Options Trading Tutorial

which is the most difficult one to profit out of, stocks currencies or option trading?

i hear currencies is the risky one of the 3, if you were to invest 1000 in currencies, what can you turn that into, if you win?

Public Comments

1. Both
2. All three of them if you look at it in terms of winning, which has connotations of some kind of game. That mindset is all wrong. If you look at it in terms of ownership investing and risk then currencies have the most risk.
3. Options are a wasting asset due to time decay on the option you buy. 80% of options expire worthless.
4. For the average investor. over an extended time period, there is little doubt that it is easiest to make a profit with stocks. For a well trained investor, over a shorter time period, I believe it is easiest to make a profit with options (or a combination of options and stocks). I am sure there are others who disagree. The most difficult almost certainly depends upon the investor's knowledge and strengths. I would think that currencies would usually be most difficult because of the high leverage associated with currency trading. I do not think there is any effective way to reduce that leverage without using options, but I do not know as much about currency trading as I do about the stocks and options. Options trading can be done so many different ways it is difficult to generalize. For example, if someone sells far out of the money inexpensive options he will almost always make a small profit but every now and then will have a large loss. Someone who buys those options will almost always lose 100% of the investment, but will every now and then have a large profit. The largest I remember seeing recently was an instance where a $2,000 investment went up to over $1,000,000 in less than 24 hours. <<<if you were to invest 1000 in currencies, what can you turn that into, if you win?>>> From what I have heard, when you win it is not uncommon to have profits over 100%. However, given my limited knowledge of currency trading, do not count on that answer being correct.
5. If you compared the three, trading currencies has the lowest transaction cost--as low as $0.9 on the spread on EURUSD. This means that your position has to move less than one pip (minimum up or down move in forex) for your position to break even. As for expected return for your $1,000, it all depends on how well you trade. It is true that you can double your money trading options and foreign exchange; it is also true that 8 out of 10 people will lose money trading in these markets. Trading options and foreign exchange can present more risk to an investor as these are more speculative. This means that, if your position is not making money, you will have to take a loss at some point in time. In stocks, some people turn losing positions into long term investments. In a way, they do not lose. They just pray more often. Cheers! http://jsforex.blogspot.com Managed Accounts in Forex Trading