Trading in the Foreign Exchange market is considered by many as a financial hazard. You have more chances of losing money rather than gaining money; fact is there are only 5% of traders in the Foreign Exchange market who are actually able to make a killing; the other 95% lose their money and others simply quit. But the opportunities in the Foreign Exchange market are just too good to pass up. Fortunately there is an alternative way of trading currency in the Foreign Exchange market with less risk, but same if not higher returns. This can be done by trading with forex options.
Purchasing forex options is known by many, but done by little. It is a very uncommon practice among traders in the Foreign Exchange market; yet it is a low risk, high return investment wherein you have a better chance of surviving the Foreign Exchange market. So, how do you profit with these options?
An option does not give you the currency, it gives you control over it. You pay for the contract which gives you the right to purchase this anytime during a predetermined period of time and at a predetermined price as well; both cannot be changed over the course of the contract. The buyer of the contract can make a profit if the currency's value eventually goes up. The buyer could then execute his rights with the contract, purchase the goods at a lower price which was predetermined and be able to sell it at its currently higher price.
If you are considering day trading then you should read this article.
First let’s look at why forex day trading doesn’t work.
The time period is to short!
Volatility in short time frames is random - PERIOD
This means daily support and resistance levels are meaningless and you can never get the odds on your side longer term.
Now let’s look at the illusion of profits.
The Marketing Illusion
You have seen them the headlines promising you 100% annual profits or a regular monthly income - all for just a few hundred dollars.
Of course the reality is they profits do not exist and it's simply clever marketing copy.
Look at the facts and you will see no substantiation whatsoever to back up the claims.
You will of course get a hypothetical track record, done in hindsight but the key word to consider here is hindsight! The person presenting the track record knows the closing prices when they do the track record.
If I knew tomorrow’s closing price today, I would be a multi millionaire but that’s not the reality of forex trading.
The people who create the illusion you can make money forex day trading can never present a long term track record of real profits – that’s real dollars made in the market by them.
Why Create The Illusion?
These people are mostly failed brokers or marketing organizations that actually have the sense not to trade the system themselves.
Why?
Becuase they can make a guaranteed return selling the system to naive forex traders.
Patterns that don’t repeat
Many traders look at back data and see patterns.
They think they can trade themselves but this is a bit like roulette wheel paterns - there appears to be an order but the same sequence never repeat again – its an illusion, that fools many traders and when they try and trade for real they lose their equity.
Still Not Convinced Day Trading Doesn’t Work?
Here is a simple test you can do for yourself:
Ask anyone who claims they make money day trading, to produce to you a real time track record of profits, with supporting bank statements and trades.
You won’t get one.
Day trading does not make money, apart for the vendors who sell e-books and forex day trading systems and they cheerfully let you take the losses, while they bank a fee for their services thats guaranteed.
Don’t fall into the forex day trading can make you money trap! If you do you will lose your equity quickly.
Both Timothy Stevens & Kelly Price are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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