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Forex Options: What they are.

Many also know them under the name of Forex Options, FX options are nothing more than a financial instrument , extremely risky for those who cannot manage it but also very a great choice for all those who are impassive and calculating.

Through the use of Forex options, the right to trade a specific currency pair will be purchased with a precise exchange rate and with a specific expiry date of the operation.

Remember that buying the right does not mean that you buy the currency but that you can carry out trading operations on the future trend of that particular currency pair.

You can decide to buy a Call trend or sell Put a certain amount of currency pair by a certain date at a specific exchange rate.

As you may have guessed, the mechanism is very simple and everyone can use it.

How To Trade On Currencies

As everyone will know, the Forex market is nothing more than the currency market and when we talk about forex options we refer to all those options that have currency pair as their core, or the exchange rates between the various currencies.

A tip that we give you, given the large amount of assets available is to choose a few and concentrate only on those, trying to follow them all would be practically impossible, even professionals, despite having a lot of experience struggle to carry out multiple operations.

So if you are new to the branch and the time available is not much, we advise you to focus your operations on up to 3 assets, so that you can study them better by reading the technical and macroeconomic data.

You could also decide to follow only one asset, logically the more your knowledge will widen and the more accurate your forecasts will be.

First you will have to choose an asset and open a position on it, done this you will only have to wait for the closing of the position to check if it went well or not.
In a nutshell, upon expiration of the option you can check if you have received a profit then conclude the exchange or if it will be better to withdraw it without losing the investment made.

The operations are not difficult; you only have to check for any profit or loss.

How They Work

In this type of option, the expiry date must be preset and at its end we will know how much we will have been able to earn or how much we will have lost.

Calculate that the investment methods made through the use of FX options turns out to be much simpler in comparison to direct investments on Forex or CFDs but obviously this does not mean that it is easier to earn.

First we will choose the amount of the investment that we want to use for a pre-established operation, then we will set the exchange rate and the expiry date of the operation.

After this we will move on to the purchase of a Call option if in our opinion the final price will be higher than the exchange rate indicated at the time of opening or Put if we think that the final exchange rate will be lower.
In this way we will already know previously how much our earnings will be in case our forecast proves to be correct.

Let’s take an example:

If the payout percentage corresponds to 130% this will mean that if we invest only 10 euros, our profit in the case of exact forecast will be 13 euros and in the case of incorrect forecast our loss will amount to 10 euros.

As you can see, the mechanism is very simple and within everyone’s reach, at the time of expiry you can cash in the gain immediately or in case of loss the amount paid will be reversed immediately.
Where To Trade

FX options represent a new type of online investment that can be made directly while sitting comfortably in front of your home PC.

If you like the Forex market and are looking for extra guiding beyond your work then FX options are right for you.

This new product is offered only by very few currency brokers.

First you need to register on a platform then you can take action either virtually through the demo or in a real way through a real trading account.

You will need to have an email address at hand and you will be asked to set your personal password, after which you can start operating.

By clicking on the “” + “” button at the top, all the products for which it is possible to trade between which there are also FX options will be displayed.

By clicking on “FX Options” you will see on the screen all the currency crosses at your disposal on which you can operate.

Once this is done you will decide the amount of the investment, the expiration date of the entire operation and if you want to make an upward or downward option, as you will have understood, the operation is very simple and affordable for everyone.

Difference Between Forex Options and CFDs On The Forex Market

When we use CFDs on Forex to invest we have three main choices to make, either we enter the game on the current price in the Long position (upwards) or in the Short position (downwards), or by using the pending prices we can decide to open sell positions / buy stop and sell / buy limit on certain prices of our choice.

There are no expiration dates nor profit limits because the decision of how much to invest and at what price to block the operation depends only on us.

With Forex Options we already know everything previously, we know how much we are going to earn or how much we can lose and at what time our option will expire.

There is no longer a need to own large capital to be able to invest unlike CFDs that require minimum capital of 1,000 euros with which the manageable operations are very few.

With FX options you can decide to invest even one euro per operation, logically the more you invest the greater the profit.

Between these two methods there is no worst or best, only the type of investment changes; with FX options the invested capital can be significantly lower.