What is Forex Option Trading? Know about Trading Strategies and how its Different from Traditional Trading Part 2
Strategy to Maximize the Profits through Currency Option Trading
When it comes to currency option trading, there is a misconception that the options can give a massive boost to the profits. It may be true to some extent but statistics suggest that more than 90% of the currency options expire and become worthless. These statistics relate to the buying side. However, if you sell the options, you have equal chance of success only if you do it in the right way. Here we will discuss a strategy that not only is proved but also has the ability to turn the odds in your favor.
Please note that selling the currency options involve a certain amount of risk. You have to maintain a balance in your selling because if you don’t, there are high chances of sustaining heavy losses. It is always to sell the options when the market skew a long way from the fair value at which the option was originally acquired. For that reason, the holders of the options should look for markets that are bearish or bullish. Moreover, it is also crucial to look for commercial buying of bear markets and selling of bull markets. The traders report can come in handy for this purpose as they have all the insights that the holders of currency options are looking for.
Currency Option Trading vs. Traditional Trading
New traders just entering the market often find it confusing to choose the right type of trading that is suitable for them. When it comes to currency trading or forex trading, there are two major types of trading i.e. currency option trading and forex trading.
Options give you the liberty to choose large amounts of stock and either buy or sell them if there is an expectation of the fluctuation in the prices in future. On the other hand, in the forex trading, currencies are traded in pairs. There is a base currency and the quote currency and the sale purchase of the currencies are done in relevance. The prices of currencies in forex trading is done in pips which are calculated up to four decimal places. The reason of doing that is to allow the traders to know how much have they earned during the day’s session. Forex trading takes place in three sessions of different time zones where buyers and sellers exchange currencies. This is the reason why forex trading is nearly happening 24 hours a day for 5 working days.
Which One to Choose
Honestly, there cannot be a single winner in the comparison of forex trading and option trading. The reason is that there are supporters in the favor of each type of trading and strong arguments are available for both the types. However, if you are a risk taker and want to give an instant boost to your profits, option trading is suitable for you. But if you want to avoid the risks and earn smooth profits, you should go for forex trading. Please note that forex trading is also a risky activity but the chances of sustaining a loss are quite less. All you have to do is look for the best platform offering forex trading and currency option trading and you are good to go.
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