Fixed Spreads In Forex Trading - Might It Be Really Worth To Consider?

Please note that the gains resulting from the downward movement must also cover the cost of buying the forex put option (premium paid) to be profitable. For example, if the cost (premium) of buying a put option expiring in 1 week's time is 135 pips then the chosen currency pair must move downwards more than 135 pips past the strike price. If it falls 250 pips below the strike price by expiration your profit would be (250 pips - 135 pips) 115 pips!

I neither encourage nor discourage trading at super high leverage. The decision boils down to you. But unless you have a clear understanding of leverage implications, your chances of succeeding are slim. It is a cruel fact but it is better for me to tell you this rather than fabricating beautiful lies like most so-called experts.

Trading Forex online can easily make you or break you. But there are many tools and strategies to help minimize the risk and maximize the potential profits. Put options are one of the techniques out there. Personally, it's made me a very successful trader. Although it sounds simple to do, being successful with trading Forex online will take time to master.

The overlap between New York and London markets (3 AM – 11 AM) creates an intense trading momentum full of trading opportunities enhanced with frequent price movements, and therefore is the best time to make money. With the right trading plan, money management and system, you can make thousands of dollars within minutes.

Most forex options expire at 1400 GMT. One observation noted over the years, by some forex traders, is the magnetic attraction options sometimes have on the value of a currency pair as an option reaches its expiry. While major economic announcements will usually have a more profound effect on forex trading, the evidence for the effect of options has gathered over the last few years.

There is high level of transparency enjoyed by both the trader and the Forex brokers when using fixed spreads. The use of fixed spread especially when dealing with interbank network does not give the Forex broker an opportunity to engage in unethical practices such as changing spread to favour their sides. This is a problem that affects very many traders. In most cases, some unethical Forex brokers would spike prices to favour them. They usually do this by simply increasing the spread in the expectation of big news in the market. The result is a conflict of interest between the trader and the broker.

Hedging has a cost, but the protection you get by doing this is well worth the price most of the time. Studying the use of hedging can also improve your understanding of the correlations between different underlying assets. The techniques used for hedging are generally conducted with derivatives, futures, contracts for differences, options and currency pairs. These instruments are often used by sophisticated investors.