|
|
|
Forum Newbie
Group: Forum Members
Last Login: 8/5/2010 2:23:42 PM
Posts: 1,
Visits: 3
|
|
So I am a member of an FX options group on LinkedIn.com. I think this has excellent potential, like a forum, for like-minded individuals to come together to share ideas and experiences regarding similar interests.
What baffles me is why FXOptions.com thinks it is in their business interest to make trading recommendations. I can understand wanting to build volume as their main motive. However, it is a dangerous marketing game to try to accomplish this through trading recommendations.
Now, about these trading recommendations, they are also ridiculous, set up to fail recommendations. Let me explain.
If you are following these trading recommendations, they are basically U.S. dollar looks strong or U.S. dollar looks weak so buy so-and-so call or so-and-so put depending on the currency pair and how it is listed with the base and counter currency.
You will never see a recommendation to sell an option, only to buy an appropriate call or put based on directional analysis.
This completely neglects one of the most important components in the pricing of an option, the volatility component. Even if the trading recommendation correctly forecasts the direction, the trade could very well still suffer losses due to the volatility component priced into the option.
I have been following FX option volatilities and publishing this data for the last few years on my website. I am observing that this is the game being played by FXOptions.com so that the marketmakers i.e. Timber Hill and Citigroup who are writing the options you would be purchasing can make their money off of you.
Bottom line to FXOptions.com: new traders don't start with trading FX options. Only experienced traders, after learning how to trade other products, eventually find themselves expanding to trade FX option products. If you must do it, at least please make trading recommendations that do not insult the intelligence of this class of traders with only making buy call / buy put recommendations based on shaky technical analysis. It will cheapen your reputation in the long run.
|
|