Forex Exotic Options Basic Strategy

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adrianallen99

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Im working on a basic Strategy for trading Exotic options in Forex, if anyone is interested in me posting my trades and my reasons for placing the trade then I will.

Im not recommending you place these trades it is just trades that I see as looking good.

It will involve 1-3 trades per week on a small selection of currencies. Trades will be placed on Wednesday and Expire on Friday.
 
Go for it adrian. I for one would be interested although I don't trade forex at the moment. How about posting the payoff diagrams?
 
adrianallen99 said:
Im working on a basic Strategy for trading Exotic options in Forex, if anyone is interested in me posting my trades and my reasons for placing the trade then I will.

Im not recommending you place these trades it is just trades that I see as looking good.

It will involve 1-3 trades per week on a small selection of currencies. Trades will be placed on Wednesday and Expire on Friday.
Click to expand...

Do you mean exotic pairs or exotic options i.e quadruple barriers, ratchets??
either way go for it.....
What stylye of trading are u using? relative value? trading vol? what u gonna do...tell us also we can understand ur trades before u start to post them....
maybe we can all muck in and create a virtual 'paper' hedge fund......the markets are so dead at the moment
 
Robertral said:
Do you mean exotic pairs or exotic options i.e quadruple barriers, ratchets??
either way go for it.....
What stylye of trading are u using? relative value? trading vol? what u gonna do...tell us also we can understand ur trades before u start to post them....
Click to expand...

I mean exotic options, but starting off with the simple options, such as no touch, one touch, barriers, etc..

http://www.refcospot.com/spot-products.htm.

I am going to concentrate on the following pairs.
USD/JPY, EUR/USD, GBP/USD, AUD/USD, EUR/JPY, EUR/GBP

On Wednesday I will pick at least 1 currency, choose the type of option and the barrier level. To do this I wil use the Support and Resistence levels and then look for some TA patterns to give me an idea of the direction it is likely to be heading in. I also may use some of the more unusual indicators such as TD Sequential.
 
Part of my reasoning for doing this, is to try and make me a bit more disciplined. As I have limited time at the moment I have to reduce the amount of trading I can do. I have a habit of over trading, especially after a good run, so if I post and start a discussion round some of my trades, perhaps I will avoid doing it.

For simplicity I will assume ever trade has a £100 payout, the premium will vary.
 
I closed my no touch option on AUD/USD for pretty much full payout after NFP results came out. I didn't post it, because basically I forgot about non-farm payroll when I purchased the option and basically was a mistake. I live and learn and hopefully wont make the same mistake again.

The option details are as follows
AUD/USD
barrier: 0.6980
expires on: 06/08/04 (2/3 Days)
premium: £46
payout: £100

I felt that AUD/USD had good support at this level. It continued to show strength above this level and I sold for almost full payout at 1:30pm. I haven't gone into too much details as it was a bit of a gamble holding through NFP.

At some point on monday I will post my thoughts on the 6 currencies pairs and possible options that I will be looking to open on wednesday.
 
I am watching the following currencies for my trades on Wednesday
AUD/USD, EUR/USD & GBP/USD

EUR/USD S:1.2250 R:1.2290
GBP/USD S:1.8400 R:1.8465
AUD/USD S:0.7110 R:0.7180

AUD/USD: I will be watching to see how the current resistence/support levels holds up, with a view to placing another no touch bet. If I was feeling really lucky I might place a double no touch.

EUR/USD: Not looking for any major movement this week, so would be looking at trying to predict its range. A barrier range bet may offer the best payout.

GBP/USD: Would look for this to trade lower and a digital option could be the order of the day on Wednesday.

Thats my thoughts so far, Ive not had a chance to look at what figures/news is due out this week and obviously this could affect my strategy. Any thoughts on the above are welcome and don't go risking your hard on cash on the above currencies as they aren't recommendations, just what Im currently looking at.
 
2 trades this week are. As usual the news/figures out on Thursday and Friday could impact the success of these trades.

No Touch - AUD/USD
The option details are as follows
AUD/USD
barrier: 0.7080
expires on: 13/08/04 (2/3 Days)
premium: £47
payout: £100

Double No Touch (Barrier Range) - GBP/USD
The option details are as follows
GBP/USD
barrier 1: 1.8040
barrier 2: 1.8440
expires on: 13/08/04 (2/3 Days)
premium: £61
payout: £100
 
Based on your premiums you need to have a win:lose ration of more than 2:1. Do you think this is achievable? Most people talk about 50:50 ratios and a mixture of money management and big wins to see through. Just curious on your thoughts as this is what put me off these kind of vehicles.
 
smullaney said:
Based on your premiums you need to have a win:lose ration of more than 2:1. Do you think this is achievable? Most people talk about 50:50 ratios and a mixture of money management and big wins to see through. Just curious on your thoughts as this is what put me off these kind of vehicles.
Click to expand...

You should get high leverage from these products, so it is achievable....

Also this thread is boring me!!!!!!!!!
 
Hey RR - I can spice it up for you....

No mention of the skewed probability of buying as opposed to selling premium...


Just kidding :devilish: :devilish: :devilish:
 
Nope, but no one actually seemed interested so I gave up posting. My Success rate seems to range from about 65-75%. I changed my strategy slightly as well and moved the restriction of trading on a particular day as I found it could if big news was coming out on Friday it could become a little too close for comfort. If that was the case I would trade tuesday with a thursday expiry.
 
Good to know, I experimented with similar seems to work out over time about 55% - 65% havent tried 2/3 day ones yet. Mine where mainly next day expireys (sorry about spelling)
 
adrianallen99 said:
Nope, but no one actually seemed interested so I gave up posting. My Success rate seems to range from about 65-75%. I changed my strategy slightly as well and moved the restriction of trading on a particular day as I found it could if big news was coming out on Friday it could become a little too close for comfort. If that was the case I would trade tuesday with a thursday expiry.
Click to expand...

I would be interested!!!
 
I trade fairly large size barriers and digitals [$1 - $5mm debits] with JPM > DB and SG. Primarily barrier risk-reversals, spot / barriers, analog[knocks] / barriers, and digital / barrier hybrids. You may want to take a look at trading touch-markets with OANDA, as their markets are much tighter than FXCM and BOM... and offer discrete expirations instead of arbitrary NY or London cuts.

Good luck.
 
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