Traders: Which of these is a better market to play & trade — Currencies, Options on Equities, or Commodities
Friday, May 29th, 2009 at
2:28 am
John S. asked:
As a personal investor, I’ve dealt more with options and commodities but have recently been looking at currencies & foreign exchange. What I don’t like about options is that they are a “wasting asset” that can expire worthless if not exercised whereas with commodities and foreign exchange, you have a position in an asset that won’t automatically expire.
As a personal investor, I’ve dealt more with options and commodities but have recently been looking at currencies & foreign exchange. What I don’t like about options is that they are a “wasting asset” that can expire worthless if not exercised whereas with commodities and foreign exchange, you have a position in an asset that won’t automatically expire.
It is interesting that with foreign exchange, you can trade on margin at rates of 100 to 1 whereas with pure equities, it is usually no more than 4 to 1.
If you are an experienced investor or financial advisor, I would appreciate hearing your perspective as to the pros and cons of trading in these three markets, i.e. FX, options, and commodities.
Tagged with: Commodities • Fx Options • Personal Investor
Filed under: Commodity Trading
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Its just what you feel more comfortable with. i would prefer to trade FTSE & UK equity options (or CFDs) because that what I know best.
Yes, FX leverage is higher because currencies don’t move as quickly in percentage terms.
You could sell options. Then the “wasting asset” works in your favor.
Both commodities and FX take more attention. Options you can buy one 5 months out and then ignore for four months and not get hurt too bad.
If you are just playing, then invest in any of them, just be willing to lose all of your money. If you have the time to monitor your investments all day like a professional, then any of them are fine, just concentrate on one. If you do not have the time to constantly invest and research your investments, then just let someone else do it for you. You will be at a severe disadvantage to the professionals and this is exactly why the hedge funds make millions. It is like playing cards against a pro in Las Vegas.
BTW, if you do not monitor your commodities, you might be build a pen in your back yard to take your like stock future that has matured.
take a look
I have been trading the Forex for 4 years and I can tell you from personal experience that it can be risky and also very rewarding.
The main thing is you need to understand the elements of trading in the market and get proper training and learn a system otherwise you will definitly just lose all your money.
I finally figured it out and help others to figure it out so they don’t have to go through the same painful learning curve I did.
If you understand what you are doing and why it can be simple and fun.
With some brokers will actually even give you up to 400 to 1 leverage.
It does take a little time to learn how to trade properly that is why having a mentor can be invaluable.
Hope that helps!
Wade
forex trading is a lot riskier but if you are a high risk taker and have some funds to play with it is also highly rewarding. one major advantage of trading forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). the forex market is so liquid that there are always buyers and sellers to trade with. the liquidity of this market, especially that of the major currencies, helps ensure price stability and low spreads. and since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. the fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis.
check your options on the site below. if you wish to trade with them, they will provide you with a personal Account Service manager with whom you can speak LIVE through any communication accessible to you. and with no software to download, you can trade immediately anywhere in the world as long as there is internet connection, of course.
I like the choices you provide.
Currencies are highly volatile, but usually trade within a predictable range, which minimizes risk to a point. The amount of margin you are willing to take on can increase both the risk and potential reward. The lack of commissions can be a plus, but the lack of assistance can be a minus.
Options are less risky, but you must balance yourself here. The price you pay is directly tied to the possibility that you will be able to exercise your option in the future. You are able to limit your risk to the price of the options you purchase, but you will likely pay commissions, which can keep you out of the money, even on a profitable trade.
Commodities are one of the fastest ways to lose money consistently. Commissions can be quite high with these, but patience can work to your advantage, if you are not just looking to make a quick strike.
Any of these choices can cause you to lose all of your money. For that reason, I would not recommend that you enter into any of these arenas unless and until you have the rest of your financial house in order. Be debt free, with adequate savings for emergencies, as well as your college funds and retirement funds in place. If you have an extra six figures lying around the house after that, then go for it.
Personally, I prefer a lower risk approach that does not require my constant attention. Having lost $60K in commodities over four months several years ago kind of soured me on high-risk investments. I’ve since learned how to make a large income from my efforts, and I let my money grow at a reasonable pace, sufficient to fund my future.
Good luck!