What is attractive about FX-options and why you should definitely try it out? We will tell you about the new approach to trading with IQ Option in this article. In FX-options are collected, the benefits of trading conventional options and Forex. Tempting? Read this article to add a new effective trading tool to the trade arsenal.
What are the features of FX-options?
FX-options differ from binary options (where the profit from each contract is known in advance) by unlimited returns while a trader risks losing only the amount of bet. Probable profit can be any. This property of instrument can be very useful in competent trading strategies. If a trader on time will sell losing options and allow profitable trades to grow, he may not even win 50% of trading rounds. User simply has to control that index the average was gain is above the average loss for profitable trading.
When user has chosen to trade in FX-options he will have access to 5 popular currency pairs (over time, their list will expand). Algorithm of this trading instrument uses strike-prices (execution prices), due to which traders can determine the required ratio of profit.
What do you need to know about trading FX options?
Traders must complete before embarking on trading FX options:
- Configure the basic parameters of deal, i.e. select the strike-price, set the expiration time and select the size of rate that will be played. Strike-price (exercise price) is a level at which the option closes with a profit. And if the price chart at moment the expiration has not crossed the strike-price, deal will close with a loss.
For conclusion of deal trader must specify the strike-price and the size of bet
When buying FX options, users are obliged to remember about risk management, specifically, the size of rate should not be higher than 5% of total deposit on the account.
- Analyse the market and find the trend
There are three types of price behaviour analysis: visual, technical and fundamental. Traders perform a visual analysis automatically during the initial viewing of price chart. And in technical analysis, traders use information that has been derived from the price chart by additional software, graphical tools, and special knowledge. For fundamental analysis, traders use important political and economic news. To learn more about the search for trends and market analysis, Users can find out by reading other articles in our blog.
- Make a deal
Trader is ready to open the option (make a deal) when the parameters are set and the tendency is determined. Next, the user needs to choose one of two options:
- “Higher” if he believes that the price will go up;
- “Lower” – if down.
Trader can adjust the strike-price during the deal, as it strike-price often determines whether the deal will be profitable or not.
Probability of loss and profit depends on the strike-price
Trader can wait for the automatic closing of deal as soon as the expiration time or close it manually. If the price at closing is higher than the strike-price, trader will win by pressing the “Higher” button but lose if he chooses “Lower”. And vice versa.
Note. Users should remember that FX-options have their own price, which must also be taken into account when calculating the profitability of deal.
Trading FX-options differs from working with classic binary options in terms of early termination of options manual expiration and strike-price setting.
FX-options are the new round in the development of binary options and Forex. Now options trade is more perfect, but users should remember that the market is constantly changing. Traders must firmly follow the trend, manage risks and regularly learn new things in order to trade effectively.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future
GENERAL RISK WARNING