This is a very tough question to answer, if you want to earn profit. Trading options is a lucrative business that people have been doing for hundreds of years. Traders have made millions of dollars in this business in the past. However, forex has its own importance. In this article, we will discuss which is much better – Forex or Options.
Do Options have Advantage Over Forex?
Both forex and options have their advantages and disadvantages. However, they do have one similarity which is they are far more liquid than other commodities. Many people who trade forex trade only on forex brokers. Some are successful at trading forex but do not do options.
Many trading firms are successful at forex trading but do not do options trading. The reason is simple. Options trading requires lot of strategy and it takes lot of hard work. It does not come naturally to most of us. On the other hand, just forex com is a lot simpler than the option market. However, Options is much better in terms of advantage and profit.
Why Options is Much Profitable than Forex?
The most important reason why options are more profitable than forex is their valuation. While the forex market has to make sure it prices the currency correctly, options traders need to be aware of every single option in the market and then make the right price assumption. Options trade is very challenging for newbies and trading firms like to develop a strategy that is well tested and effective.
Once you buy options, you will need to keep the options open, and that means keeping them open through any economic or market fluctuations. Moreover, the options will expire over a period of time. So, you need to check the prices of the option every day. Options traders need to be aware of the fact that all these prices are calculated by different pricing methods, which makes their job much more difficult. Thus, they have to be highly educated and motivated to succeed in this business.
What are the benefits of trading Options over Forex?
The major advantage of trading options over forex is the time frame in which you can make the trades. You can trade forex for 15 minutes and make a profit. This is not the case for options, you can trade an option for months and still make a profit. The reason why this is so, is the time frame in which you can profit is also shorter.
You can only make money in a certain amount of time. However, this disadvantage may also have its own advantage. If the option expires worthless, you make a quick profit. With Forex, it is possible to make a lot of money if you have good trading psychology.
All the money that you make in the forex or option market is a combination of two factors – volatility and timing. In the case of forex market, if you get lucky and the price goes up after a big move, you make a good profit. However, when the price is down, you can lose a lot of money if you do not get lucky. In the case of options, the volatility is lower, but the timing is also important. You can get profit in both markets.