Did you consider the perfect Forex option trading strategies
4 years ago forexsimulation 0
If you are trading using the spot strategy then you can simply do it but when it is about the option trading strategies things are different. The spot strategy is betting on the price movements direction so it’s straightforward. But the option trading strategy is different you should check on the price moment at the end of the day. This strategy can be the best to trade a changing Forex market but the spot trading strategy cannot be used in such. There are some options strategies you should use in the option trading strategy such as strangle and straddle options. In the Forex market, it is important to be attentive to the market environment if you are not aware then there is a problem in trading successfully. To be precise there is fine line of difference in forex currency trading and options trading. If you trade the options market than you need be extremely careful about the timings since it will greatly effect your trading performance in the market.
The long strangle option strategy
The directional movement of price is decided by the long strange option strategy, but the direction cannot be decided perfectly. By using this strategy you will participate in both the call and put options, but it will different strike prices and same expiration. The strike price you purchase them can be used to fulfill other expectations. As an example, consider the breakout with the increase in price it is more likely to cause the call option strike price lower and the put option strike price higher. If you are involved in forex currency trading than you can easily find similarity of this system with the hedging trading strategy in the forex market where the traders buy and sell a certain fixed at the same time. But when you trade this system be sure that you know how to manage your open positions in the market.
The short strangle option strategy
The short strangle is used when the price remains steady during a particular range. It is the same as the long strangle option but you execute both call and put option with different strike prices and the same expiration. The con factor of this strategy is that your losing trades outweigh the winning trades. When you are using the short strangle option make sure to sue it wisely. Unlike forex currency trading this system requires a sound knowledge about the trading session since your trading output is greatly dependent on the expiry period.
The straddle option strategy
The straddle options is extremely profitable and even if it short or long, it is exactly equal as the strangle options we described but there is just one difference. In this system the call or put options are purchased or executed at the strike price and the expiration should be the same unlike the strangle options. Most of the novice traders in the financial market fails to manage their risk while using this system but if you truly want to become a profitable options trader than it is highly imperative to follow proper risk management factors.
When the traders are trading using these strategies they must do it logically, they should analyze the currency pairs. They should look for strong resistance and support levels. As an example, a short strangle option with strike prices above the support and resistance levels might be a great opportunity to generate profits. However always remember to follow proper risk management factors regardless of the reliability of the trade setups.
Summary- there are numerous strategies in the Forex market if you want to become a successful trader then it is a must to learn almost all the strategies. If you are unable to learn all the strategies at least the important once are to be learned by the traders. The Forex market is complex but by using the right strategies you can trade it in better ways. Although Forex is complex the successful traders are capable of trading it and they are making profits too. So you should not backup when you are in the Forex market, moving forward will bring you success but not giving up.