Hello Traders, Since, this question is being asked in options subforum, I expected the answers are going to be biased. However, those who have traded options and forex, why did you choose one over the other?
Let's fix a definition of Forex to OTC Forex and not Futures on Foreign Exchange. Foreign exchange futures are very safe and most certainly not a scam. 1. Forex brokers are shady. Even the best ones are questionable. 2. Extremely high leverage with low initial deposits signals bucket shop warning signs. 3. The interbank market is not connected, liquidity can become an issue, and you're getting pushed around by banks swinging huge lines. 4. On (3) the Forex market is unregulated. Trading unregulated instruments is a bad, bad, bad idea. The SEC and FINRA are there to protect you from brokers taking advantage of you. 5. Non-standard contract sizes. The only benefits to the market are low entry cost, low margin, and high leverage. A lot of people start in Forex because "I can just trade $100, no big deal" and they blow out multiple thousands not learning anything. Don't believe me that Forex is a giant scam? Here, here, and here. Just assume you're handing your money to slimy bankers if you play the game. Unregulated brokers front-run you, and do a bunch of other shady things to guarantee their side.The spreads can get nuts on a dollar adjusted basis. Of course this is going to ruffle the feathers of some of the non-US people here who are allowed to play on the unregulated crap shoot Forex is. They're going to come in saying I'm nuts and they make TONS of money in Forex. In general, aside from a few select brokers (Oanda being one), it's difficult to play in Forex in the US because majority of good brokers require an institutional account. This is by design. OTC Forex is an institutional trader's game. Retails need not apply. Unless of course you want to be liquidity fodder for the big guys. Options (non-nadex binary) really don't have any of these problems. Besides the fact they also bring in novices that trade deep OTM calls and puts for huge gains, there are more tactical ways to use them. You should start with an absolute minimum of $5,000 ($10,000 is probably closer to what you want) in order to keep your per-trade risk levels down. The option market is heavily regulated so you don't get massive rigging scams (at least...not as often). Leverage is good. Just about the only problem is you have to learn the instrument, which has many complicated sensitivities you need to be aware of before placing a trade. If you wanted to you could even trade options on foreign exchange via futures options on the euro or whatever currency you want! Options are very sophisticated. You can do almost anything with them. Since options are traded on a linked exchange, liquidity is generally never an issue - liquidity providers stand ready at all times to keep the markets going. You have a far higher probability of success trading options well than you will ever get in Forex.
Fx with equities. (kinda out of topic) The way i see it, one of the major reasons, for retailers, being in disadvantage, in fx essentially : (most welcome, to correct me) Like with priority, for high volume, comes the question, of how many , types of choices, one can make, when choosing two categories. There is, ,,that many'', of fx currency pairs to choose from , & there is that many - of equities to choose from. One thousand, seven hundred, seventy one, with volume more than 500k/per day. Even with volume of 1 000 000/ per day, you got more than 1 100 stocks to choose from, when it comes, to significant levels. Even being impatient, (best traders know, how to do nothing) would protect one ( in some amount of percentage), when in equities, in
I agree with the majority of your post except this portion. Also, TDA/ThinkorSwim offers spot forex, I traded with them for a long time and didn't have any issues
There are some similarities: Option net buyers = FX trend followers/breakout traders: few big wins here and there to keep their hopes up but 98% gradually drain their accounts, even with "good" money management Option sellers = FX Martingale type traders. Unrealistic equity curves, seemingly can't lose until a big move bankrupts them. Picking up pennies in front of a train...
Thanks for your insights! 1) Which exchange do you recommend trading options on currency? PHLX? CME? FiNEX? ISE? ETFs? Other? 2) Which broker that allows trading options on currency thru your recommended exchange?
I know a few very sophisticated types who do...but they've had a huge learning curve and do very complex hedged trades. Of course others "make money" for a while in certain markets...but not long term. I believe only a tiny handful can survive multiple black swans and several market regime changes.
Do you have real data, or know folks who are the exception to your statement, either on ET or outside of ET? I am not challenging your statement, just curious since I trade options and am relatively new, a newbie.
I started a private thread with you. It has a few links. I guess that's what you have to do now...no more PMs?