Peter Fedorsky

Saturday, October 2, 2010

Forex Options Trading

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When speaking about options trading, people usually think of stock options. However, options can also be applied to other financial instruments such as commodities, bonds, or even currencies. Options have in fact become an alternative investment of choice for many investors and traders, corporate or individuals, for hedging their funds. When used in Forex Trading online forex trading, options allow traders to increase their gain and limit their risk. In fact they allow the Finotec is one of the few online forex brokerage firms to offer options on the main currency pairs.

To understand what options are, think of them as a type of insurance policy: they are effective and valid only if certain conditions are met.

Forex option definition:

A forex option is a contract between a buyer and a seller under which the buyer has the right – but no the obligation – to sell (or buy) a specific amount of one currency against another at a predetermined price and on or before a preset date in the future. In return for this right, the forex option buyer will have to pay a one-time sum, called “premium,” to the seller.

The rights and obligations of buyer and seller:

The party buying the currency options contract (also known as buyer or “holder”) may choose to either sell it before its expiration date or keep it until its expiration date. In this case, the buyer exercises his/her right to take a position in the underlying spot exchange rate. On an online trading platform, as soon as the buyer takes this position, the position is automatically closed for immediate payout. If the market moved in his favor, then he takes in the difference between the market price and the strike price. If the market moved against him, the position is just closed – he has already paid the premium.

The buyer’s only financial obligation is thus the premium he must pay to the seller. On the expiration date, a CALL buyer may exercise his/her right to buy the underlying spot position at the strike price while a PUT buyer may exercise his/her right to sell the underlying spot position at the strike price. However, buyers often sell the currency options contract before the expiration date. There is no limit to the possible profit of the buyer.

If the buyer exercises his right, the party selling the currency options contract (also known as seller or writer) is obligated to take the opposite underlying exchange rate spot position. The idea is that the premium paid by the buyer will cover the risk in case the seller is forced to take an adverse position on the underlying spot market.

Read more about Forex option trading on www.forex-tradingtraining.com

Friday, October 1, 2010

Forex Market Season

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You can tell the summer is over and people are back to work. The kids are in school and the football season has begun. Although these are not the major indicators the Forex market uses to determine liquidity, it may have some effect. You never know.

The Forex technical charts are showing more movement. It looks like some of the big money institutions are back and ready to play. Now is the time to buckle down and dust off the brain. You may have gotten away with some lazy trading in the last couple months because of the lack of movement in the Forex markets and tight trading ranges, but now it's back to reality.

And this is all good news. The frustration of finding new and creative ways to make money during the summer Forex markets is over. The chart of the EUR/USD is proof positive that things are on the move. The support level that was mentioned last week at around 1.26 held like a champ, and now it's moving upward. If you started your buying at around that level, not only are you pleased, but you could be pyramiding and adding to profits.

You might have taken profits at the resistance level of around 1.289, and that's okay. No one is going to argue about taking profits. It was a legitimate resistance level and should have been respected. Another approach would have been moving up your stop-loss, lightening up your quantities, and test the resistance line. If you did that, you're smiling today. Now, stop smiling and consider adding on to your position. Yesterday's accomplishments have nothing to do with today. That resistance line is now a support.

Thursday, September 30, 2010

Why You Need To Take Full Advantage Of Forex Indicators Today

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Below we provide a composite of forex indicators explained. An indicator, in general, is one that signals a change. In forex world, it means currency fluctuations. Currency fluctuations are affected by several factors. To monitor or predict these changes, two broad categories of indicators are used: technical and economic. A technical approach is one that uses price history changes and chart patterns. Some examples would be stochastic oscillator, moving average convergence divergence or MACD, and RSI or relative strength index. Economic indicators are, just that, based on economic data. The common economic measurements are GDP growth, unemployment, CPI, retail sales, and industrial production.

Let us dive more closer into the world of technical indicators. A measurement of the strength of the underlying currency movement trend can be defined by its RSI or relative strength index. This normalized index is a ratio of the positive moves relative to negative ones to determine which direction is more prevalent. The index is based on a zero to one hundred point value. A number below thirty indicates oversold and over seventy as overbought.

Another indicator, the MACD, can signal a change in direction over a specific window of time measured. This moving average convergence divergence calculates the difference between two exponential moving averages like a two hundred day versus a fifty day. Graphing this difference versus the moving average of the difference will provide cross over points that signal a change in direction.

The stochastic oscillator is a very good gauge for the sustainability of a trend whether it is positive or negative. This methodology calculates percentage values based on closing prices. In the case of an uptrend, the closing prices are focused on the upper end of a trading range, and in a downtrend they are near the bottom end. The concluding result is a band of lines which delineates an uptrend or downtrend. Any variation away from these bands would result in a trend change signal.

Wednesday, September 29, 2010

The Secret, Forex and pyramids

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Is the newly launched Dubai chapter of My Private Trade (MPT) a pyramid-selling scam or is it the first baby steps into the brave, new world of Facebook-style Forex?

I still don’t know. So last night I went to the second Dubai meeting of MPT at the Sofitel Hotel on JBR Walk.

It was a chance for all the people who had rushed to sign up at the launch over the weekend to learn more about how to actually use the platform and trade currency on it. The meeting was an hour long. Fifty two minutes were spent teaching us ways to convince friends and family to join up (it’s by signing up others that MPT members earn commission). Eight minutes were spent telling us how to actually trade currency on this platform.

The man giving the eight minute explanation summed up Forex as follows: “If you think the price is going to go up, buy. If you think it’s going to go down, sell. You won’t always get it right, sometimes you’ll lose but the trick is to win more often than you lose.”

Indeed. That would appear to be the key to profitable currency trading, but just how does one do that without tools such as a crystal ball?

To be fair though, he also said there was a Currency Trading Manual amongst the material that newly joined MPT members received. I still haven’t signed up so I haven’t seen that. Who knows, maybe it does hold the elusive key to being a successful currency trader (but if anyone would care to wager...).

Tuesday, September 28, 2010

Triad Trading Formula 2: Trending Forex Training by Jason Fielder

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Jason Fielder claims to be a top trading expert in the Forex arena and will be launching his latest training course Triad Trading Formula 2 on September 15, 2010. Jason makes some bold claims, and backs them up with experience.

Jason has been training people in these multi market trading methods for over a year now and his experience is from personal trading. He first started training other traders when he got fed up of attending costly trading seminars that only focused on one market trading method.

Triad Trading Formula 2 is the latest evolution after the huge success of the original Triad Trading Formula launched last year. As the name suggests Jason’s Triad Trading Formula 2 focuses of three trading principles rather than one, namely Trend, Counter Trend and Breakout.

Jason was also the driving force behind Correlation Code and Delphi Scalper both training courses released in the last 12 months and both with very successful reviews.

Monday, September 27, 2010

How and When to Use Simulated Forex Trading

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Simulated Forex trading is another great benefit when it comes to trading the Forex Market. Basically it allows you to trade a simulated version of the live Forex market, giving you the complete functionality of an online Forex broker. You get to use the real charts and see the live price data as it happens. As you place trades your demo trading platform also manages all your trades, orders and accounts in real time!

You don’t get this type of functionality trading equities.

This means you will experience the Forex market from the comfort of your home and have access to the data that every professional trader gets to see. Access a free simulated Forex account now.

The problem with using simulated Forex trading

Using a simulated Forex account is great to get you started and to let you learn the ropes, but the major problem with a simulated account is that it is difficult to feel the emotion of the market and to understand how you would react if you had real money riding on the trade.

What I mean is that you don’t learn what it’s really like to wrestle with greed and fear as the market plays out before you. You could put on a huge trade, let’s say $1,000,000, and if the market goes your way you could end up “making” thousands of dollars. But would you do this in real life with the risks that are associated with a trade like this?

You could also end up “losing” thousands of dollars but you would not experience the emotion of fear as your money drips away.

Sunday, September 26, 2010

Ten Factors That are Preventing You From Lucrative Fx Trading

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Have you actually wondered why is it that quite number of traders succeed inside the forex trading market while 90% of foreign exchange traders fall short to accomplish accomplishment? Below are 10 significant good reasons:

1) Trying to find Uncomplicated and Quick Money

I have to emphasize that forex trading isn’t really a get rich fast scheme. Achieving a steady lucrative results out of fx trading is difficult. It needs some foreign currency training, fortitude, self-control, emotion management, and so forth. to get you to the world of productive currency trading.

2) Seeking the Holy Grail

I have people asked me, “What will be the best foreign exchange trading process around?” There is not this kind of trading techniques in foreign exchange trading. Several foreign currency traders invest many years seeking to come across the Holy Grail of foreign currency trading, but failed to discover a single. The major cause may be the forex trading marketplace modifications each individual moment.

3) Inadequate Proper Training

One of the good reasons forex traders fail is since they really don’t have sufficient appropriate education/ training. Some people who came into foreign exchange trading really don’t even open a foreign currency book or educate themselves about foreign currency trading. You need certain forex trading instruction education, a fx course, a forex trading method after which a mentor to coach you.

4) Deficiency of Discipline

Discipline is so essential in fx trading that it is going to reward you by accumulating your earnings in case you abide to it, and could turn your forex trading account into absolutely nothing whenever you lack of it.