eToro and Currency Options Trading
You may think that all financial transactions in the forex market belong to just one big category called foreign exchange trading, but in fact, there are many different types of forex trading. In the forex market, one can trade forex options or conversely forex futures. Even in the sub category of currency options one can purchase a put option, a call option, option chains or a single payment option, just to name a few. Sounds complicated? It is, but fortunately most of today's global forex providers stick to just one kind of forex trading and that is SPOT forex trading.
What is SPOT FX?
SPOT is the acronym of "single payment option trading" and is the most common type of world currency options trading. With a regular put/call options contract, the trader buys the right, but not the obligation, to purchase or sell a certain amount of currency at a certain date. As opposed to futures trading, a currency option contract lets the trader choose whether to proceed with the purchase or to back out, whereas with a forex futures contract the trader is committed to the deal. The benefit of options trading is that it decreases the risk taken by the trader. The drawback is the premium they have to pay the broker. Many offline and online brokers offer traders a currency option sample, but you must be careful not to fall into a scam.
SPOT forex differs from this kind of currency options trading because the contract is settled immediately. Essentially, SPOT automatically converts your option to cash when your option trade is successful, giving you a payout. It is like setting a take profit order at a certain price level and receiving the cash out if and when the currency pair reaches the set price rate. It differs from over the counter currency trading because no physical commodities actually exchange hands until after the contract is closed.
Why Trade Forex Options with eToro
The first choice any fx trader has to make is where to trade. eToro is the perfect place to start trading spot forex because it offers a step by step educational program where you can learn how to trade for free. Instead of paying for an expensive trading seminar, all you have to do is sign up and take advantage of the exclusive eToro trading guides and courses. Here you can learn all about binary currency options, compare trading strategies and get an insider view at the decisions made by our top profiting traders. We enable you to master the workings of the spot forex market and practice you skills with eToro demo mode.
Sign up with eToro todayto start trading world currency options.