2Bull Forex Blog

Currency options if you buy them offer you unlimited profits and limited risk – that’s good, but your chances of success aren’t good 90% of options expire worthless.

On the other hand, if you sell options you have a 90% chance of success and if you do it correctly, then you can build huge profits over the longer term.

Below we are going to look at a strategy that has the odds in your favor and maximizes your chances of success when selling premium.

So if the chances of success are so great why don’t more people sell options?

This can be summed up in one word – RISK

On the face of it doesn’t look good taking an unlimited risk to get a limited gain, but of course if you constantly pile up small profits by collecting premium with currency options then you can make big profits – let’s look at how to do this and keep the risk down.

Getting 90% + Odds On Your Side For Huge Gains

If you want to use a currency trading system based around options selling keep the two points below firmly in mind to get the odds even more on your side.

1. Sell Greed and buy fear.

Option premiums become high when a market is driven by greed and fear - these set ups provide you woth a chance to trade and build big profits from your forex trading signals.

So when markets skew a long way from the “fair value” you sell.

The two indicators below are great for spotting contrary trades and are explained more fully in our other articles.

This is the set up you are looking for:

Look for markets that are very bullish or bearish by checking the % bullish indicator and look for below 15% bullish and above 85% to isolate opportunities. Next, look for commercial buying of bear markets and selling of bull markets via the commitment of traders report.

Use your charts to enter and sell options behind the next level of support or resistance.

2. Get time on your side

When you are buying option premium, you want lots of time on your side when you are selling go for the opposite.

Time decay at the end of the life of an option kills it quickly, so use it to your advantage and sell options with short times to expiry.

This is not a game for amateurs

If you want to do a forex trading strategy that includes selling currency options - keep the following in mind:

The above is a simple strategy and it works and it needs courage to do – Selling options is a big boys game and you need to be well capitalized, have strict money management and be prepared to trade against the consensus and the majority of forex traders.

Trade with 90% odds of success

If you can adopt the right mindset, spot the opportunities driven by greed and fear and have the courage to trade them by selling currency options, you can trade with 90% odds of success on your side and pile up huge profits.

In recent years their has been a move away from simple chart formations to more complex forms of trading and price led indicators, but there are numerous great chart patterns to trade and here we are going to look at one of the best – the symmetrical triangle.

This is a formation is one all traders should look out for and trading it is easy and can be very profitable. Let’s take a look at it.

The symmetrical triangle usually forms during a trend as a continuation pattern - the pattern contains at least two lower highs and two higher lows.

When these points are connected together, the lines converge as they are extended and the symmetrical triangle takes shape on the forex chart and is wide at the start and narrows over time.

Why They Occur

symmetrical triangles are areas of indecision by market participants, typically the forces of supply and demand are fairly equal and in synch and a previous trend pauses.

Attempts to push higher are quickly met by selling, while dips are met by buying.

Each new lower top and higher bottom becomes more shallow than the previous giving it the shape of a sideways triangle.

Eventually the sideways pattern changes and is met with decisive buying or selling and prices breakout of the formation.

Using symmetrical triangles

1. Trend Direction

To qualify as a continuation pattern, an established trend should already exist and the trend should be at least 3 months old.

2. Validity

At least 2 points are required to form a trend line and 2 trend lines are required to form a symmetrical triangle.

4 points are required to define a formation as a symmetrical triangle. The second high (2) should be lower than the first (1) and the upper line should slope down.

The second low (2) should be higher than the first (1) and the lower line should slope up.

The longer the triangle takes to form and the more times it is tested the more valid it tends to be.

3. Duration

If the pattern is less than 3 weeks, it is normally considered to be a pennant ,so you are looking at 1 – 3 months as typical durations.

Trading the Break

Now you know what a symmetrical triangle is, its time to look at how to trade them and the breakout that will inevitably come.

1. Wait for the breakout

While most breakouts of symmetrical triangles are normally in the direction of the trend not all are – so wait for confirmation before trading.

Don’t be tempted to predict a break - wait.

2. Confirmation:

For a break to be considered valid, it should be on a closing basis only.

It is also a good idea to check that price momentum is strong using a confirming momentum indicator such as the stochastic or Relative strength index to add an additional filter.

So there you have it a quick guide to trading one of the best chart patterns – look out for them and use the above tips to trade and hopefully they will help you pile up some nice forex profits.

At present the futures market has gone far beyond rural products. It is a global market today for all kinds of commodities, including man-made goods, agricultural products, and monetary instruments such as currencies and capital bonds. When this futures market is played by some of the speculators, the real goods are not significant as there is no anticipation of delivery. Rather, it is the bond itself, which is traded, the value of that alters continually all through the day as expectations change concerning the value of the commodity itself.

The foreign exchange market (FOREX) as well has several advantages over the futures market as follows:

Liquidity – Forex trading is an actual liquid market. As the chief monetary market in the world it dwarfs the futures market on a daily basics exchange. This means that Forex trading stop orders could be carried out more simply and also with less slippage. The Forex trading is open 24 hours a day and 5 days a week. Most of the futures exchanges are open 7 hours a day only. This makes Forex trading more liquid and permits Forex traders to take benefit of trading opportunities as they happen rather than waiting for the market to open the next day.

Absolutely Commission Free – Forex trading transactions actually have no commissions. Forex Brokers can earn money by fixing their own spread the variation between what a currency could be bought at and what it could be sold at. In difference, Forex traders have to pay a commission fee or brokerage fee for every futures transaction they come in to the view.

All Instant Transaction - Because of the high quantity of trading, Forex transactions are carried out more or less instantly. This minimizes slippage and augments price for sure. Brokers in the futures market normally quote prices available at the last trade - not actually of necessity the price of your transaction.

Security - Final prices in futures are for ever a small unsure as of Forex trading market gap and slippage. The Forex is less dangerous as of built-in safeguards in the trading system.