Posted by forex at 2:58 AM
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1. Open an account. Numerous on-line brokers deal in currency options, which means there is a lot of choice. Check commissions and minimum deposit requirements and ask how many days it will take to process an application. Since competition is rather fierce, many offer a limited number of free trades when opening an account, so check these special offers and take advantage of them.
2. Obtain option trading privileges. Most broker-dealers require an investor to sign additional paperwork in order to trade currency options because these financial instruments are volatile and highly risky. Tell the customer service representative of a desire to trade options and sign the paperwork, so you may start trading sooner rather than later.
3. Deposit the necessary cash that the broker-dealer mandates for options accounts. Being less liquid and more volatile than currencies, currency options require a larger cash deposit and cannot be bought 'on margin'. In other words, you can purchase $100 worth or Euros with far less than $100 cash in your account, but will need to have the full $100 on deposit if you wish to purchase $100 worth of currency options.
4. Study the market and start small. Even if you have traded currencies in the past, keep in mind that options have unique characteristics. It is a good idea to watch the market closely and understand how options prices move in response to changes in the value of the underlying currency before making actual trades. When starting, start small and do not put all eggs into one basket--diversify.