Archive for January, 2009

Currency Options as Forex Strategy

Thursday, January 22nd, 2009

A steady decline in risk aversion has taken place over the last few months, such that investors once again appear willing to own riskier assets, especially in the developing world. If this continues, increasing demand for emerging market assets would probably be accompanied by currency appreciation. While there are several ways that investors could conceivably profit from this trend, there is an overlooked strategy: currency options. Specifically, some traders have begun to write “out of the money” put options- the equivalent of selling insurance to investors that wish to protect themselves from further declines in emerging market currencies. Those who specialize in currency options, however, have noticed declines in both implied volatility and the risk-reversal rate, which together suggest that such a possibility is now perceived as less likely. Regardless of whether you plan to employ such a strategy, it’s worth paying attention to currency options prices, as they represent valuable snapshots of a given currency’s perceived health. Bloomberg News reports:

Traders quote implied volatility, a measure of expected price swings, as part of setting options prices. Options are contracts granting the right to buy or sell a specific amount of a security in a given time span.

You can read more at FOREX BLOG

Introduction to Forex Trading

Thursday, January 22nd, 2009

When I started to trade forex, I had trouble finding useful information about it on the Internet. Looking back at my path toward learning practical things about trading forex, in retrospect, I still see that it was really difficult to start. Mostly I think it was due to the fact that I felt that everyone was saying and writing different things about trading forex. I didn’t know who to believe and why I should listen to those people who tried to convince others that they were successful traders. When it comes to the Internet, I am always suspicious about the source of information. Anyone can say anything. More than often articles about trading forex are written by people who are merely trying to optimize their website so they receive more traffic from Google and other search engines. Also, I imagine it is fun writing about forex as if you are a successful trader, whether you are or not. I created these series of forex articles and tutorials that provide a rare sense of clarity to help readers gain practical information about placing trades, risk management and becoming an effective trader.

After searching the Internet and browsing a few forex books in a book store, I realized that to gain any experience trading in the foreign currency exchange markets, first I had to do the difficult task of taking my time and learning everything I could about it. Now, after several years of real-world trading practice and learning, I have decided to share my knowledge of the forex-trading science with other people. I know you are searching for this information on the Internet. After all, you’ve just found my website that is dedicated to aspiring forex beginners. I also know that you are not finding the answers to your questions, I remember feeling the same way.

You can read the entire tutorial HERE