Note: trading Foreign Exchange Currencies involve risks and are not suitable for everyone. Foreign Exchange FX Currency trading can be speculative in nature and carry substantial risk of loss. Only invest with capital you can afford to risk. And learn the basics of FX trading before investing.

An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset (stock or future) at a specific price on or before a certain date (expiration date of the option). When you buy an option you only pay a premium and not the full price of the underlying stock or future, and the strike price is established. The strike price is the goal that you set to the price of the stock or future; where you think the price is going to be at or before the expiration date. The difference between the stock or future's current market price and the option's strike price represents the amount of profit per share gained upon the exercise or the sale of the option. The maximum amount that can be lost is the premium paid to buy the option.

Define a Basic Forex Strategy
Technical analysis and fundamental analysis are the two basic genres of strategy in the forex market - just like in the equity markets. But technical analysis is by far the most common strategy used by individual forex traders. Here is a brief overview of both forms of analysis and how they apply to forex:

Fundamental Analysis
If you think it's difficult to value one company, try valuing a whole country! Fundamental analysis in the forex market is often very complex, and it's usually used only to predict long-term trends; however, some traders do trade short term strictly on news releases. There are many different fundamental indicators of currency values released at many different times. Here are a few:

• Non-farm Payrolls
• Purchasing Managers Index (PMI)
• Consumer Price Index (CPI)
• Retail Sales
• Durable Goods

Now, these reports are not the only fundamental factors to watch. There are also several meetings from which come quotes and commentary that can affect markets just as much as any report. These meetings are often called to discuss interest rates, inflation, and other issues that affect currency valuations. Even changes in wording when addressing certain issues - the

chairman's comments on interest rates, for example - can cause market volatility. Two important meetings to watch are the

and Humphrey Hawkins Hearings.

Simply reading the reports and examining the commentary can help forex fundamental analysts gain a better understanding of long-term market trends and allow short-term traders to profit from extraordinary happenings. If you choose to follow a fundamental strategy, be sure to keep an economic calendar handy at all times so you know when these reports are released. Your broker may also provide real-time access to such information.

Like their counterparts in the equity markets, technical analysts of the forex analyze price trends. The only key difference between technical analysis in forex and technical analysis in equities is the time frame: forex markets are open 24 hours a day. As a result, some forms of technical analysis that factor in time must be modified to work with the 24-hour forex market. These are some of the most common forms of technical analysis used in forex:

• The Elliott Waves
• Fibonacci studies
• Parabolic SAR
• Pivot points

Many technical analysts combine technical studies to make more accurate predictions. (The most common is combining the Fibonacci studies with Elliott Waves.) Others create trading systems to repeatedly locate similar buying and selling conditions.

Finding Your Strategy
Most successful traders develop a strategy and perfect it over time. Some people focus on one particular study or calculation, while others use broad s analysis to determine their trades. Most experts suggest trying a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points.

Things to Remember

• Open a demo account and paper trade until you can make a consistent profit - Many people jump into the forex market and quickly lose a lot of money (because of leverage). It is important to take your time and learn to trade properly before committing capital. The best way to learn is by doing!
   
• Trade without emotion - Don't keep "mental" stop-loss points if you don't have the ability to execute them on time. Always set your stop-loss and take-profit points to execute automatically, and don't change them unless absolutely necessary. Make your decisions and stick to them!
   
• The trend is your friend – If you go against the trend, you had better have a good reason. Because the forex market tends to trend more than move sideways, you have a higher chance of success in trading with the trend.

The Bottom Line
The forex market is the largest market in the world, and individuals are becoming increasingly interested in it. But before you begin trading it, be sure your broker meets certain criteria, and take the time to find a trading strategy that works for you. Remember, the best way to learn to trade forex is to open up a demo account and try it out. (Ready to try forex trading without risking your money?

Beirut Brokerage Corporation BBCorp S.A.L offers options trading by telephone and 24-hour-a-day broker/advisor support.