So you've got the basics down. You have a thorough understanding of how the forex market works and how to use support and resistance levels to execute profitable trades. You experienced some profitable trades and learned from your unsuccessful trades. Your mentality is sharpening to the point where you do not lose your mind every single time you make a dollar or lose a penny. Well, it is time I introduce you to some more advanced trading strategies.
You are probably familiar with options, but have not really explored how to successfully exploit in the forex market. The beauty of these derivative instruments is that they allow you increase your profits while limiting risk. I am going to give you a brief overview of options and how to use them.
There are two types of options: call/put and SPOT (single payment option trading). The conventional option is the call/put and functions similar to a stock option. The SPOT derivative is unique in that it gives traders more flexibility than the call/put option.
Stock options enable you to purchase something from the option seller, with worrying about actually having to purchase it, at a set price and time. You can choose the price and date you want the option to be valid. Once you select the date and price, you will receive a quote stating the premium to pay to obtain the option.
The scenario I just broke down is applicable to the call/put option in the forex market. However, they have two option to choose from: American-style and European-style. American-style option is defined by its ability to be exercised at any point before its expiration date. The European-style option can only be exercised at its expiration.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment