The New guide to Trading Currency Options

This is a nontraditional approach to trading currency options. What is our goal here? What kind of information do we need? Can we diversify in our program?

Our goal is to make money using currency options irrespective of currency direction↑↓. This trading is not like forex wherein currencies move faster on the news ↓↑ same hour and same day. You may not have time to adjust your positions or you are not there at your computer. Currencies do not move in one direction on a given day or in a week. Just look at the chart patterns if every one reads the same charts why can’t everyone make money? Its’ like the analysts buy two, hold one and sell two. what would you do?

With currency options trading your profits are limited and your risk is also controlled. If you can protect your capital and decrease your losses you can come back to make money.

Currencies tend to move on the news of geo political events. There are different types of trading programs out there in the market based on event driven, trend based, employment numbers, Federal Reserve announcements, FOMC and European central bank statements etc.

Chart patterns and analyst predictions are looked at too. These are all good to look at them. You can read them to keep in mind what direction a particular currency is going. The patterns may not reveal everything. You can lose all your money between support and resistance levels (too early or too late).

You will never be able to calculate reasonable value of the option premium and be able to execute it at correct price at the main street level. You can only buy or sell at bid or ask price that shows up on the monitor. That’s ok with me and you can still make money with that price.

In this nontraditional approach the trading is based on the movement of the underlying currency and is not based on trend, charts, reports and statements.

The unique characteristics of the currency options make it possible to trade in this way. Unlike equity options here there are no dividend plays, unexpected mergers or the small print in the prospectus that you never read. You don’t have to worry about stock market going up or down.

This trading was not possible five or ten years ago because of the high trading costs. Now with very low commission rates it’s all possible.

There is no easy way to make money other than hard work. The money made with hard work is earning nothing at the bank with low interest rates. Every investment and trade has risk. The only way is to how we minimize it and profit with the trades and investments made. If the risk is lowered the profits can be maximized.

A lot of thought, effort, research and experience went in to create this simplified currency options trading. It all started with the idea whether I can make money in currency options without fundamental or technical analysis. I am not against having this knowledge but for making money in currency options trading it’s not a must to have this knowledge at your fingertips. We can easily adjust the currency options strike prices with the daily movement of underlying currency when necessary. All this is possible with the low commission environment of today. This was not possible a few years back. Even with all the trades and commissions I have paid, it’s still possible to make good amount of money. My trading plans will show you how to do it in the training plans section.

These trading plans are executed with good and consistent results. It’s possible to make money in a simple way without going into technical analysis or fundamentals. The currency options have unique characteristics for successful trading which I will discuss in the trading plans. The options are readjusted if and when needed.

Please use these trading plans to your advantage. How can the main street participate in this? These contracts are highly liquid, easy to trade and no third party risk. I have done it and you can too.

This is my contribution to the main street.

Why currency futures options?

With the present low interest rate environment money market rates are very low after taking inflation rates out its in a negative territory.

Even though the stock market is way up since the year 2009 the reports show that not many retail investors are participating in the boom or late to the party.

I am an options trader for the last twenty five years. I have traded the currency futures options for the last ten years.

These are exchange traded and third party risk is low to none. These are considered as section 1256 contracts for IRS taxation purposes (USA). Sixty percent long term and forty percent short term capital gains. Please verify with your certified accountant.

I have traded them with the help of charts, event driven and trend patterns, fundamental and technical analysis. Then I came across this unorthodox way of trading options without charts, trends or events. What if I trade with the movements of the currency only without worrying about trends, events and central bank announcements? I realized that the unique properties of the currency options (not possible with equity options in my opinion) made it possible to trade and make money with almost no or low risk. Risk is continuously adjusted if needed. In this I will describe and show you how to make money consistently without being tied down to the computer, no fundamental or technical analysis. Sounds ridiculous!! Isn’t it?

This is for the main street so that everyone can participate in this.

Overview of currency options trading

Currency trading is assumed to be over four trillion dollars a day and it continues to grow at a rapid pace. There is lot of money to be harvested from this as traders. Substantial profits can be made with these trading plans. When a trade crosses the country’s borders currency needs to be converted from one to the other. When cross border trading takes place and currency contracts are used to protect the value of the products. These are traded through forward contracts and currency futures etc. Currency options are part of the portfolio of asset managers and hedge funds.

Currency options are traded through many platforms. Interbank currency trading, over the counter trading and exchange traded currency options.

In this program we trade exchange traded currency options also called currency futures options. The traders act as speculators in the market and provide liquidity.

This is not Forex trading.