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Saturday, March 7, 2009

The Forex Tracer and FAPS

Forex Tracer and FAPS are two of the most widely held, reliable and top forex robots used in the currency exchange industry. These robots can both trade in autopilot and has the ability to perform better on a live forex market. This is absolutely the reason why a lot of traders opt for these two systems in their trade.

As an experienced trader, it is indeed a requisite to try and test other kinds of trading software in the market to see for your own what specific trading robot provides the most profit. In my study, I find the forex tracer as an excellent system in trading on autopilot. With its user friendly interface and easy to follow steps, I find myself testing the demo account and in a weeks time, I am doing live trade. In this very same week, it paved way to a whopping $5000 dollars! Not bad for a beginner user and not to mention on a complete autopilot.

One of forex tracer's admired features is its ability to trade even without constant monitoring. A user can go to sleep or go somewhere else with the autopilot doing its job. This system has been created through mathematical calculations and estimations in getting forex signals. It generates a careful study of the entire market and does the trade based on what it is programmed. This has been proven efficient and has given a lot of profitable trades to traders.

Conversely, the FAPS or the Forex Autopilot System has seemingly inferior performance with that of the forex tracer. FAPS is a bit irresponsive and does not have the stop-loss action which is considered a critical factor any autopilot system should possess.

Forex Tracer and FAPS both played as a well programmed and developed forex robots only that the former is more reliable and responsive whereas the latter might need some more improvement and flexibility.

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I made over 900 dollars a day with one of the softwares listed on that site. Just Imagine if you purchase a couple of profitable softwares!

You have to be very careful when purchasing a software though. Some of the softwares just sit around and never make you any money. If you want to make thousands every week with forex I suggest you take a look at http://forextradingreview.info

Article Source: http://EzineArticles.com/?expert=Freddy_Jones

Forex Trading - Emotions and Decision Making Don't Mix

Staying away from emotional decisions when trading in the Forex market is very important. It is best to act upon a well thought out strategy that you have had time to test and perfect. Making decisions upon your natural instinct just does not work with Forex trading. It could cost you lots of money that you do not want to risk.

Since the Forex market is so changeable and fluctuating, traders tend to get emotional. A good way to avoid this is to have a method and plan chosen beforehand, and then stick to it, even though at the moment it seems better to go with a different, last-minute decision. In order to succeed in the Forex market, you have to learn some key factors: analysis and perseverance.

Systems Can Work For You

A word of advice from experienced traders is to create a system and act on it no matter what happens. Your system should include the following things: what to buy, when to buy, when to trade, and what to trade. If you stick to your strategy, your profits will normally increase.

A system that is founded in technical analysis of the market trends will be the backbone of your success in Forex trading. It will be the best tool you can use. Many traders will tell you that when their system and their emotional instincts clash, the system is almost invariable right.

A system that is mechanically perfected and thought through will eradicate emotion and vulnerability from your trading. In order to work smoothly and safely, your system must have these four things:

~ When you should obtain a currency

~ When you should trade currencies and which to trade to

~ What conditions can influence that decision

~ And how you can trade out of a currency

The other element to solid, successful trading is perseverance. The Forex market fluctuates - it rises and falls in patterns that are predictable to technical analysts. It never will just move smoothly and flawlessly. It will always have both highs and lows. It is in these times of instability that rash decisions can hurt you.

Plan Your Trade And Trade Your Plan

If a currency that you are trading suddenly takes a dive down, your natural reaction is to panic, cut your losses, and run. Despite the fact that your system says to be patient, you think it would be smarter to ditch it all now. In the same way, it is easy to hurriedly buy up a lot of a certain currency that is rising in value and popularity on a whim.

Everyone will be buying up this currency and soon you will find yourself outdone. That is why it is crucial to have a good system and stick to it, despite any fads and phases of the market. If you refrain from impetuous and emotional decisions and choices in the Forex market, you will become a better trader and find that it is easier than you expected it. You will risk less money and inevitably gain more.

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Article Source: http://EzineArticles.com/?expert=Ferris_Malone

Forex Options Market Overview

The forex options market started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an "interbank" market. However, with the plethora of real-time financial data and forex option trading software available to most investors through the internet, today's forex option market now includes an increasingly large number of individuals and corporations who are speculating and/or hedging foreign currency exposure via telephone or online forex trading platforms.

Forex option trading has emerged as an alternative investment vehicle for many traders and investors. As an investment tool, forex option trading provides both large and small investors with greater flexibility when determining the appropriate forex trading and hedging strategies to implement.

Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platforms.

Forex Option Defined - A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option "premium."

The Forex Option Buyer - The buyer, or holder, of a foreign currency option has the choice to either sell the foreign currency option contract prior to expiration, or he or she can choose to hold the foreign currency options contract until expiration and exercise his or her right to take a position in the underlying spot foreign currency. The act of exercising the foreign currency option and taking the subsequent underlying position in the foreign currency spot market is known as "assignment" or being "assigned" a spot position.

The only initial financial obligation of the foreign currency option buyer is to pay the premium to the seller up front when the foreign currency option is initially purchased. Once the premium is paid, the foreign currency option holder has no other financial obligation (no margin is required) until the foreign currency option is either offset or expires.

On the expiration date, the call buyer can exercise his or her right to buy the underlying foreign currency spot position at the foreign currency option's strike price, and a put holder can exercise his or her right to sell the underlying foreign currency spot position at the foreign currency option's strike price. Most foreign currency options are not exercised by the buyer, but instead are offset in the market before expiration.

Foreign currency options expires worthless if, at the time the foreign currency option expires, the strike price is "out-of-the-money." In simplest terms, a foreign currency option is "out-of-the-money" if the underlying foreign currency spot price is lower than a foreign currency call option's strike price, or the underlying foreign currency spot price is higher than a put option's strike price. Once a foreign currency option has expired worthless, the foreign currency option contract itself expires and neither the buyer nor the seller have any further obligation to the other party.

The Forex Option Seller - The foreign currency option seller may also be called the "writer" or "grantor" of a foreign currency option contract. The seller of a foreign currency option is contractually obligated to take the opposite underlying foreign currency spot position if the buyer exercises his right. In return for the premium paid by the buyer, the seller assumes the risk of taking a possible adverse position at a later point in time in the foreign currency spot market.

Initially, the foreign currency option seller collects the premium paid by the foreign currency option buyer (the buyer's funds will immediately be transferred into the seller's foreign currency trading account). The foreign currency option seller must have the funds in his or her account to cover the initial margin requirement. If the markets move in a favorable direction for the seller, the seller will not have to post any more funds for his foreign currency options other than the initial margin requirement. However, if the markets move in an unfavorable direction for the foreign currency options seller, the seller may have to post additional funds to his or her foreign currency trading account to keep the balance in the foreign currency trading account above the maintenance margin requirement.

Just like the buyer, the foreign currency option seller has the choice to either offset (buy back) the foreign currency option contract in the options market prior to expiration, or the seller can choose to hold the foreign currency option contract until expiration. If the foreign currency options seller holds the contract until expiration, one of two scenarios will occur: (1) the seller will take the opposite underlying foreign currency spot position if the buyer exercises the option or (2) the seller will simply let the foreign currency option expire worthless (keeping the entire premium) if the strike price is out-of-the-money.

Please note that "puts" and "calls" are separate foreign currency options contracts and are NOT the opposite side of the same transaction. For every put buyer there is a put seller, and for every call buyer there is a call seller. The foreign currency options buyer pays a premium to the foreign currency options seller in every option transaction.

Forex Call Option - A foreign exchange call option gives the foreign exchange options buyer the right, but not the obligation, to purchase a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."

Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.

The Forex Put Option - A foreign exchange put option gives the foreign exchange options buyer the right, but not the obligation, to sell a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."

Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.

Plain Vanilla Forex Options - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic forex option contracts that are traded through an over-the-counter (OTC) forex options dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or a forex put option contract.

Exotic Forex Options - To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.

Intrinsic & Extrinsic Value - The price of an FX option is calculated into two separate parts, the intrinsic value and the extrinsic (time) value.

The intrinsic value of an FX option is defined as the difference between the strike price and the underlying FX spot contract rate (American Style Options) or the FX forward rate (European Style Options). The intrinsic value represents the actual value of the FX option if exercised. Please note that the intrinsic value must be zero (0) or above - if an FX option has no intrinsic value, then the FX option is simply referred to as having no (or zero) intrinsic value (the intrinsic value is never represented as a negative number). An FX option with no intrinsic value is considered "out-of-the-money," an FX option having intrinsic value is considered "in-the-money," and an FX option with a strike price at, or very close to, the underlying FX spot rate is considered "at-the-money."

The extrinsic value of an FX option is commonly referred to as the "time" value and is defined as the value of an FX option beyond the intrinsic value. A number of factors contribute to the calculation of the extrinsic value including, but not limited to, the volatility of the two spot currencies involved, the time left until expiration, the riskless interest rate of both currencies, the spot price of both currencies and the strike price of the FX option. It is important to note that the extrinsic value of FX options erodes as its expiration nears. An FX option with 60 days left to expiration will be worth more than the same FX option that has only 30 days left to expiration. Because there is more time for the underlying FX spot price to possibly move in a favorable direction, FX options sellers demand (and FX options buyers are willing to pay) a larger premium for the extra amount of time.

Volatility - Volatility is considered the most important factor when pricing forex options and it measures movements in the price of the underlying. High volatility increases the probability that the forex option could expire in-the-money and increases the risk to the forex option seller who, in turn, can demand a larger premium. An increase in volatility causes an increase in the price of both call and put options.

Delta - The delta of a forex option is defined as the change in price of a forex option relative to a change in the underlying forex spot rate. A change in a forex option's delta can be influenced by a change in the underlying forex spot rate, a change in volatility, a change in the riskless interest rate of the underlying spot currencies or simply by the passage of time (nearing of the expiration date).

The delta must always be calculated in a range of zero to one (0-1.0). Generally, the delta of a deep out-of-the-money forex option will be closer to zero, the delta of an at-the-money forex option will be near .5 (the probability of exercise is near 50%) and the delta of deep in-the-money forex options will be closer to 1.0. In simplest terms, the closer a forex option's strike price is relative to the underlying spot forex rate, the higher the delta because it is more sensitive to a change in the underlying rate.

John Nobile - Senior Account Executive
CFOS/FX - Online Forex Spot and Options Brokerage

Article Source: http://EzineArticles.com/?expert=John_Nobile