Reasons why we work with options.
The markets of all financial instruments, in particular Forex, are very volatile. They go up and down. And that’s good. If the value of an instrument – a stock or a currency pair – stood still, then you must agree that no one would make a profit from speculative transactions.
But all these movements of the instrument “up and down” have the “other side of the coin” – losses for the trader or investor if he incorrectly predicted the market movement, be it a short-term, medium-term or long-term movement.
Let’s think about it, how often does a trader make mistakes?
At least thirty percent of the opening of a position. By “error” we mean one of the following factors leading to this error, or a combination of these factors:
- Inexperience of the trader 2. Confusion when analyzing charts 3. Wishful thinking 4. Ill-conceived or incorrect tactics 5. A truly sudden change in the market situation. 6,7,8, and much more. The list is extensive.
Even we, who have been present on the market for more than 25 years, have seen everything and everyone, do a scrupulous analysis and develop a detailed scenario for each opening of a position with mandatory limitation of losses and no less mandatory profit taking “not to choke on greed”)) in at least 25% of cases we are wrong, which, however, does not prevent us and our clients from annually ending the financial year with a profitability of 20-35 percent.
But 85 percent of people, traders and investors who come to the exchange lose their money within a week to six months.
We have already outlined the reasons in this article and in previous ones. The main ones: inexperience and greed. Excessive greed.
Most brokerage companies allow their clients to trade with a margin leverage of 1:100 or even 1:200.
Most clients come to these brokerages with capital ranging from $50 to $500.
A person comes with 200 dollars and opens a position for 20k (leverage 1:100) dollars EURUSD, let’s assume at the rate of 1.0850. The position is “bullish”, waiting for the Euro to strengthen. If you guessed right, great. He moderated his greed, closed the position at 1.0920, added $200 to his trading capital, and another $140.00 in profit.
And if it’s the other way around, what happens sooner or later? Minus $140.0, and this is even if you stopped in time, without waiting for a message from the broker about a “margin call” (forced closure of a position due to the exhaustion of money to support this position on the trading account).
Markets, especially in our current difficult times, are structured in such a way that a currency pair can easily run up these 75 points, which we are talking about as profit, in ten minutes, and then return down within an hour. But if it’s for profit, it’s great, in case of a correctly opened position up (bulls). What if this couple first went down, taking with them all this meager capital of the unfortunate trader’s trading account, left him with nothing, and then came back? And all these events happened in an hour?
It is difficult to convey the psychological state of a trader. Devastation and despair, covered with feigned bravado: “nothing, next time everything will be my way.” I will “make” this market.”
Yes, maybe he will “make” this market once or twice, but sooner or later he will again deposit new money into the trading account. The market, like the casino, will “make” our trader.
Our company provides not only recommendations on opening trading positions, limiting losses and reasonable profit taking in the foreign exchange and other markets, but also CAPITAL MANAGEMENT.
We strongly recommend that all our clients have at least two and a half thousand dollars in their trading account, and preferably five thousand. All of our “five-thousanders” increased the capital of their trading account by 41.4% in 2022, earning 2070.00 USD over this past difficult year.
Why is the minimum 2.5 thousand dollars, and why is 5k dollars better? Because there may be (maybe, but not necessarily) several unprofitable transactions, the capital of the trading account will “sag.”
For example, for all account holders of 5.0-10.0k dollars, we recommend trading on the Forex spot with a position not exceeding 100k, that is, for accounts with physical money 5.0k 1:20, and for accounts with physical money 10k 1:10.
But even with this small leverage, we very often recommend opening half of the normal position. Here is an example: https://t.me/carefulinvest1/444
We know the market very well. And we know the consequences of excessive greed and carelessness. Therefore, less is better, but better. Tautology, but excuse me)).
We use OPTIONS for even more stable and less risky work in the market.
YES, options trading is less profitable than spot trading.
YES, options trading can also be unprofitable.
BUT options trading is more reliable and calm. We, our management company, just like you, the investor, did not come to the market to “tickle” our nerves, get an adrenaline rush and sit at the screen, watching the multi-colored red and green lights of quotes. You, a person engaged in some kind of your main business or professional activity, need the main thing: to get your percentage of profit on the funds invested in trading, “without letting your money out of your own hands.” You want to earn at least 20% per annum on yours, whether it’s $5K or $10 million. We – our company “Careful Investments – Carefulinvest” are needed by you solely for this purpose, and not in order to “drink tea and coffee with us”))).
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