Options Trading Platforms For FX traders

For quite some time now I have been an advocate of hedging currency positions with options. Why? because if you as a small trader with a portfolio of under $100,000 are going to place an order, long or short, with a trailing stop-loss, the chances are incredibly stacked against you that you will be stopped out. The volatility in this hyper sensitive market is enough to wipe

out the trading position of major banks as we saw with the losses incurred by Barclays Bank, Citibank and Deutsche bank on Jan 16th 2015 when the SNB decouples from the EUR and the CHF soared instantly over-running massive bank positions and triggering an avalanche of stop losses. Events happen and risk needs to be contained.  Forex trading is not gambling; if you want to do that then go to a casino because the chances are just the same; the house wins in the long run. Trading must be methodically inculcated with a sensible formulation of a risk management plan. And foremost in any trading arsenal is the principle of hedging with options.

Example - 

Buy 1 long EUR/USD at 109.00 + long 1 put strike 108.50

But 1 short EUR/USD at 109.00 + long 1 call strike 109.50

Before the small trader had recourse to currency futures options on exchanges. But now increasingly spot fx platform providers are incorporating options trading usually taking up the counter-party position themselves in an OTC product creation to provide traders with recourse to hedging. This is because platform providers do not want customers to destroy their accounts so brazenly within a few sessions of trading. Now what would be the purpose of that? Platform providers make money on volume of trades and therefore trader longevity is the key to the platform being successful and profitable. Therefore is very much welcome that some platform provides can see the sense of offering options products so that the sensible trader can balance his trades and in the event of a reversal can at least mitigate his losses with an option position as back up to a stop loss plan.

For further study of options trading to hedge your currency positions please study the following platform - 

http://binary-en-option.com/

Academy videos and books -

http://www.anyoption.com/trading-academy

Never enter into any trading plan without careful preparation of risk management assessment.


Pieter Bergli - DeLoren Trust Holdings

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Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.