Archive for November 20th, 2009

It is no secret that the forex market could be a terribly profitable place to be if you would like to make money by trading currencies. 

However , it’s also no secret that achieving consistency in the foreign exchange market needs plenty of preparation ( you want education and trustworthy trading tools ) because not only you have to have a great idea of where the price is getting ready to move, but also how far it is going to go. 

as an example if you’re trading the EUR / dollars pair and you decide it’s a sensible idea to go long, you would place a “buy” order, as you predict the cost of the Euro Buck against the buck to go up. 

If you placed your trade using 1 mini lot ( this equals $1 profit for every pip ), and your target for that trade is 30 pips, you would need to have at least $1,000 in your account to meet margin requirements and permit some room for drawdown, and if the trade is successful you will make $30 in profits. 

However, in order for this to happen the cost of the EU Dollar has to move 30 pips against the buck, otherwise you won’t reach the planned target and realize the profits.  As you can see, if you trade the currency market using the standard approach you’ll have not only to forecast where the price is going, but also how far it is going, which simply makes it twice as difficult. 

Now, if you have $1,000 in a binary options trading account, what would you want in order to place a successful trade, and likewise, what sort of profits a successful trade would deliver for you? 

In order to answer this question, let us say that the cost of the EUR / $ is at 1.47849 and based a given analysis of the market ( e.g.  Swing trading pattern recognition ) you think the Euro Buck is trending up against the Dollar. You can see an example of a real case study of financial software for forex trading hitting a rolling stop-loss here.

In this case you would go long also but instead of placing a “buy” order for currency, you would simply buy a $100 call option for the EUR / greenbacks pair with an one hour expiration.  If you are right and the price goes up, even if it’s only 0.001 pip above the price you bought your call option ( which is the strike price ), and it is still there or above till expiration, you would get as much as 75% return on your $100 investment. 

In other words, a single $100 trade could deliver $75 in profits and you might repeat this process numerous times during the day. 

But the remarkable thing here is that you did not need the price to go up thirty pips in 1 hour to get a 75% return on your investment, you only required 0.001 points of change to reach this. 

In this eventuality you certainly had to figure out in what direction the price was going to move ( this is generally an ingredient of the trading process ) BUT your forecast did not have to take you all the way to a 30 pips increase in the price in order for you to make get the anticipated return, because you got it with just 0.001 points of adaptation, and you made $75 rather than $30. 

Also, you can open a binary options account with only $100 and you can trade with as little as $30 with no commissions charges. 

So as you can see, the potential of foreign exchange trading through binary options is giant and the method is far faster so increasing your possibilities for moneymaking trades {, however ,} you do need to have a sense of where the market is going.  Provided that you have this, you are probably going to make take much more winning trades than losing ones and a ton more money also. 

If you’re new to binary options you can read more currency trading tutorials here that will teach you the easy way to meticulously find the direction in the cost of any asset, currency or index, so enabling you to be profitable in your trading.

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