The vast majority of currency trading volume is circulating in the spot market today. Although very useful for hedgers and several long – term positional traders these are still vaguely unheard of in the retail trading level.

What is a ‘futures’ contract? It is an agreement between two parties specifically between a short position party and the long position party. In a futures contract, everything is exactly specified per unit, method and time frame of delivery . The price of a futures contract is strictly based by the agreed-on price of the principal financial commodity that is expected to be produced in the future.

Currency options, which are a popular choice at the institutional juncture since 2009. A currency option is also regarded as a contract to purchase – buy or sell a currency pair at a particular price for a specific period of time. The position who takes the opposite side of the contract is the proprietor who will collect the premiums from the purchases for the rights of the options. The main advantage of buying options is that the risk is strictly limited to the current price of the option. The only drawback however is that the price or premium for off – loading that risk to someone else.

Strategies using different options can be substantially difficult without the proper knowledge to do so. The science of options pricing is not for the prudish character. Currency options may be used as a trading platform or as a tool for running the risk of a spot transaction.

Spread betting on the other hand is a better alternative to participate in the position of currency markets. Basically, one makes the bet on the direction of prices whether they go up or down so depending which position they take the rewards and losses are utterly remarkable. Although spread betting is very popular in Europe it is still not readily available in other markets outside of it.