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Forex option brokers can generally be divided into two separate categories: forex brokers who offer online forex option trading platforms and forex brokers who only broker forex option trading via telephone trades placed through a dealing/brokerage desk. A few forex option brokers offer both online forex option trading as well a dealing/brokerage desk for investors who prefer to place orders through a live forex option broker.
The trading account minimums required by different forex option brokers vary from a few thousand dollars to over fifty thousand dollars. Also, forex option brokers may require investors to trade forex options contracts having minimum notional values (contract sizes) up to $500,000. Last, but not least, certain types of forex option contracts can be entered into and exited at any time while other types of forex option contracts lock you in until expiration or settlement. Depending on the type of forex option contract you enter into, you might get stuck the wrong way with an option contract that you can not trade out of. Before trading, investors should inquire with their forex option brokers about initial trading account minimums, required contract size minimums and contract liquidity.
There are a number of different forex option trading products offered to investors by forex option brokers. We believe it is extremely important for investors to understand the distinctly different risk characteristics of each of the forex option trading products mentioned below that are offered by firms that broker forex options.
Plain Vanilla Forex Options Broker - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic option contracts that are traded through an over-the-counter (OTC) forex dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or forex put option contract.
There are only a few forex option broker/dealers who offer plain vanilla forex options online with real-time streaming quotes 24 hours a day. Most forex option brokers and banks only broker forex options via telephone. Vanilla forex options for major currencies have good liquidity and you can easily enter the market long or short, or exit the market any time day or night.
Vanilla forex option contracts can be used in combination with each other and/or with spot forex contracts to form a basic strategy such as writing a covered call, or much more complex forex trading strategies such as butterflies, strangles, ratio spreads, synthetics, etc. Also, plain vanilla options are often the basis of forex option trading strategies known as exotic options.
Exotic Forex Options Broker - First, it is important to note that there a couple of different forex definitions for "exotic" and we don't want anyone getting confused. The first definition of a forex "exotic" refers to any individual currency that is less broadly traded than the major currencies. The second forex definition for "exotic" is the one we refer to on this website - a forex option contract (trading strategy) that is a derivative of a standard vanilla forex option contract.
To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.
Exotic forex options are generally traded by commercial and institutional investors rather than retail forex traders, so we won't spend too much time covering exotic forex options brokers. Examples of exotic forex options would include Asian options (average price options or "APO's"), barrier options (payout depends on whether or not the underlying reaches a certain price level or not), baskets (payout depends on more than one currency or a "basket" of currencies), binary options (the payout is cash-or-nothing if underlying does not reach strike price), lookback options (payout is based on maximum or minimum price reached during life of the contract), compound options (options on options with multiple strikes and exercise dates), spread options, chooser options, packages and so on. Exotic options can be tailored to a specific trader's needs, therefore, exotic options contract types change and evolve over time to suit those ever-changing needs.
Since exotic forex options contracts are usually specifically tailored to an individual investor, most of the exotic options business in transacted over the telephone through forex option brokers. There are, however, a handful of forex option brokers who offer "if touched" forex options or "single payment" forex options contracts online whereby an investor can specify an amount he or she is willing to risk in exchange for a specified payout amount if the underlying price reaches a certain strike price (price level). These transactions offered by legitimate online forex brokers can be considered a type of "exotic" option. However, we have noticed that the premiums charged for these types of contracts can be higher than plain vanilla option contracts with similar strike prices and you can not sell out of the option position once you have purchased this type of option - you can only attempt to offset the position with a separate risk management strategy. As a trade-off for getting to choose the dollar amount you want to risk and the payout you wish to receive, you pay a premium and sacrifice liquidity. We would encourage investors to compare premiums before investing in these kinds of options and also make sure the brokerage firm is reputable.
Again, it is fairly easy and liquid to enter into an exotic forex option contract but it is important to note that depending on the type of exotic option contract, there may be little to no liquidity at all if you wanted to exit the position.
Firms Offering Forex Option "Betting" - A number of new firms have popped up over the last year offering forex "betting." Though some may be legitimate, a number of these firms are either off-shore entities or located in some other remote location. We generally do not consider these to be forex brokerage firms. Many do not appear to be regulated by any government agency and we strongly suggest investors perform due diligence before investing with any forex betting firms. Invest at your own risk with these firms.
I`ll start reviewing with Forex.com.
From their site:
FOREX.com … division of GAIN Capital Group, one of the most respected online forex trading firms in the industry. The company’s flagship service, GAIN Capital, is used by institutional investors, professional money managers and experienced day traders from over 140 countries.
I can not agree that forex.com is one of the most respected online forex trading firms. After investigated a lot of sites found that there a lot of unsatisfied traders:
…This is the worst trading platform I have ever used. For starters the layout is appalling and account transaction statements won’t work. The java edition is very unstable, crashing every other minute. Secondly, execution of orders is slow and you are only successful after several attempts. Thirdly when I tried phoning them I was waiting for half an hour before I gave up, nobody answered the phone. Their live chat is useful but they’ll give you a phone number and then when you try it they’ll say there are problems with that line, duh! Fourthly, their 5 pip spread on GBP! Don’t waste your time and money with them…
…First experience in FX was with them. Absolutely horrid platform. Of dealing desk brokers, hard to get any worse, only ACM lies with them at the bottom of the barrel. Their rollover policies royally suck and they have all the disadvantages of a dealing desk broker with none of the advantages…
and 2 positive:
…I have traded equities and currencies for the last 15 years, I recently added Forex trading to the fold. I open my first account with FXCM and never even entered a trade. They have a rule which prohibits entering limit orders at or near the current buy/sell price. After checking out several other firms I learned this was a common practice. I had heard a lot of shady things about Forex but this was unbelievable, talk about stacking the card in the houses favor. I then began to search around to see if this was industry standard. Luckily it was not I came across Forex.com. There service has been outstanding from opening the account, to trading the account. Yes there platform is a little primitive but who really relies on there platform for trade ideas, for that matter I don’t really even think that the pip spread matters either. I looked at the spread calculator on ONA! DA, that is completely misleading because the only thing that matters is what price you actually buy and sell your position. In trading you are either right or wrong. When you are right you need to make more then when you are wrong or you won’t be trading very long. What matters is that the pip spread is representative of the real market. Anyway the reason I am so happy with them is that they allow me to enter limit orders, stop orders, stop limit orders, or cancel other (OCO, and If then orders. All of these orders can be entered at any price I choose. They also give me Advanced Get which is an e-signal program which include e-signal data that is a compilation of over 200 banks and brokers best prices. They give me the tools to see the real market and don’t block me from entering my orders at the presice place and time in the market. I don’t know what else a trader could ask for. By the way I have not had a margin call yet, but according to what they tell me is that it is all done by there computer system. They are from the east coast and I bet if Felix argued enough they would have eaten that error. In my 15 years of trading I have had plenty of error and bad fills. Sometimes you win sometimes you lose. Don’t let it get to you.
- second one i can`t find at this moment 
GAIN Capital Group is pleased to offer individual investors access to its award-winning trading platform and professional-level services via FOREX.com.
FOREX.com is a registered Futures Commission Merchant (NFA ID #0339826) and a member of the National Futures Association. As an FCM, FOREX.com is regulated by the Commodity Futures Trading Commission (CFTC), must uphold the highest standards and business practices and is subject to strict financial requirements and reporting. Interested parties can visit the NFA web site at any time to review FOREX.com’s record as an NFA member in good standing…”
