Currency Options Give You Unlimited Profit Potential With Limited Risk

Currency Options Give You Unlimited Profit Potential With Limited Risk



Currency Options give you Unlimited Profit Potential with Limited Risk
Options give you unlimited profit potential and limited risk .​
If used correctly currency options will give you staying power and huge leverage, but most traders don’t know how to​ use them correctly.
What you need to​ do is​ know how to​ use currency options correctly which the bulk of​ traders fail to​ appreciate.
Getting the Odds on Your Side
We are not going to​ go into details about how currency options work, there’s plenty of​ free information on the Internet - here we’re going to​ look at​ strategies to​ increase your odds of​ success.
Potential Rewards are not what they Seem
The first thing a​ trader needs to​ consider when buying an​ option is​ how much time is​ needed, and what strike price is​ a​ good target.
Many inexperienced currency options buyers look at​ the profit potential, and don’t consider the potential losses.
They buy strike prices too far out of​ the money, and options that are to​ close to​ expiry.
Just like the mug gambler who always backs the outsider, they lose their bet.
So, How Can You Increase the Odds of​ Success?
There are two points to​ keep in​ mind:
1 .​
Time to​ expiry of​ the option
2 .​
The strike price targeted
Firstly, you need to​ keep time on your side, and buy strike prices that are not to​ far out of​ the money - buy in​ the money, or​ at​ the money options.
Your profit potential may not be as​ great, but your risk will be reduced - and your chances of​ Success far greater.
Keep in​ mind your option does not just need to​ go your way from when you bought it​ - it​ needs to​ trade in​ the money by expiry.
For example, a​ trader sees the pound trading at​ 1.70 and buys a​ 1.90 call .​
The price goes the way they thought and reaches 1.87 - they then run out of​ time and the option expires worthless .​
This happens all the time - prices move in​ the right direction, but the trader makes no money.
The trader feels they were unlucky - and tries the same again.
However, keep in​ mind being close does not make you money in​ options trading!
To make money in​ options you need to​ buy in​ the money options, with plenty of​ time value - this will increase your odds of​ success dramatically.
How to​ Buy Currency Options in​ Longer Term Trends
When trading the longer-term trend, position yourself into the trend in​ the following way.
.​
Identify the long-term trend via technical analysis
.​
Wait for a​ dip in​ the currency to​ position yourself in​ the trend.
.​
Watch for dips to​ support - and then look for confirmation with stochastic crossovers, or​ other momentum tools to​ initiate the trade.
.​
a​ great way of​ buying options in​ the long-term trend is​ to​ look for dips to​ the middle of​ a​ Bollinger band to​ time entry .​
This is​ a​ good timing tool in​ strongly trending markets.
The above is​ a​ simple strategy, and one that can help you make big profits from currency trend following .​
Use options correctly, and you will have limited risk, unlimited profit potential and great odds of​ success.
Don’t make the mistake that most novice traders do - make sure you use time to​ your advantage - and keep those strikes in, or​ near the money, and you will create big capital gains longer term.




You Might Also Like:




No comments:

Powered by Blogger.