Forex options - an alternative way to increase the deposit

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

About independent work on Forex, every investor in our time is quite well aware. Many people make a living from this, using various trading systems in trading, connecting advisers and listening to the trading signals of experienced players. Those who understand the excellent opportunities for investing in the foreign exchange market, but cannot do it on their own due to lack of time, experience or knowledge, use pamm accounts or any investment program of their broker. However, all the possibilities of Forex trading do not end there.

There is another yet little-known way to benefit from fluctuations in the value of a particular currency - Forex options. This earning option has not yet gained great popularity among traders, but nevertheless, you need to know about it in order to competently use it at an opportunity and not miss the chance to significantly increase your deposit.

Forex options trading became available to the common mantrader only recently - before that, only corporations and large banks had such an opportunity. Now, even the smallest amount of $1 will be enough to try such a financial instrument in your practice.

What are Forex options?

An investor who decides to use this financial instrument, after acquiring it, gets the right to sell or buy a certain currency in the future at a predetermined rate. For convenience and clarity, let's take the following example: suppose the EUR/USD quote has reached the level of 1.3190. A trader, based on technical and fundamental analysis, comes to the conclusion that by the end of the trading session, the current rate will decrease and acquires a down option for $100. In the case of a correct forecast, this trader will be able to exercise the option at a better price, equal to its value multiplied by the coefficient set by the broker. In our example, it is 1.8, so the trader will sell his option for $180 and earn $80.

Why should you use Forex options?

In normal trading, we enter the market at the most convenient moment by setting the calculated stop loss and take profit at such a level that the profit of the operation is sufficient compared to the inevitable risks. At the same time, for a good income, you need to wait until the price makes a fairly strong movement. At the same time, Forex options allow you to make decent money even ifwhen the price moves in the intended direction by only a few points.

When buying an option, the trader pre-sets all of its parameters on the broker's website. When submitting an application, an automatic calculation takes place, and the trader sees the estimated profit. This allows you to weigh all the pros and cons before confirming the order and then purchase an option or revise the terms of the transaction.

What is the difference between Forex binary options?

This type of contract can be described as "all or nothing". The word "binary" means that this option consists of 2 parts - the first profit is accrued, and the second one is not. With the help of a binary option, you can either get a specific profit or be left with nothing. Too risky, you say? However, the profit here is impressive: from 70% to 85% for each operation, despite the fact that the transaction time can be limited to 1 minute. If some strong news came out and as a result a rapid price movement began, then it is unlikely that it will reverse in the next 15 minutes. And even if the price during the duration of the binary option changes in the right direction by only one point, then in this case there will still be the same 70 - 85% of the income. That is, the profit here is strictly fixed and does not depend on the number of points passed by the quote.

Thus, options are, under certain conditions, a very interesting type of investment. Someone may not like them, but someone will be allowed to increase their deposit many times over. In any case, it would be useful for every trader to know about this possibility.