Forex Options – 3 Simple Tips for Big Consistent Gains

Options are a great investment tool, due to the fact they give you the advantage of limited risk and unlimited profits. Forex options can make you big profits, if you use them correctly. If you don’t, you will join the 90% of option traders who lose.

Forex traders who end up in this losing majority tend to make two critical errors.
1. They Buy Out Of The Money Options
When most traders buy options they tend to buy options that are a long way from the strike price, as their cheap and that if the strike price is reached they will make huge profits.

The big problem of course is that:

“if the level is reached” is not a certainty and is only a projected profit.

Option traders need to keep in mind that an option way out of the money is cheap for a reason and the reason is:

The odds of the option trading in the money are low.

Buying an option way out of the money is like betting on the outsider at a horse race – the outsider very rarely wins!

The way to make money in options is simple:

Buy at or in the money options, your potential reward is smaller, but your odds of success are far greater. A projected profit is just that, not money in the bank and any options trader needs to keep this point firmly in mind when trading and not get carried away with unrealistic profit targets.
2. They Don’t Get Time on Their Side
In addition to buying options to far out of the money to get cheap premiums, options traders make another fatal error:

They buy options to close to expiry.

The closer an option is to expiry, the more critical the time element is, as it will erode the options value the closer it gets to expiration.

If you want to make money from options get plenty of time on your side and buy options which are months away from expiry, rather than weeks or days.

Just as in point one, your profits will be less, but your odds of success will be far greater.

When buying forex options be realistic about targets and get plenty of time on your side, your odds of success will then increase dramatically. Options give you a big advantage, in that they allow you to ride out short term volatility and stay with the trend - WITHOUT getting stopped out by short term market volatility and are a useful tool for any forex trader.

Today, volatility is one of the major obstacles that forex traders face when implementing a successful forex trading strategy, Options can provide a good way of coping with it, but you need to (as in all trading) get the odds on your side to win longer term and the two tips above will help you do just that.

NEW! 5 X Critical Trader PDF’s & Much More Claim your FREE PDF’s and demo account and learn Forex Trading and also get: Breaking financial news, real-time market tight pip spreads, guaranteed stops, $100.00 minimum investment and 400:1 leverage - at http://www.freeforexguidesonline.com

Article Source: http://www.ArticleBiz.com

Five Tips To Turn Volatility Into Opportunity

The recent turbulence in the world and in the stock market will create unique challenges for advisors during this upcoming RRSP season. The downturn in the economy has reduced the market value of our clients’ portfolios and negative returns have created anxiety among many investors.

However, within this doom and gloom exists an opportunity to separate ourselves from our competitors. Bear markets create unique opportunities to generate additional business and to build loyalty among our existing clients. Why? Because many advisors act like investors — they hang out on sidelines when the market is down and jump in when the market is hot.

1. The following steps will help you generate additional revenue and create loyalty among your clients during bear markets or periods of volatility: Communicate with your clients. Stay in frequent contact with your clients via phone, e-mail or snail mail, especially during periods of volatility. Your clients need to be reassured of their investment decisions.

2. Filter the information you digest. The media is filled with negative bias during market downturns. Look for articles and audio materials that focus on positive components of the markets and long-term investing. There are many excellent historical charts which highlight the most profitable time to invest is following a significant market correction.

3. Stress the value-added services you provide. A qualified advisor can create a portfolio that is tailored to meet a client’s risk profile. Stress past successes and use third-party endorsements. Also find out if there are any other aspects of your client’s financial portfolio which needs repair. This is a perfect opportunity to let them know that you can quarterback their financial team and make sure that nobody drops the ball during turbulent times.

4. Take advantage of the reduced competition. With the amount of cash parked in money market funds, it appears equity investing has gone out of style. Stress to clients who have long-term perspectives that they have a unique opportunity — many equity funds have significantly reduced in value and your clients can buy these assets at a deep discount. The Dow Jones Industrials hovered around 1700 points following 1987 crash. The long term investor who weathered this storm were rewarded with very handsome profits.

Never follow the pack. Successful advisors have the foresight to see opportunity in turbulent times. They have the discipline to face their clients and preach the same principles during market downturns that they do during periods of economic expansion.

Lorne S. Marr, President of Lorne S. Marr Insurance Services Ltd. has been a practicing financial planner since 1993 having graduated from the University of Windsor with an MBA. In the year 2000 he completed the internationally recognized Certified Financial Planner designation. He is a recognized expert on Life Insurance in Toronto.