Today I popped into my bank to pay a cheque in and there way a lady at the counter next to me trying toÂ close her ISA and withdraw her money. I wanted to tell her that she is about 2 weeks too late and if she had beenÂ able to read charts then she would have been selling her shares then. Whether it is a slowing in China or low Oil pricesÂ there is a theory that can help you spot any market top and save you thousands of pounds.
Vanilla options may complimentyour trading portfolios; liberating you from simple up and down trends and opening up an expansive hub of trading strategies to seek more opportunities and diversify risk. Here are three benefits of trading options:
Normally, traders position themselves in the market with a view on direction. They believe it will go up or down and place trades accordingly. This article explains why it’s also important to consider volatility as part of your trading portfolio.
Volatility is how much an asset, such as a currency pair, fluctuates with no regard to direction. It’s an important aspect of trading since it provides investors with an idea of potential profit or risk. Through analyzing option prices it’s possible to see how much volatility the market are expecting. This is because an option price is not only driven by market direction, it is also driven by volatility.
The advantage of buying options is the ability to create limited risk trades and strategies without having to utilize a stop-loss order, hence you avoid stop-outs (as long your MT4 account equity supports the option buy price). Furthermore, you risk is limited but your profit is unlimited.