Forex Trading Vs.

Options
Forex Trading, also known as FX Trading or by many as the Foreign Currency
Exchange, is a financial market where a person can trade national currencies
in order to try and make a profit. Perhaps one feels the U.S. Dollar will get
stronger compared to the British Pound or the Euro. A strategy can be
developed to affect this trade and if the research is correct, a good profit can
be made.

Options Trading allows you to buy or sell options on large amounts of stock,
futures etc. that you feel will either go up or down in price over a certain
period of time. As with Forex Trading, you can leverage your buying power to
control more stock or futures for instance, than you could have normally.
However, there are differences between Forex and Options Trading. Many of
the differences are described below.

24 Hour Trading:

An advantage you have with the Forex Currency Trading System (Forex) as
compared to Options trading is your ability to trade 24 hours a day, five days a
week if you wish. The Forex Market is open longer than any other market. If
your goal is to make double digit gains in a market, it is great to have
unlimited time each week to make those trades. Whenever some big event
happens around the world, you can be one of the first to take advantage of the
situation with Forex Trading. You won't have to wait for a market to open in
the morning like you would if you were trading Options. You can trade from
your computer instantaneously, all hours of the day and night.

Rapid Trade Execution:

When you use the Forex Currency Trading System, you receive immediate
trade executions. There is no delay like there can be in Options or for that
matter other markets as well. And your order gets filled at the best possible
price instead of guessing which price your order might get filled. Your order
certainly won't "slip" like it can with Options. In Forex Trading, there is a lot
more liquidity to help with "slippage" than there is in Options Trading.
Liquidity:

Forex Trading has the advantage of being more liquid than any other market,
including Options Trading. With the average daily volume in the Forex Market
reaching close to 2 Trillion, there is no comparison. The liquidity in Foreign
Currency Trading (Forex) far surpasses that in the Options Market. This
means when it comes time to trade, Forex Trades will be filled much easier
than Options trades will. This speed means more potential profit. Couple this
with instantaneous trade execution in Forex Trading, and you have the ability
to make a lot of trades quickly.

No Commissions:

Forex or FX Trading is Commission Free because it is an inter-bank market

which matches buyers with sellers in an instant. There are no middleman
brokerage fees as with other markets. There is a spread between the bid and
ask price and this is where Forex trading firms make some of their profit. This
means you can save money when you trade Forex compared to Options
trading where there are commissions since you would be working with a
brokerage firm.

Greater Leverage:

Online Forex Trading can give you much greater leverage than playing
Options. However, with Options, you can also manage putt and call options in
a way to greatly increase your leverage. Leverage can be very important when
you know what a currency is going to do. You can achieve 200:1 or greater in
Forex Trades compared to less typically in Options, but it can be close. This
means with Forex, there can be substantially more potential profit if you make
the right move.

Limited Risk is Guaranteed:

Since Forex Traders must have position limits, the risk is limited since the
online capabilities of the Forex Trading system automatically initiate a margin
call when the margin amount is greater than the value of the account in
dollars. This keeps a Forex Trader from losing too much if their position goes
the other way. It is a good safety feature that is not always available in other
financial markets. And the Forex is different than Options in that with
Options, you only have a certain period of time to trade before the options
expire.

When considering the differences between Forex Trading and Options, just
keep in mind your preferred trading style and the type of risk you are willing
to take. There are definite advantages to Forex or FX Trading that may allow
you to profit greatly if you develop a good system and stay within your trading
limits. If you are ready to go, then begin investigating a good Forex firm with
whom to open a Foreign Exchange Trading Account.