Similarities Between Options, Turbos, CFDs, and Investing Through a Broker
While there are some important differences between forex CFDs, forex options or turbos, and trading through a forex broker, there are also many similarities. Whichever solution you choose, you will always be speculating on the price changes of currency pairs rather than individual currencies.
Retail forex investors can take advantage of leverage. The leverage effect allows them to gain exposure to large amounts of currencies without having to pay the full value of the position upfront. If you buy an option, you will need to pay a premium to open the position. This is the option premium. It represents your maximum risk if the market were to move against you. Conversely, in the event of a rise in prices, your earnings would be potentially unlimited. Writing options works differently. You receive the premium when you open the position, and it represents your maximum gain. However, this exposes you to potentially unlimited losses should the market turn against you.
Turbos work the same as call options when it comes to the initial down payment. This is because what you deposit to enter a position represents your maximum risk and you will not have to pay anything else. The price includes the spread and fees, and there are no additional funding fees (or overnight fees), these will be reflected in a daily adjustment to your knockout level. Please see our trading conditions for more information.
In the case of CFDs, you only need to lock in part of the position, known as a hedge, to open your position. Your gains and losses, on the other hand, are counted on the basis of the total value of your exposure, which means that they can occur more quickly and to a greater extent than your initial deposit.