Comparison between Options and Forex
Posted by longgone on November 5th, 2019
Forex, an acronym of Foreign Exchange is the trading or exchange of one country’s currency for another country’s currency. Money can be made in Forex when a trader makes a correct prediction as to how one currency will move in relation to another. Options trading allow the trader to sell or buy options on large amounts of futures, stocks etc. that he feels will either move up or down in value over a certain period of time. At the same time as with Forex trading, the trader can leverage his buying power to handle more futures or stock for instance, than he could have in general. However here is the comparison of the main differences between options trading and Forex.
In comparison to options trading, an advantage a trader has with the Forex currency trading system is his ability to trade twenty-four hours a day and five days a week if he wishes. The Foreign exchange market being opened for a longer period than any other market, a trader can achieve his goal of making double digit gains in the market as he has unlimited time every week to conduct those trades. Moreover with Forex trading, whenever there is some big event occurring around the world, a trader can be one of the first to take benefit of the situation. He need not have to wait for the market to open in the morning like one would if he was trading options. One can also trade from his computer instantly, all hours of the day and night.
Using the Forex currency trading system, the trader receives rapid trade executions. Unlike options or any other markets, there is no delay in the execution of trades with Forex trading system. Instead of speculating which price a trader can get his order filled, his order gets filled at the best possible price. Surely his order won’t slip as it can with options. In comparison to options trading, there is a lot more liquidity to assist with ‘slippage’ in Forex trading.
Unlike options trading, Forex trading certainly has the benefit of being more liquid. There is apparently no comparison to Forex market with the average daily volume reaching close to two trillion. The liquidity in Forex currency trading far exceeds that in the options markets. This implies that when it comes to trading, Forex trades will be filled more easily than options trades. With this pace, it means more profit potential. Combining this with immediate trade execution in Forex trading, a trader will have the ability to make a lot of trades rapidly.
In comparison to playing options, online Forex trading provides trader with much greater leverage. Though with options, a trader can also control call and put options in a way to greatly increase his leverage. Leverage can be of great importance if a trader knows what a currency is going to do. With Forex, there is a great profit potential if a trader makes the right move than to less typically in options.
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About the Authorlonggone
Joined: November 5th, 2019
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