New and experienced traders are discovering that forex trading is a simple and exciting way of investing in a variety of assets. The simplified rules and regulations of this unique trading vehicle have led to the development of numerous online brokerages that are now providing dynamic and intuitive trading platforms for trading Forex.
While nearly every Forex platform is functional and capable of getting the job done, there are some platforms that provide traders with better profit opportunities than others. Choosing a forex trading platform is not a difficult process, but with some guidance, you will save valuable time and be better equipped to choose the best platform available.
About Forex Tading
The basic elements of forex trading involve taking a specific position on an asset and placing a short-term contract on that position. Unlike other forms of trading that have open-ended profit and loss potential, the profits and losses from Options trading are fixed. This gives you a better understanding of the risk potential of each trade, assuring that a significant profit can be made from each winning trade.
When trading Forex, you place a “call” option if you feel the price of the asset will increase by the expiration of the trade or a “put” option if you determine that the price will fall when the trade expires. Forex trades can last anywhere from one minute to one month, and if the trade finishes in the money, you can receive an percent return on your investment. If the trade finishes out of the money, you may still be eligible to receive a refund of your investment. This is a simplified example of forex option trading, but if you select a proven Options trading platform, you’ll have an excellent opportunity to realize sustained profits.
Rate of Return for Forex
When choosing a Forex trading platform, the first thing to consider is the rate of return. Some platforms only offer small percent payout for winning trades and no refund amount on losing trades. On the other hand, some brokers offer high payout for correct trades and less refund on your investment for losing trades. You need to compare Forex brokers before you open an account.
Information Provided by a Forex Platform
The level of information provided also varies between Options platforms. Most traders prefer Options trading platforms that provide historical price data, which helps evaluate the historical performance of an asset. This helps traders identify proper strategies to make profitable trades.
Trading Platforms That Offer a Free Demo Account
Many platforms provide free demo accounts that will allow you to learn the art of successful trading without risking any money. A demo account also allows you to try out different strategies, trade different markets, and learn proper hedging strategies in order to develop your own system that you feel comfortable and confident using to make profitable trades on a consistent basis. These accounts are exactly the same as live accounts, except there is no risk of capital loss involved. Therefore, you can try out a myriad of trading strategies and only deposit funds into a live account when you have mastered making consistent profits and building up your demo account.
Often, the platform an individual chooses makes or breaks their trading success. By following this guideline, you’ll be able to select a professional platform with all of the tools and features to get your Options trading off to a profitable start.
- A simple Internet search can turn up hundreds of forex trading systems within minutes.
- Most forex systems promise lucrative profits with almost no work involved at all, and with automated systems, this is a very real possibility.
- Regardless of the type of system you choose, the truth is, following a Forex system is a proven way to profit. But, how do you know which systems work and which one’s don’t? To determine this, you’ll have to first understand the different types of systems available.
Before discussing Forex systems, it’s first necessary to discuss the risk involved. No matter how foolproof a Options system claims to be, no trade is a sure bet. If it was, then everyone would be millionaires. However, there are Options trading systems that are designed to maximize gains and minimize risks. Utilizing a system that is designed to do this is the best way to achieve long term profits with Options trading. Now, let’s learn a little more about the basic systems that may be able to help you achieve financial freedom through Options trading.
Manual Forex System
Manual trading systems are often chosen by the majority of traders, because they allow traders to have complete control over their trades. These systems basically provide you with a trading guideline on a specific trading technique. There are thousands of manual trading systems available to choose from, and each has the capability of performing well. Some systems are based around placing Above/Below trades. Some may focus solely on a Boundary trade strategy. However, most systems include some sort of money management and hedging strategies that can help you minimize any losses and maximize your profits.
Automatic Forex Trading Systems
Automatic Options trading systems are software applications that place trades on your behalf, allowing for completely hands-off trading. These systems can be purchased and downloaded on the internet. You simply upload them to your trading platform, input a few parameters, and the software program, also called an Expert Advisor or Trading Robot, does all of the trading for you. All you have to do is leave your computer running and stay logged in to your trading account all day. This allows you to potentially profit from Options trading while you go about enjoying your day. These systems are appealing to many, but successful traders usually prefer to have complete control over their trades and their accounts.
An Example of a Proven Forex Trading System
To use this system, you minimize risk by purchasing a call option and a put option on the same asset. It is important to note that this system is only effective when the trade is in the money before its expiration. For example, if you purchase a call option with a one day expiry at 8:00 am and you are in the money by noon, you would buy a put option on the asset as well. By doing so, you’ll be able to hedge your investment. This creates two price levels for the investment. If the asset ends up between the two price levels upon expiry, you will have doubled your gains. If the asset finishes higher than the strike price of the put option, your losses will be minimized. Conversely, if the asset price finishes below the strike price of the call option, your losses will be minimized as well.
This is an excellent example of the type of Options systems that are available to you. Regardless of the Options system you choose, many successful traders will tell you that you’ll be much more successful using any system than no system at all.
The high yields and quick returns of Options are responsible for the rising popularity of this unique trading vehicle. Options may be simple for beginners to learn, but Options trading is also perfect for advanced traders that can incorporate various strategies into their trading game plan. A solid Options strategy can be responsible for nice profit returns, but using multiple trading strategies can erase someone’s money worries for the rest of their life.
Fundamental Options Trading Strategies
The pairing Forex strategy
The pairing strategy can consistently yield high profits from trading a single forex contract. This popular strategy involves pairing up a money put with an in the money call. If the spot price of the asset falls between the two chosen prices upon expiry, the nested position allows you to still make profits.
Hedge and double position Forex strategy
Another popular strategy is to hedge and use a double position to pair the call with a put. This hedging strategy not only reduces risks, but it can lead to huge profits as well.
The betting Forex strategy
This common trading strategy involves a trader placing a call or put option if he or she expects a big market move in a particular direction. This strategy is often successful because traders tend to base positions on widely used indicators that can cause assets to gain price momentum in a certain direction.
Stop-loss Forex strategy
This strategy is by far one of the most popular amongst forex traders. The strategy seems simple upon first glance, but experience is often needed in order to predict the perfect stop-loss time. The following factors can greatly affect the stop-loss strategy and make it difficult to implement:
- Trading vehicle – The strategy depends on which type of asset you are trading, because each type of asset requires its own stop-loss strategy. Someone trading options might use a two-dimensional strategy, while someone trading stocks will likely use a consistent stop-loss level.
- Risk tolerance – The stop-loss strategy used by a trader is determined in large part by their risk tolerance. Every trader has their own aversion to risk, and this strategy is largely dependent on a trader’s personal risk preferences.
- Trading Style – Every trader also has their own trading style, which affects the type of stop-loss strategy that they feel comfortable implementing. One trader may feel more comfortable making 10 trades a day and another may prefer to focus on making one winning trade a day. The former would utilize a tight stop-loss and the latter would more than likely choose to use a wider stop-loss strategy.
- Market mood – The mood of the market also has an impact on the stop-loss strategy used by traders. Traders tend to use wider stops in volatile markets and tighter stops in quiet markets.
As you can see, stop-loss strategies depend upon numerous factors and can be quite complex. Each trader uses a stop-loss strategy that best suits their trading style and the trading system they have chosen to implement.
Using any of the above strategies, it is very easy to reduce risks and make considerable profits in a short amount of time trading Options. However, like any form of trading, there is always a risk of capital when trading Options. Fortunately, many traders have found that experience combined with the right trading strategy can lead to lucrative profits in no time at all.