Here's a Better Way to Trade the Huge Forex Market

Traders all over the world are doing this the wrong way...

Not long ago, I had the opportunity to go to China and discuss the crackling, "always on, 24/7" foreign currency exchange (forex) market.

It's easily one of the richest, most liquid, and dynamic markets on earth.

I mean, this market sports more than $5.3 trillion in trading volume every single day. That swamps the stock and futures markets.

Depending on how you count it, it'd take about 30 days of trading on the New York Stock Exchange (NYSE) just to come close to what you see in one day of forex trading.

The gains can be mind-boggling.

Now, the conference had some very cool people, from all over the world - the kinds of folks who naturally gravitate toward this excitement and profit potential.

You bet I had a great time, but hands down, one of the biggest, most frequent questions I heard was: "Tom - you ever trade binary options on forex markets?"

I nearly bit my tongue, and here's why...

As things stand right now, binary options, or "binaries," as they're often called, are one of the worst ways to trade currencies.

At the same time, they're becoming more and more popular with traders all over the world.

That's mostly because, even though binaries are classified alongside other "exotic" options, they seem really simple compared to the "vanilla," or "American-style" options trades I recommend all time in my research services to give my readers a chance at fast double- and triple-digit gains

"Seems" is the key word when it comes to these binaries. Let me show you what's really going on - before you put any of your hard-earned wealth on the line.

And of course, I'll show you my favorite way to safely and sanely trade the incredible forex markets...

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Here's the Deal with Binary Options

Like all options, binaries are fixed contracts, but there's a really big difference. A binary option centers on this simple yes/no question: Will a certain market be above a certain price at a certain time?
Yes? Or no?

If you're convinced the answer is "yes," then you could buy the option.

If you think "no," then you'd sell the option.

Either way, one of those binary outcomes will happen; someone will win and someone will lose.

Whatever you pay is your maximum risk. You can't lose any more.

VIDEO STUNNER: Watch Tom become $4,238 richer in under a minute... then follow his simple instructions to learn how you could pocket a potential $2,918 in just one move. See it now...

You have to hold the option to expiration, and if you're right, you get the full amount you invested to be right, and your profit is the amount less the purchase price.

If you're wrong, you lose the full amount you put up.

That's really simple, right? Well, that's pretty much how binary options work.

Or so they want you to think.

It's the Purchase Price That Gets You in the End

It's helpful for us to think of a binary as an outcome, like a roll of a die that just so happens to have two sides.

Once you buy or sell a binary, you wait for the outcome. Unlike American options, you can't sell it to someone else, so there is no time value.

Either you win or lose. You know your potential winnings or your potential loss.

Even though you bet up or down, it's still a limited-reward and limited-risk outcome.

I also want you to think about the purchase price again. I like to call this the "vig," or the amount of money you must pay the binary option dealer to create the trade for you.

Does this sound familiar? Because this is very similar to a bet in Vegas.

In Vegas, just as in binaries, there's always a "small amount of money" you pay the house (or binary dealer) just to take the bet.

Here's the thing: It's a lot larger than you think when you do the math.

The average vig on binary options is eye-watering, anywhere from 5% to 10%.

That's right, 5% to 10% of every trade goes to the house, so, mathematically speaking, you have to be right 55% to 60% of the time in the long run just to break even, let alone make any kind of serious profit.

FAST: $4,238 in under a minute... $1,050 in 15 seconds... $940 in 11 seconds... $1,260 in eight seconds. These are the results of a real wealth experiment. Click to see it...

I don't like those odds at all, and I'm betting you don't, either. So let me show you my favorite way to trade the forex markets.

How to Profit from Constant Moves in Currencies

So now that we know binaries on forex markets are a classic sucker's bet, we'll look at the most efficient, risk-balanced way to trade.

You don't have to be an always-awake, usually nervous currency trader to speculate for big profits here; you can make money and sleep at night.

Just have a look at PowerShares' "CurrencyShares" exchange-traded funds (ETFs).

CurrencyShares exchange-traded products are listed on the NYSE, and they're specifically constituted to closely track the spot currency - nearly every major currency is available - against the U.S. dollar.

These ETFs track currencies, but they work just like most standard ETFs, in that you can buy and sell these in units, just like shares of a stock, right from your brokerage account.

Buying one of the shares above means that you are expecting that particular foreign currency above to rise against the dollar.

Conversely, shorting a specific CurrencyShare means that you're expecting the dollar to rise against whatever currency that ETF tracks.

And of course, CurrencyShares does offer options - sane, "American-style" options.

That means one contract, with a specified strike price and expiration date, controls 100 shares of the ETF. You have the right to buy or sell the option anytime until expiration, which helps give the option the time value lacking in binaries.

The example above is an option with Guggenheim CurrencyShares Euro Trust (NYSE Arca: FXE), a euro/dollar CurrencyShare, underlying.

This shows options with 36 days to expiration.

The FXE May 18 2018 $118 calls were trading at $1.62, with a bid at $1.52 and an ask at $1.57. That's a full $0.05 difference between the bid and ask - a spread you could safely fly a jumbo jet through.

It's much, much better than what a binary would cost you, and with infinitely more flexibility before expiration.

Look, I understand the appeal of binaries and the simple yes/no answer. And as we'll see later, there are some safe binaries, but you'll find them traded on the Chicago Board of Options Exchange (CBOE), not in the forex market.

Up Next: Here's the One Secret I Kept from Wall Street

I love to trade. And I'm good at it, too; I've beaten some of the market's top traders. In fact, I got so good, a famous Wall Street firm (I can't mention the name here) paid me $20 million to spill the beans.

So I did... mostly. I held back a little something, kept my most lucrative secret close to the vest.

Today, I'm going to share it with everyone - on camera, no less. You're going to get the chance to watch me get $1,050 richer in 15 seconds! And then $940 richer in 11 seconds... $1,260 richer in eight seconds... and $988 richer in seven seconds!

And then, the best part: You're going to discover how you can do it yourself...

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About the Author

Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.

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