0 Forex Options Trading - What is a Forex Call and Put Option?

What is a Forex Call Option?

A forex option gives you the right but not the obligation to buy or sell a currency pair at a certain price on a certain date. The certain price in this case is called the 'strike price'. That is the option gives you the flexibility of choosing where you want to buy or sell the currency pair. The certain date in this case is called the 'expiry' or the expiration date of the option.

If you think that the market is going to go up then you would buy a call option. Likewise, if you think that the market is heading down, you would buy a put option. The seller (or "writer") of the forex call option is obligated to sell the currency pair should the buyer so decide. The buyer of the call option pays a fee (called a premium) for this right.

The buyer of a forex call option wants the price of the chosen currency pair to rise in the future; the seller either expects that it will not, or is willing to give up some of the upside (profit) from a price rise in return for the premium (paid immediately) and retaining the opportunity to make a gain up to the strike price.
Call options are most profitable for the buyer when the price of the chosen currency pair has moved up past the strike price greatly. When the price of the chosen currency pair surpasses the strike price at the time of expiration, the option is said to be "in the money". When the price of the chosen currency stays at or around the strike price at the time of expiration, the option is said to be "at the money". When the price of the chosen currency pair goes under the strike price at the time of expiration, the option is said to be "out of the money".

However, to be truly profitable, the gains resulting from the upward movement must also cover the cost of buying the forex call option (premium paid). For example, if the cost (premium) of buying a call option expiry in 1 week's time is 120 pips then the chosen currency pair must move upwards more than 120 pips past the strike price. If it rises 300 pips above the strike price by expiration your profit would be (300 pips - 120 pips) 180 pips!

What is a Forex Put Options?

A forex put option gives you the right but not the obligation buy or sell a currency pair at a certain price on a certain date. The certain price in this case is called the 'strike price'. That is the option gives you the flexibility of choosing where you want to buy or sell the currency pair. The certain date in this case is called the 'expiry' or the expiration date of the option.

If you feel that the market is going to go down greatly then you would buy a put option. Likewise, if you think that the market is trending up, you would then buy a call option. The buyer of the put option pays a fee (called a premium) for this right as the buyer expects the price of the chosen currency pair to drop in the future while the seller expects that it will not.

Put options can only make profits for the buyer if the price of the chosen currency pair has moved down past the strike price greatly. When the price of the chosen currency pair falls past the strike price at the time of expiration, the put option is said to be "in the money". When the price of the chosen currency stays at or around the strike price at the time of expiration, the put option is said to be "at the money". When the price of the chosen currency pair goes above the strike price at the time of expiration, the put option is said to be "out of the money".

Please note that the gains resulting from the downward movement must also cover the cost of buying the forex put option (premium paid) to be profitable. For example, if the cost (premium) of buying a put option expiring in 1 week's time is 135 pips then the chosen currency pair must move downwards more than 135 pips past the strike price. If it falls 250 pips below the strike price by expiration your profit would be (250 pips - 135 pips) 115 pips!

Forex Options Trading can do a very good model for people who want to do Forex Trading. What you need is a right system, the willingness to work and determination to not give until you reach your goal. If you are willing to take action, then this Forex Trading is suitable for you.
And I will like to offer you a Free "Getting Started Trading FOREX with Options" course when you subscribe to my newsletter on Non Direction Trading. You will get your instant access at http://www.NonDirectionTrading.com

From Timothy Stevens - The Forex Options Guy who provide valuable Forex Options Training at http://www.NonDirectionTrading.com

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0 Forex Options Trading - How to Find Cheaper Opportunities in the Foreign Exchange

Finding low risk investments with the highest possible return is always the dream of any investor; and there is no better place to find that than in the Foreign Exchange market. Not only is the Foreign Exchange market the largest financial market in the world today, it is at the same time the most profitable market. However, this financial market is very complex, and being able to find and capitalize on opportunities is difficult. This is why forex options have become an alternative method of trading in the Foreign Exchange market. The trader does not risk too much money when trading with options, but the trader positions him or herself in an advantageous spot.

For a smaller price, forex options give the trader the right to purchase currencies of someone else but not the obligation to do so. In other words, it reserves the currencies to the buyer of the option; thus putting him or her in a position to control what happens to the currency without having to actually purchase it. These forex options would then have a pre-determined price for the currencies involved and an expiration date, both of which cannot be changed in the course of the contract. The buyer of the option would then be able to make a profit if the price of the currency goes up.

So, the profitability of the option depends upon the buyer's ability to predict which currencies would go up. Then, he would simply purchase an option over the counter thus giving him a cheaper opportunity to make money.
I will like to offer you a Free "Getting Started Trading FOREX with Options" course when you subscribe to my newsletter on Non Direction Trading. You will get your instant access at http://www.NonDirectionTrading.com

From Timothy Stevens - The Forex Options Guy who provide valuable Forex Options Training at http://www.NonDirectionTrading.com

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0 Forex Options Trading - Forex Money Management - How Not to Lose Your Shirt?

Keep your shirt and hopefully with proper management you can buy a new one too. Money management in Forex is one of the underestimated principles. Many people's mistake is rushing into Forex without a sound idea on money management. They are focused mostly on what to buy, when to buy, what to sell, and when to sell.

Proper money management in Forex is a crucial part of your investment plan. It guarantees that your money will last long in Forex. Without it you can easily lose the shirt on your back. Most people are attracted to the amount of money they can profit. Unfortunately, they neglect to give importance on the probability of losing their money. In Forex, you either win some or you lose some. The chances of surviving and ultimately making money out of Forex boils down to how much money you can lose before you start winning.

Forex are sometimes treated by other investors as a gambling game. Whether you treat it as a game or a serious investment, learn on how to make your choices properly. Bet not only on the chance you'll make the right choice, but also bet on the chance you'll make a wrong one. You might be thinking that it sounds stupid, but the longer you have money that longer you can make choices that can recover what you lose. If you are only focused in making a single choice then you'll either win or lose. If you made the right choice then you're a happy man. But if you made the wrong choice you'll end up losing all your money and not being able to bet again.
Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.

He has recently developed a free e-course showing you a step by step process for starting your Forex Trading easier. To learn how to start Forex Trading with Options without wasting your time and losing more money, visit http://www.NonDirectionTrading.com/members/FreeReport.htm

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0 Forex Options Trading - Which Currency to Trade For Foreign Exchange Trading?

Those who are just beginning to get themselves into the forex trading business should be able to cope easily if they are diligent and determined enough. These days, it is easy to test-run currency trading because there are demo accounts being offered by websites dedicated to forex.

The primary concept should begin with the definition of foreign exchange. This is also known as forex or FX, and involves the buying and selling of currencies. The forex market is considered to be the largest in the world, and the business, the most lucrative and liquid.

In fact, there is about $2 trillion turnovers everyday compared to about $500 million daily business in the stock market. This forex market amount is almost 30 times that of the total business volume in equity trading in North America.

The foreign exchange market involves seven major currencies to trade as compared to the thousands of stocks in the stock market. These currencies include the:

· US Dollar (USD)

· Euro (EUR)

· Japanese Yen (JPY)

· British Pound (GBP)

· Swiss Franc (CHF)

· Canadian Dollar (CAD)

· Australian Dollar (AUD)

The USD is considered to be the most traded currency; the EUR follows and then the JPY. In trading, it is best to begin with the currency that you are most familiar with. If your national currency is one of the 7 major forex currencies, then you are better of beginning with that. The major reason is that you have immediate access to whatever information that can influence the value of the currency. That can help you decide on your probable moves to profit or at least minimize losses.
Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.

He has recently developed a free e-course showing you a step by step process for starting your Forex Trading easier. To learn how to start Forex Trading with Options without wasting your time and losing more money, visit http://www.NonDirectionTrading.com/members/FreeReport.htm

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0 Forex Options Trading - Importance of Learning Technical Analysis

The foreign exchange market is a jungle of numbers, prices and money. It has thousands of opportunities waiting for those bold enough, skilled enough and lucky enough to be able to take advantage of these opportunities. This however, as proven by millions of traders worldwide, is easier said than done. It is true that there are tons of opportunities but finding them is a different matter. If ever you do find one, knowing how to use them is also important yet difficult to do. So in order to prepare yourself for the upcoming tasks, you must learn how to analyze.

There are two ways which traders can choose from to analyze the foreign exchange market. The first way is by fundamental analysis. This analysis makes use of information and data regarding the factors which can influence the price of currency like politics, local laws, their government as well as their economy. The second, more common way to analyze the market is by using forex technical analysis. Technical analysis on the other hand deals with market charts and statistics.

Prices, numbers and other statistical data is the centrepiece of technical analysis. Being able to read charts would train you to identify the different trading signals in the market. You do not have to learn every signal and every trick; you only need to learn what's important depending upon your trading strategy and goals. Learn forex technical analysis today and you will be enlightened. You will figure out the best times to trade so you too can make serious money.
Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.

He has recently developed a free e-course showing you a step by step process for starting your Forex Trading easier. To learn how to start Forex Trading with Options without wasting your time and losing more money, visit http://www.NonDirectionTrading.com/members/FreeReport.htm

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0 Forex Options Trading - Forex Money Management: How to Turn $1,000 to $12,000?

Forex trading is definitely risky. Not all who participate in Forex trading ends up with profits. With fixed ratio money management, you will profit more rather than losing money. It will help you to maximizes your money and limits your looses. It is a defensive strategy in Forex trading. Let me show you how you can turn your $1,000 to $12,000 safely in Forex trading. Follow these steps and start cashing in your profits.

Step 1: Open a Forex trading account of $1000 for every lot.

Step 2: Determine how many pips you want to gain before you increase your investment in a lot. The minimum pip to start increasing investment varies from people to people. Start with a number of pips that you are comfortable with. Let' say you decided that 200 pips is enough to start adding to your investment. You'll need an average of only 10 pips for a day for 20 trading days.

Step 3: Increase you're the percentage of your lot if you achieve your minimum profits. If you haven't reached your minimum pip, continue trading with the number of pips within your capacity. The increase of on the percentage of your lot should be in the increments of 10% percent per achieved profits.

Sample :

First 200 pips - $1,000 + (200 pips x 0.1 lot) = $1,200 as your new lot

Second 200 pips -- $1,200 + (200 pips x 0.2 lot) = $1, 600 as your new lot

Third 200 pips -- $1600 + (200 pips x .3 lots = $600) = $2200 as your new lot

Fourth 200 pips -- $2200 + (200 pips x .4 lots = $800) = $3000 as your new lot

Fifth 200 pips - $3000 + (200 pips x .5 lots = $1000) = $4000 as your new lot

Sixth 200 pips -- $4000 + (200 pips x .6 lots = $1200) = $5200 as your new lot

Seventh 200 pips -- $5200 + (200 pips x .7 lots = $1400) = $6600 as your new lot

Eight 200 pips -- $6600 + (200 pips x .8 lots = $1600) = $8200 as your new lot

Ninth 200 pips - $8200 + (200 pips x .9 lots = $1800) = $10000 as your new lot

Tenth 200 pips - $10,000 + (200 pips x 1 lot = $2000) = $12000
Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.

He has recently developed a free e-course showing you a step by step process for starting your Forex Trading easier. To learn how to start Forex Trading with Options without wasting your time and losing more money, visit http://www.NonDirectionTrading.com/members/FreeReport.htm

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