Sunday, February 28, 2010

Differences between Forex and Options

Differences between Forex and Options
Forex Options
Largest and most liquid market in the world Liquidity depends on underlying asset & expiry date
24-hour trading action for 5.5 days a week Not 24-hour. Varying trading hours based on the exchanges
Easier to calculate stop beforehand Difficult and unreliable to place stops on underlying asset
Minimum slippage and order errors More room for slippage due to lack of liquidity
100:1 leverage on standard-sized accounts Leverage depends on the type of option transaction you want to engage in. Selling Naked Calls or Puts generally requires a huge amount of margin

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