FX Options are a new financial trading instrument from IQOption available to both, EU and worldwide retail traders.
Basically, FX Options are a combination of binary options and forex.
As with all financial trading instruments, there are upsides and downsides but the easiest way to explain it is as follows: While with binary options you already know how much pre-determined profit you can make in a deal, FX options can instead boast unlimited profit, while you can only lose as much as you have invested in such deal. This feature, if well thought, can turn into a reasonable trading strategy where you are not "forced" to win over 50% of your deals to make a profit. As simple as that.
HOW TO TRADE FX OPTIONS?
Set-up the amount - This is the first thing you need to specify in order to invest.
Choose the strike price - This works as a threshold that the price should reach in order for you to win. When the strike price is not met, the invested amount is lost. When you consider that an option can have an expiry time as little as 30 seconds, it is possible to make hundreds of trades throughout a trading day.
Invest max. 5% – The old rule of investing max. 5% of the total funds available in your account also applies with FX Options financial trading.
Analyze the trend – Just as you would do when trading binary options and forex, you need to decide when it's best for you to enter the market and place your deal based on the visual, technical or fundamental analysis you have done.
Open the deal – According to the above points, you are now ready to open the deal by hitting either the "HIGHER" if you believe the price/value will go up and "LOWER" if you think the opposite is going to happen.
When the expiration time will be reached, the deal will be closed automatically. Therefore, if at this stage the price will have gone above the strike price and your choice was for "Higher" you will gain, and lose if was it will be "Lower". Vice versa, in order to gain by choosing “Lower” the price at the expiration should be below the strike price you have specified, otherwise the invested amount will be lost. To be taken into consideration is the fact that options have a price of their own that will also be taken into account when the profitability of the deal is calculated.
Basically, FX options are traded according to the same laws and principles as regular options. Follow the trend, cut losses, manage your risks and, most importantly, educate yourself. You can do this with a FREE DEMO with a leading broker such as IQOption.