forex trading. Options can mean a world of difference when used wisely.

What is an option? Essentially, an option is an agreement or contract that gives power to trade currency at a pre-determined specific price. It is called such because this power is optional- the holder of the contract is not obligated to use it.

In the forex market, there exist two kinds of options:

  1. Call Options
    Call options gives the power to buy currency at a specific price. It increases in value when the underlying stock goes up.  In a nutshell, what you need to do is to buy call options on a stock when you predict its price is about to go up.
  2. Put Options
    Put options, on the other hand, is the power to sell the currency to someone else at a pre-determined price. You buy Put options if in your prediction, the stock of that currency is about to go down.

Here is the point: you buy or sell the stock to make a profit by buying the options and then selling them in turn those options to someone else for a profit.

At the end of the contract, the value of those options will be what is indicated in that contract. Other than that, anytime the value of that option is the value in the current market, where the holder has deemed that he would be making a profit. He has foreseen that his call options would go up and/or his put options will go down.

It may seem complicated at first, but it will all make sense once you get the principle. Remember that call options go up and put options go down.

Now add the concept of leveraging to the idea of options and the possibilities of profit would be staggering. Leveraging is the chance to borrow your broker’s assets to trade for currency. So in effect, if you can buy put options at the right time, and sell them at the right time, your profits would greater.

Companies also use options to lower the risk in forex trades. Think of it, you can buy without being bound by the rules of the current fluctuation in the market. It just adds a new dimension to forex trading. Whether the underlying stock moves up or down, there is possibility for profit. Add to that the power of leveraging, and then we can make more profit. This only works if we can correctly call the movements of the currency stocks in mind.

And this is only the tip of the iceberg. The idea gets more complicated as we compute the intrinsic values of the stocks and how companies use options to protect themselves from risks. Nevertheless, the basic principle remains the same: by trading options instead of stock, bigger returns are possible. On the other side, leveraging can also put you in a big risk.

This is why you have to have a sound forex trading strategy first, and you are confident enough to call the movement of the stock values. Once you are ready, then the possibilities of huge profits will all open for you.  Learn more about options and the flow of forex trading; they will be your prime weapons to attain market success.

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Make Forex Signals Work for You


In forex trading, watching the market for entrance and exit points is the brunt of your work. Traditionally, you monitor the progress of currencies by feed reports. Either by watching the news or guarding the numbers in your laptop.

Here lies the problem- who would want to spend the rest of their day plastered to their laptops? Forex trading seems to be a perfect business ground for everyone: opportunities are near equal, and you could trade anytime, anywhere provided you have internet access.

The answer to this is to get a service that provides forex signals. Simply put, forex signal services are paid subscription services where they monitor and interpret the market to your liking. Your set of specifications, what to watch out for and when to alert you. They send you results by email, or directly to your phone.

Forex signal services are very popular nowadays. You may even refer to it as an indispensable tool for any trader. Brokers even provide their own unique platform that will cater your information requirements. When you sign in with them for an account, they give you this service with a fee or even free.

What usually happens is that they give you signals for known or popular currency pairs. For instance, you may be intent in watching the changes in Euros and American dollars, Japanese Yen and Singaporean dollars. If requested on your account, they can provide you with signals on less known pairs.  Whatever your strategy and currency trade is, they can fit their services for your needs.

How do they do this?

Well, forex signal companies use computerized systems to monitor pairs and make some analysis for their subscribers. Understand that they do not make decisions for their subscribers mind you; they are just signals, tools to help you make a decision. Once you make a decision right away, your broker and software can even do the trade right away.

However, there is a catch:  they are not a hundred percent accurate. They only provide leanings or advice on what decisions traders should make. The best signal service companies have good track records of providing great recommendations and near accurate signals. The service will cost you, but if you are a serious trader upping their game, then signals are a must.

Here are some tips how to make the most out of your service:

  1. Ask about the features from your service provider. If the service comes from your broker, then consider if they are effective for you. Some are packaged into the type of accounts.
  2. List down what are the things you need to monitor. You might save money on services by getting a less costly subscription that just gives what you need.
  3. Invest on the reputable forex signal service companies. Their excellent service might be just what you need to gain an edge.

At the end, what you should remember is that forex signals are just instruments that help you. They are not meant to replace you decision-making process. You alone should decide the trade you have to make. After all, you would not risk all of your money based solely on a machine. You and your strategy must still take control. Forex signals makes forex trading more manageable and more enticing to other people.

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