Nowadays, every investor is quite well aware of independent work on Forex. Many of these earn a living using various trading systems in trading, connecting advisors 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 because of a lack of time, experience or knowledge, use PAMM accounts or some kind of investment program of their broker. However, this does not stop all the opportunities for Forex trading.
There is another, so far little-known way to get the benefit from fluctuations in the value of a particular currency - these are Forex options. This earning option has not yet gained much popularity among traders, but nevertheless, you need to know about it in order to correctly use it at the opportunity and not miss the chance to significantly increase your deposit.
Trading Forex options has become available to the ordinary trader 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 decided to use this financial instrument, after its acquisition, is entitled to sell or buy a certain currency in the future at a predetermined rate. For convenience and clarity, let’s take an example: suppose the EUR / USD quotation has reached the level of 1.3190. The trader, on the basis of technical and
fundamental analysis, comes to the conclusion that by the time the trading session ends, the current rate will drop and acquire an option to lower for
$ 100. If the forecast is correct, 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 receive an income of $ 80.
Why Use Forex Options?
In regular 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 income of the operation is sufficient in comparison with 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 earn decent money even when the price moves in the intended direction by only a few points.
When buying an option, the trader pre-exposes all its parameters on the broker's website. When applying, an automatic calculation occurs, and the trader sees the estimated profit. This allows you to again weigh the pros and cons before confirming the application and then acquire 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, the second - no. Using a binary option, you can either get a specific profit or be left with nothing. You say too risky? 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 turn in the opposite direction in the next 15 minutes. And even if the price during the operation 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, and someone will be allowed to significantly increase their deposit. In any case, it will be useful for each trader to know about such an opportunity.