In the U.S., any worthwhile Forex broker will be registered as a Futures Commercial Merchant (FCM) with the CFTC (Commodities Futures Trading Commission). Finding one doesn’t end the need for research, it’s just the bare minimum you should require.

Since Forex trades are highly leveraged (in effect, the broker ‘lends’ an investor up to 99% of the money required to make a trade), the broker you select should be associated with a firm with deep pockets.

Forex accounts are not FDIC (Federal Deposit Insurance Corporation) insured, so you can not expect the U.S. government, or any other authority to bail out the broker firm or repay you if the market turns critically downward. Large institutions, with ample capital to withstand downturns in the market, and rapid drains on their deposits if clients withdraw en masse, are crucial to your financial peace of mind.

Beyond those fundamental basics there are many options.

Since the Forex markets trade 24 hours per day all around the world, you may want to trade after normal business hours in your home country. Whether your broker resides in the same country (usually, for language and legal reasons) or not, you want one who will pick up the phone when you call.

Forex trading has moved into the Internet age, but it is still very much a phone-based business. Getting a broker on the phone at any time 24-7 can – and often does – mean the difference between profit and a nasty loss. Sometimes, big profit or loss.

Since Forex brokers don’t work off standard commissions the way stock or bond brokers do, you need to research the firm’s spreads. Forex trading is always done in currency pairs. A spread is the difference between the bid and ask price – what the broker pays to buy versus the amount they sell a currency for.

Some brokers offer fixed spreads on some or all trades. This has the advantage of predictability. It’s a kind of fixed ‘commission’. But that might or might not suit your budget or trading style as they are normally larger than variable spreads.

All brokers will offer a “standard” account to a qualified budget proven client. Typically you have to fill out an application form that states you have adequate capital and understand the risks involved in Forex trading. Standard accounts trade currency in standard lots of 100,000 units. You can’t buy 100 euros for $150, you have to buy 100,000 euros.

Since that’s a very large investment for the average trader, brokers offer leverage. Professional traders use leverage as well, of course. In other words you put in, say 1% of the total, the broker puts up the rest. That has huge profit (or loss) potential, but it entails significant risk. So be aware of a broker’s margin call policy.

Most mainline brokers today will offer some type of ‘mini’ or starter account. Instead of trading in standard lots, they trade in smaller units, such as 10,000. This reduces your investment from, for example, $1,500 to only $150. Most clients can easily meet that minimum.

But that lower leverage requirement limits the potential for profits. That may or may not suit your investment needs. Only you can decide.

You’ll want a broker with software that provides you with the research and other trading tools you will need to be effective in Forex trading. Forex investing is much more complex and volatile than even stock or bond trading, which is already not simple when done well.

Be sure to use the trial accounts offered and make several ‘fake’ trades in order to test out the software and research available. You need real-time prices – Forex moves very fast – and lots of technical and fundamental analysis information at your fingertips.

There are websites and forums where specific brokers are discussed, but take what’s said there with a grain of salt. Just as with complaints about vendors on eBay or Amazon and other large Internet trading arenas, a few bad remarks shouldn’t ruin the reputation of honorable brokers.

Beyond all that, the factors become a little more difficult to judge. Above everything, you want to feel you trust the person on the other end of the line. They are not there to be your friend or listen to personal complaints or trade tips. But you should get the sense that they are competent, professional and ethical.

Take your time to research. After all, your decision will affect ALL your trades.

What you need to do is know how to use currency options correctly which the bulk of traders fail to appreciate.

Getting the Odds on Your Side

We are not going to go into details about how currency options work, there’s plenty of free information on the Internet – here we’re going to look at strategies to increase your odds of success.

Potential Rewards are not what they Seem

The first thing a trader needs to consider when buying an option is how much time is needed, and what strike price is a good target.

Many inexperienced currency options buyers look at the profit potential, and don’t consider the potential losses.

They buy strike prices too far out of the money, and options that are to close to expiry.

Just like the mug gambler who always backs the outsider, they lose their bet.

So, How Can You Increase the Odds of Success?

There are two points to keep in mind:

1. Time to expiry of the option

2. The strike price targeted

Firstly, you need to keep time on your side, and buy strike prices that are not to far out of the money – buy “in the money”, or “at the money” options.

Your profit potential may not be as great, but your risk will be reduced – and your chances of Success far greater.

Keep in mind your option does not just need to go your way from when you bought it – it needs to trade in the money by expiry.

For example, a trader sees the pound trading at 1.70 and buys a 1.90 call. The price goes the way they thought and reaches 1.87 – they then run out of time and the option expires worthless. This happens all the time – prices move in the right direction, but the trader makes no money.

The trader feels they were unlucky – and tries the same again.

However, keep in mind “being close” does not make you money in options trading!

To make money in options you need to buy in the money options, with plenty of time value – this will increase your odds of success dramatically.

How to Buy Currency Options in Longer Term Trends

When trading the longer-term trend, position yourself into the trend in the following way.

. Identify the long-term trend via technical analysis

. Wait for a dip in the currency to position yourself in the trend.

. Watch for dips to support – and then look for confirmation with stochastic crossovers, or other momentum tools to initiate the trade.

. A great way of buying options in the long-term trend is to look for dips to the middle of a Bollinger band to time entry. This is a good timing tool in strongly trending markets.

The above is a simple strategy, and one that can help you make big profits from currency trend following. Use options correctly, and you will have limited risk, unlimited profit potential and great odds of success.

Don’t make the mistake that most novice traders do – make sure you use time to your advantage – and keep those strikes in, or near the money, and you will create big capital gains longer term.

What you need to do is know how to use currency options correctly which the bulk of traders fail to appreciate.

Getting the Odds on Your Side

We are not going to go into details about how currency options work, there’s plenty of free information on the Internet – here we’re going to look at strategies to increase your odds of success.

Potential Rewards are not what they Seem

The first thing a trader needs to consider when buying an option is how much time is needed, and what strike price is a good target.

Many inexperienced currency options buyers look at the profit potential, and don’t consider the potential losses.

They buy strike prices too far out of the money, and options that are to close to expiry.

Just like the mug gambler who always backs the outsider, they lose their bet.

So, How Can You Increase the Odds of Success?

There are two points to keep in mind:

1. Time to expiry of the option

2. The strike price targeted

Firstly, you need to keep time on your side, and buy strike prices that are not to far out of the money – buy “in the money”, or “at the money” options.

Your profit potential may not be as great, but your risk will be reduced – and your chances of Success far greater.

Keep in mind your option does not just need to go your way from when you bought it – it needs to trade in the money by expiry.

For example, a trader sees the pound trading at 1.70 and buys a 1.90 call. The price goes the way they thought and reaches 1.87 – they then run out of time and the option expires worthless. This happens all the time – prices move in the right direction, but the trader makes no money.

The trader feels they were unlucky – and tries the same again.

However, keep in mind “being close” does not make you money in options trading!

To make money in options you need to buy in the money options, with plenty of time value – this will increase your odds of success dramatically.

How to Buy Currency Options in Longer Term Trends

When trading the longer-term trend, position yourself into the trend in the following way.

. Identify the long-term trend via technical analysis

. Wait for a dip in the currency to position yourself in the trend.

. Watch for dips to support – and then look for confirmation with stochastic crossovers, or other momentum tools to initiate the trade.

. A great way of buying options in the long-term trend is to look for dips to the middle of a Bollinger band to time entry. This is a good timing tool in strongly trending markets.

The above is a simple strategy, and one that can help you make big profits from currency trend following. Use options correctly, and you will have limited risk, unlimited profit potential and great odds of success.

Don’t make the mistake that most novice traders do – make sure you use time to your advantage – and keep those strikes in, or near the money, and you will create big capital gains longer term.