Forex Options Trading Made Simple
The foreign exchange market or FOREX as it is commonly known is the biggest market in the world that has a standard every day turnover of more than $4 trillion. In the earlier days, Forex was limited only to the large banks and some rich people. But in the last few years with the entry of thousands of Forex brokers, trading in Forex has become very popular and more and more people are taking up trading in Forex in a large scale.
This has become possible due to the vast improvements made on the internet and also the rapid development made in the Forex market, over the last few years. Consequently these developments have affected Forex Options trading as well.
Those people who are already trading binary options very well know that there are four separate categories. They are the Binary Stock Options, Binary Commodities Options, Binary Forex Options and the Binary Indices Options. The fundamental structure of Binary Forex Options trading is like the other categories of Binary Options. It also has the Put Option and the Call Option.
Here you use the Puts on currency pairs like the EUR/USD, USD/JPY or the GBP/USD. But in the case of Binary Forex Options, you trade the currencies against one another. This means that when a currency grows stronger, the other one will get weaker.
Today most of the trading platforms offering Binary Options also offer the Binary Forex Options on many currency pairs. A very easy method for doing well in trading Binary Forex Options is to follow the economic events of the world and their impact on the currency market.
Therefore, if you want to trade Binary Forex Options, you should know the fundamental rules of the trade. For instance, just consider the EUR/USD. Here the EUR is the base currency while the USD is the quote or counter currency. So, if the base currency is very strong, the quote/counter currency will be a high number.
Call or Put Options
Most of the traders of Binary Options also trade in Binary Forex Options whenever there is some unexpected turn or change in the economic events. This is because it is the economic events that largely decide on the strength of all the currency pairs. For illustration, if there is some encouraging economic news emanating from France, Germany, and Italy, it is liable to make the EUR stronger in opposition to its chief currency crosses.
Therefore, in this state of affairs, Binary Forex Options traders will in all probability instantly buy currency pairs by utilizing either the Call or Put options, in the expiration times that can be on daily, weekly, hourly, or a monthly basis. It is due to these expiry time options you get the flexibility of investing in short, long or a medium term basis.
Basics of Forex Options
For example if you have decided for investing in the GBP/USD currency pair after hearing some financial news from Britain and the USA; then in this case, if there was negative news from Britain, and positive from the USA, and you think that the GBP will go down, and consequently have utilized a $100 Put option on the GBP/USD currency pair at the $1.6568 level, the pair will need to terminate only at 0.001 below the strike price for your trade to make profit. Even if you are not correct, you will still be entitled to get some percentage in return of the original investment made by you. These are the basics of Binary Forex Options trading.
Awareness of Economic Affairs
The fundamentals of Binary Forex Options trading is quite alike that of the other Binary Options. But you should remember not to get confused with the traditional forex trading because in this case currency pairs are also used in trading. Therefore for being successful you should be aware of the upcoming market events of the world’s leading economies: which are the United States of America, Great Britain and the Euro-Zone. By doing so, you can boost your understanding and skills in Binary Forex Options trading.