Forex Online Option Trading - Maximizing Profits and Minimizing Losses

Forex Online Option Trading - Maximizing Profits and Minimizing Losses

The year 2007 was a year of great excitement and anticipation for many traders when Forex online option trading broke into the surface of foreign currency trading. While they are traded the exact same way as stock options, Forex options are presented with different symbols on the chart.

Prior to this, traders dealt in Forex market makers and Forex futures. With the foreign exchange market the complicated environment that it is, the degree of difficulty in trading market makers and futures remained double. Losses were unlimited in positions that moved against traders, and a majority of speculators on the foreign exchange market continued to lose a lot of money.

Forex online option trading opened the doors for Forex traders in a new way. Options presented an opportunity for them to minimize their losses and maximize their risk. The only amount placed in danger would be the cost of the option itself. With online brokers getting into Forex options, more and more traders started to segue into options trading to improve their prospects the Forex market.

By identifying the trends of currencies in the Forex market, traders involved in Forex online option trading bought options and held it for three months or more, and sold the options once the price trend of the currencies went up, bringing the option with them. With this sure method of maximizing profits, Forex options went through the roof and brought with it many successful traders who know a good method of trading when they see one.

Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.

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Forex Market vs the Stock market

Forex Market vs the Stock market

The foreign exchange market
has advantages over the stock market. The Forex market is fairly new to the average person but it is no secret it is the biggest financial market in the world.

Like I said before the Foreign Exchange market is the biggest financial market in the world, three times bigger than the Stock market. The Foreign exchange market handles about three trillion dollars daily; that is why trades are done instantly, with no waiting period. On the contrary the Stock market has a waiting period over trades.

Another advantage the Forex market has over the Stock Market is time. The Foreign Exchange market is open 24 hours from Sunday night until Friday night. The Stock market opens daily in the morning and closes daily in the evening. The Forex Market being open continuously means more trades can be made at any time during the day or during the night; it is particularly good for those individuals that work during the day and only have the time to execute trades in the evening.

Trading in the Forex market also means trading with no more than about 12 currencies which are the most popular in the Currency market. The stock market on the other hand has a myriad of options on stocks which means more time has to be spent on research and research. The Stock market having only about a dozen currencies to choose from means one can concentrate on a particular currency instead of having to research for too many in the stock market.

The Foreign Exchange Market clearly has some advantages over the Stock market. It is true that the stock market seems to be more stable and not as volatile as the Forex market so fortunes can be made or can be lost within seconds if one does not take the necessary training to make one is ready to start trading with currencies.

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Foreign Exchange Trading System - 3 Tips Every Trader

Foreign Exchange Trading System - 3 Tips Every Trader

Did you know every day in the Forex currency exchange
, that $1.8 trillion USD will exchange hands? This numbers so huge I could barely read my head around it the first time I heard it.

What if, by using three small trading tips we could increase our chances of getting our hands on even the smallest, miniscule percentage of that $1.8 trillion? I think most people could live with that, and even consider that a lavish lifestyle.

1. Learn to play stop and limit orders effectively: placing the fact of stop-orders is beneficial to a trader because it limits losses and it takes advantage of the potential for an upside breakout.

But placing limit orders it allows traders create new positions or get out of a current position at the selected limit or better price. With a limit sell order, a currency trader can place a limit sell order at above the current market price to make profits.

With a limit by order, a currency trader can place a limit by order at below the current market price, in order to buy below the current market norm.

2. Learn to use leverage correctly: what makes the foreign exchange market different than other stock markets is the ability to use leverage. Leverage in the Forex market, is the ability to control more currency pairs than the trader has deposited in to his or her trading account.

For example, if an investor wanted to control $10,000 USD/JPY, the investor would only have to have the margin requirement of the total transaction value. For instance if the margin requirement is 1% of the transaction value than the trader is expected to have $100 in his or her account.

This can be advantageous to the investor because they can control more investment than what is in his or her actual account. By using leverage correctly that investor has the potential to increase their return on investment (ROI).

3. Control the frequency of your trades: a real killer to the newbie currency exchange investor is the number of risky trades. A lot of beginner traders become excited and impatient and make way too many low probability trades.

Forex trading is about evaluating probabilities in the rise and fall of currencies. Therefore, by limiting the frequency of your trades choosing good if quality trades you will reduce your failing trades.

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FXOpen introduces incremental ECN lot trading

FXOpen introduces incremental ECN lot trading

FXOpen is one of the companies that are most responsible for Metaquotes’ (the company behind Metatrader) success simply because it introduces features that Metatrader should have but it doesn’t. Alpari is another of these companies and occasionally serves as Metaquotes’ beta-site.

FXOpen recently introduced the first ever MT4 ECN platform and also added PAMM accounts making money managers’ life much easier.

Today FXOpen announced (http://forum.fxopen.com/showthread.php?t=62155) that it completed the development and testing of another very important feature – incremental lot trading. With the exception of MB Trading small time traders could not have traded ECN style due to the very large minimal order requirements.

If opening an account with an ECN broker like Dukascopy requires a minimal deposit of $10,000 and a minimal trade size of 1 lot, with FXOpen you can start trading with 0.1 lots. For now, FXOpen’s commissions are about 30% lower than MB Trading’s.

FXOpen’s solution doesn’t mean that anyone can display any size of order inside the spread – this would obviously worsen the ECN feed with its liquidity providers. What it means is that orders less than 1.00 lot will be aggregated and processed via STP and will be filled when the market moves. These small orders have a slightly higher chance of not being filled than the large orders but it’s a small price to pay for the ability to trade ECN with as low as 0.1 lot (10,000 order size).

The minimal deposit and trade size limitations were one of the reasons why small retail traders haven’t jumped on the ECN bandwagon yet. With it being lifted it should become much easier. While it obviously doesn’t appeal to large traders, who never had problems trading at least 1 lot any way, but it does appeal to people who would like to try ECN with small amounts to see how it works and then make larger investment decisions based on their experience. It also makes the market more accessible to Martingale and Grid style traders who place large number of small sized orders in the market.

Traders can give this feature a test (I will appreciate any feedback) by using the demo or live environments which FXOpen claims to be identical.

It remains to be seen how the market will accept this new feature and FXOpen’s test would be the ability to successfully place as many orders as possible.

All in all, I think it’s an important move in the right direction for all brokers as innovation and transparency are one of the key factors driving growth in this market.

It is also interesting to see how non-US, non-NFA, brokers are giving the US industry a decent fight. With 4% of the clients already having left the US looking for a better option, some decent offshore brokers are destined to profit as they can offer more trading tools such as hedging and they also don’t have a burdensome and time consuming registration processes.

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