By Jason Ng

After spending much time explaining the differences between options trading and futures trading to beginners to derivatives trading, I think its time to touch on the similarities between options trading and futures trading. Is options trading and futures trading really that different? What are some of the similarities? Well, there are actually four main areas in which options and futures are similar.

First of all, options and futures are both derivative instruments. This means that they are both merely contracts that allows you to trade their underlying asset at certain specific prices, hence deriving their value from price movements of their underlying asset. Both options and futures are merely contracts that bind the exchange of the underlying asset at a specific price. Without an underlying asset, options and futures would not have any value for their existence at all, which is why they are known as ‘Derivative Instruments’. Options and futures both exist for the purpose of facilitating the trading of their underlying asset.

Secondly, both options and futures are leverage instruments. This means that both options trading and futures trading give you the ability to control the price movement on more of their underlying assets than your cash would usually allow. For instance, a futures contract with an initial margin requirement of 10% would allow you to control ten times the amount of its underlying asset than your cash would normally allow you to. A call option asking for $1.00 on a stock that is trading at $20 has a twenty times leverage as it allows you to control a stock worth $20 with only $1. Leverage also means that you could make more profit with options and futures on the same move on their underlying asset than you would if you bought the underlying asset with the same amount of cash. Of course, leverage cuts both ways. You could also potentially lose more than you would in options and futures trading than you would if you had simply bought the underlying asset.

Thirdly, both options and futures can be used for hedging. Hedging is one of the most important usages of derivatives. Both futures and options can be used to partially or totally hedge the directional price risk of an asset even though options are more versatile and precise as it allows for what is known as delta neutral hedging which allows a completely hedged position to still profit should the underlying asset stage a strong breakout in either direction. The hedging power of options and futures is also extremely important in reducing the downwards pressure faced by the overall market during market crisis because big funds and institutions can hedge the downside risk of their holdings using options and/or futures instead of selling their shares in order to maintain their account value. By reducing the amount of selling these big funds does, downside pressure in the overall market is partially relieved. Of course, this alone does not stop bear markets from forming when the general retail crowd (aka the ‘Herd’) starts to rush out of the market.

Fourthly, both options and futures can be used to profit in ways other than the price movement of the underlying stock itself. Futures spreads can be used to speculate in seasonal price differences between the price of futures contracts of different expiration months and options spreads can be structured to profit from time decay no matter which way the underlying asset goes. Yes, it is these options strategies and futures strategies that make derivatives trading so interesting and so rewarding for people with the knack for mathematical calculations and strategies.

So, even though options and futures are very different derivative instruments and have very different rules and trading characteristics, they are still very much the same in the above areas and you can be a more comprehensive and savvy trader or investor by understanding how to use both options and futures to your advantage.

About the Author: Jason Ng is the Founder and Chief Option Strategist of Masters ‘O’ Equity Asset Management and author of Optiontradingpedia.com and Futurestradingpedia.com. Learn more about

Options Trading

and

Futures Trading

.

Source:

isnare.com

Permanent Link:

isnare.com/?aid=543896&ca=Finances

Forex money trading involves a lot of decisions and is a mind game. You need to have the right mind set even before stepping into the trade market. Most successful traders are known to first train the mind and then enter into the market. However, the newer traders trading in the forex market do not believe in it. The results are evident, since almost 95% of traders end up loosing over a period of time.

You do not have to be brilliant academically or in the financial market if you want to achieve success in the trading markets. You could have an average intelligence level and still do really well for yourself. What decides the outcome of a trading or investment is the decision making process that most traders find difficult making. This is where traders are either successful and earn profits or fail and endure losses.

Not all traders find it easy to come to a decision, while some other find the decision making process a simple task and learn how to stick to it. Most traders, however, decide but do not stick to it in the long run. They are looking at instant success, and in the bargain could ruin their portfolio. Another important factor that influences a traders decision is how the charts in a trading market moves.

Most traders find it a pain trading even though they use automated systems that regularly tell them that their investments are earning a profit. This is because they are constantly thinking if whether the market will experience a plunge. In which case they could stand to loose their money. This could be a huge decision changing factor for traders in forex money trading. The best is to stick to a plan and if you believe in your system and your knowledge, you will not be a looser.

By Pierremojo

OmniForex is really a service that provides customers with indications as to when it is a good time for you to purchase or marketforeign currency pairs. The OmniForex Signals is a web based forex signal service that provides buy and sell info on foreign exchange forex pairs The money producing potential of the Forex signal service has caused a great buzz in the forex marketplace.I would like here to give an in depth review of the OmniForex Signals and why it’s the number forex trader’s tool, Especially for any trader serious about earning money in Foreign exchange.

OmniForex provides customers with signals that suggest the timing of forex trades. The signals are generated by a sophisticated set of computer algorithms. The user can merely stick to the directions to buy or sell a specific currency pair utilizing a forex platform.

As a method to create profits trading Forex, it is necessary to buy/sell the appropriate currency pairs at the correct time. What a trader determines as “the right time” is determined by the trader’s trading approach. It’s sensible to adopt a clearly defined investing strategy to systematize the course of action. Or else, you can under no circumstances e able todetemine when “the correct time” is. As being an outcome of the continuous and dynamic dynamics on the Forex marketplacewhether a foreign exchange is expensive or low-priced will be determined by your positions and your buying and selling tactic.

Trading methods might be very uncomplicated. For example, a trader may nicely determine to spend money on a currency pair each and every time the selling price is lower than the five previous level and sell each time the cost is greater than a certain. Traders can outline their private methods from an almost restricted array of possibilities. Traders usually alter methods early on primarily because they incur a reduction. The nature of Forex trade is such that sometime you profitand occasionally you lose. In case you make a lot more usually than invest, your gains will exceed your losses, and you can be regarded as a lucrative Forex trader. Obviously defined methods ought to consist of things like “stop loss” and “profit” parameters. These will help if/whenit is important to make an exit from your trade to prevent incurring losses.

The OmniForex signals provider provides daily signals for 18 currency pairs, as outlined below: AUD/USD, AUD/JPY, CHF/JPY, EUR/CHF, EUR/CAD, EUR/JPY, EUR/AUD, EUR/USD, EUR/GBP, GBP/CHF, GBP/USD, GBP/JPY, NZD/USD, USD/CAD, USD/CHF, USD/JPY, XAG/USD, XAU/USD

OmniForexsignals is a membership program – beyond the stated regular membership fees there are no fees to be paid in order to take advantage of the service. Consumers are welcome to try the full-featured service for an initial 3-day period of just $4.99. Following the trial period is finished, the monthly regular membership is $99.90. This cost will not include money for trading or brokerage services. You still have to get a good forex broker (like eToro etc)

It is a totally automated signaling service – it does not need you to do any of the current market analysis manually. Many of the so-called systems merely recommend techniques that you can use to time forex transactions without providing signals for specific trades

OmniForex supplies customers with signals that suggest the timing of fx trades. The signals are recognized by advanced set of pc algorithms. The consumer can merely comply with the directions to obtain or market an unique fx pair, using a forex platform.

About Company :

The OmniForexSignals service delivers highly intelligent trading solutions to Forex traders globally. Our proprietary technology increases the trading skills of our customers. After years in development, our trading signals are unmatched by other solutions in the forex markets.

The company’s headquarters is located in Tel Aviv, Israel, and is operated by a team of seasoned professionals. Support : OmniForex can be contacted using the online support system. At the moment, no phone service is offered.

About the Author: Read detailed comprehensive

OmniForex Signals Reviews

and discover how to trade forex just by clicking in combination with

Forex Trading eToro

forex platform; http://www.OmniForexSignalsReviews.com

Source:

isnare.com

Permanent Link:

isnare.com/?aid=746187&ca=Finances