Forex Option Trading - Fixed Prices to Shield a Trading Account

By Steve Maenshel

Forex option trading is a hedging instrument, used not only by big financial institutions, but also by many individual Forex traders. Forex option trading is a great tool for implementing both, hedging and speculating strategies. Forex options are among the most liquid options in the world. The buyer in this case becomes a holder of a foreign currency option. The seller becomes the writer, or the granter.

The forex option holder receives the right to exchange a predefined amount of currency at a predefined date and price. The option buyer is obligated to pay a premium to the seller of the option. In fact, this is the only liability of the buyer, making Forex option trading a field with very limited liabilities. The forex option seller has two ways to precede with his/her option - to buy the contract back or to hold it until its expiration.

When you buy a Forex option, you are opting for a fixed price of the transaction. Forex options have a fixed amount with a fixed expiration date, rather than being tied to the markets' fluctuations.

Do Forex options always get exercised? As a matter of fact, most of the time the options are not exercised by their purchaser with the Forex option trading; options are often offset until they expire. If the option gets exercised, a spot position is assigned to the option holder. There also is a threat of an option expiring worthless, if at the expiration time the strike price is lower than the purchase price.

As mentioned above, you only pay a fixed price for the transaction when you buy a Forex option. Forex option trading will safeguard you against losing more than you have invested into the option. In the event of the final strike price on the market being higher than the purchase amount, you will instantly profit. In the event of the final strike price on the market is lower than the purchase price, you will lose. However, you will never lose more money due to this fixed price, in case your transaction becomes worthless.

Forex option trading has evolved as a hedging tool, and due to that it can only be used at the international currency markets. This type of trading usually holds more risks as well as more profits.

Call options grant their owners the right to buy the currency. Put options grant their owners the right to sell the currency. Both call and put Forex option prices are predominantly influenced by volatility. Increasing volatility results in both call and put options to grow in price. There are two types of put and call option contracts in Forex option trading. Common (plain) options are called "plain vanilla" options and customized ones are called "exotic" options.

Are there any ways to make your Forex option trading less risky? Yes, for that try to follow the below general guidelines:

1. Only place a small portion of your account into option trading.

2. Use only the proven signals with your Forex option trading.

3. Practice on a demo account before starting to trade with real money.

Forex option trading is a good way to learn and understand more about the Forex market. Forex option trading is a risky but also potentially very profitable Forex trading instrument. - 23221

About the Author:

Author Steve Maenshel can you develop a solid foundation for forex option trading. For more forex trading information, visit his forex resource center.

Trading Decreased Volatility Breakout (Part I)

By Ahmad Hassam

Without understanding the crowd psychology, you cannot become a successful trader. Always try to understand the crowd psychology. Trading breakouts is one of the most popular ways of making pips from the forex market. Decreased volatility breakout is one of the subsets of breakout trading. While this strategy is similar to the strategy of trading breakouts, but it is specific to a certain conditions in the forex market. With this strategy, you try to take advantage of periods of low volatility in the forex market.

When prices change to a large extent within a short span of time, volatility tends to be high. Volatility is a measure of the scale of price fluctuations over time. The more the price changes during a certain period of time, the higher the volatility of the currency pair. The reverse also holds the volatility tends to be low during such periods when prices oscillate more or less close to a certain price level without deviating much from it over a long span of time.

It is the volatile nature of the forex market that attracts the risk seekers in search of high returns. However, entering the market in periods of high volatility can be stressful for most of the traders as they dont know whether the trade their way or not. Instead of focusing on the high volatility market, why not concentrate on the low volatility period.

Just like other financial markets, there is a tendency in the currency prices to alternate between periods of high volatility and low volatility in the forex market. This recurrent pattern is due to the crowd psychology which is the force behind changes in the forex market.

You must understand how trend is developed in the currency market and how the crowd psychology affects the different phases of the trend. There are four main stages of a trend and there is a different crowd psychology behind each stage of the trend. These four stages are: 1) Nascent Trend, 2) Fully Charged Trend, 3) Aging Trend and 4) End of Trend. These four stages are closely linked to the cycle of volatility in the market. Lets discuss these stages of a trend in detail.

Nascent Trend: This is the first stage of the trend. In the beginning of the trend when the new trend just starts either upside or downside, most market players are still skeptical about the possible new trend direction during the nascent stage of the trend. Volatility is thus low as both bears and bulls tread carefully and are cautious. Nothing is clear at this stage of the trend. Market players are trying to confirm or deny the start of a new trend. So everyone is cautious.

Fully Charged Trend: When the trend progresses, it becomes fully charged as there is now evidence from fundamental data that supports the trend direction! It is time for more action now. Traders who are caught on the opposite side of the market become exposed when the new information proves them wrong.

During this period a lot of changing positions will take place. This causes the currency prices to move more dramatically within that trend period. Traders who were initially on the wrong side of the market become new converts to the trend.

Everyone wants to jump in the trend. More and more positions are established. Traders become convinced of the direction of the trend and new information convinces most of the traders of the direction of the trend. Hence volatility tends to be high during this period. This brings prices to higher highs in an uptrend or lower lows in a down trend. Always remember, Trend is your friend. Ride the trend as long as it lasts. - 23221

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!

Annuity Marketing Really About Earning the Trust of Annuity Prospects

By Bruce Darber

Don't sell annuities like their used cars. People aren't asking you for a sales pitch when they ask for your professional advice. They want answers that are straight and sound. They need information they can trust.

More than just a sales pitch, annuity marketing is educational in its purest sense. While you're selling a product that depends on building annuity prospects, if you aren't up front, you'll never learn your clients' important trust.

Economies are shifting these days, and people have every right to be scared. They should understand, however, that annuity marketing is a far safer investment than the stock market when it comes to financing. Many annuity prospects seek security after watching their stock market savings evaporate with the economic collapse.

Your clients should realize they have options to sell any annuity later. If your clients need money immediately for a financial emergency, their investment can be sold just as easily as it was bought. Perhaps they need the money for other projects after realizing they bought too much annuity.

While there are many ways to build annuities, ultimately you are building a relationship with your clients. Annuities promise a secure future for your clients. It's a relationship that needs to sustain into the future.

As relationships grow, so does trust. Honesty is always the best policy when it comes to annuity sales Your clients should be as valued and respected as family and friends. Keep their best interests as your main motivation when marketing annuities.

Sales talk that doesn't spell it right out is transparent and obvious. Ultimately, it can destroy your business. Trust builds overtime, but it can quickly be lost.

Be honest and educational about the realities and benefits of the annuities market. As you build the trust of your clients, they'll recommend you to family and friends, build up your portfolio over time. - 23221

About the Author:

The author of this blog is very knowledgeable in annuity marketing and if you would like to learn more here are some other places to get information about annuity prospects.

How to Sell Gold for Profit

By Tabitha Reaves

This is the worst recession for over 60 years and as we have all had to cut corners, tighten our belts and look for ways to save cash, many people have been taking a good, hard look at where they can make extra money. Many of us have old jewelry which is simply wasting away in a drawer or a box somewhere - it is unlikely to be ever used again and it is in every sense of the word, dead weight.

Selling gold and especially old jewelry has become a boom industry in the US and around the world.

Why?

The answer is simple - in times of recession, investors look to buy gold because it is considered a stable, secure investment - gold is what backs the currency reserves of the US dollar and currencies all around the world. When economic times get rough, gold is where the smart money invests and in turn, this drives up the price of gold while stocks and shares fall in value.

Because top dollar is now being offered for gold, it makes a good proposition for gold refiners to buy in the relatively small quantities of gold and precious metals included in your jewelry collection. The issue for you is how to get the best price for the collection you are looking to sell and how not to get scammed in the process!

First of all, deal with a gold buyer who is prepared to offer you a published price for the precious metal involved - not just gold, but also platinum and silver - reputable dealers will publish a daily buy-price for metals so you can easily see what you will get for your metal and be able to compare prices with other dealers. If you cannot see a published price or the dealer is not ready to come forward with a price when you ask, avoid doing business with them - this is something which is basic and fundamental.

In addition, when you are dealing with a dealer using the internet (or indeed in any advertizing medium) you should take some basic precautions to make sure you are dealing with who they say they are! Remember, you are trusting a substantial amount of money to their gold buying process and you want to be sure you are going to receive payment from the person you are sending the precious cargo to. If they have an internet site, check the contact information and make sure you are dealing with a real company at the end of the telephone number. If you call the company and you only get a call-center or customer service staff who do not appear willing to discuss your potential sale, then quite simply, don't deal with them. You should also make sure that the address they give is a physical mailing address for their business and that it can be verified.

When you have decided who you are going to transact the business with, make sure that they provide you with secure and insured courier or mailing services so you can be assured that the jewelry makes it to their refinery and if there is a claim, you are going to be fully compensated for any loss or mistake. - 23221

About the Author:

The best online resource to sell gold or sell silver can be found at www.refinity.com

FOREX FUNDAMENTALS: Handling news about foreign exchange

By Brad Morgan

Knowing the basics of the foreign exchange market is key to making a profit there. While an excellent grasp of technical trending or charting is needed, the comprehension of the currency exchange market groundwork is essential as well. Consequently , an ill-timed trade could be the end result.

There are major impacts wielded by news reports both global and local on the currency market. While finance related news unquestionably yields the greatest effect, other non-finance but major events have their own impact too. They are possibly anticipated or come as a complete surprise .

A tornado or an act of terrorism are cases in point as they are unforeseen but could severely influence the market prices. In such events, stop-losses are just about the only counter-step you would have.

A good example of projected events would be choosing the host country for the Miss Universe Pageant. The chosen countries economy would undergo an increase in investor trust which can lead to an appreciation in its currency value.

Conversely, the countries who were not considered may be affected negatively. Thus advance knowledge of such events are fundamental to forex traders.

analogous events are the daily finance data updates in scores of countries. While not released as often, the information on the economy will be released from time to time and this contains data on the rates of inflation, interest rates, GNP, GDP and other key economic indicators.

It must be recalled that forex trading involves two countries. While checking reports in your home country is easy, it sometimes leads one to forget to check events in other countries.

Americans in particular, are disposed to this due to the domination by the US currency as far as foreign exchange intelligence is concerned. This is further boosted when a secondary currency is traded against the dollar. Making sure that your data is always two sided is the proactive step you can make to avoid this.

Taking to heart these key aspects of basic study on the currency market is essential to a promising trader. For such upstarts, anticipating key events and departing the market before they occur is the prudent thing to do.

A method based on fundamentals may take form as you become knowledgeable in the market. But more than anything else familiarity with the forex fundamentals is essential . - 23221

About the Author:

Forex trading requires knowledge of forex fundamental analysis. Forex markets move quickly, get forex trading training to keep on top of it.