Investors aiming to protect themselves from currency fluctuations in yuan, the Chinese currency, can do so very effectively by using the market of foreign exchange options as stated by Professor J.James, the head at Commerzbank for the FXQ solutions group.
James explains the existence of two Chinese currencies: the CNY, which is onshore and more controlled, and the CNH, the offshore that is less controlled. The more liquid currency is CNY; however, the CNH is also catching up.
Both currencies are available for foreign exchange options, and they also behave very similarly to the way options act on other currencies. The prices of the currencies are available through both Bloomberg and Reuters, and the currencies can also be bought using banks like all other currency options.
These currencies can be used by different investors who wish to protect themselves from the influence of movements in Chinese currency, and they are also very popular, reveals James.
James claims there is a good reason for these currencies to be popular. The reason is called ‘protective contract,’ which means they can limit your possible losses in a very effective manner. Investors can also use them to protect their businesses against changes in Chinese currency. James validates her claims by stating that they are a very effective way to achieve protective goals.
Trading Binary options seem to be the best way of avoiding the dangerous side effects of fluctuating China’s stock market prices these days. There are many reasons you should consider Binary Options, first you can trade on a short term, by setting the time you want to close the trade and then withdraw your profits immediately. Unlike the Binary Options where you can trade in short terms, stocks on the other hand involves a long term trading whereby you will have to wait for your stock to appreciate in value before selling part or all of it.
Binary option’s short term trading simply means, your investments will carry less risks, and the reason being that you can do trading for as little as 1 hour , all you have to do is do some research and monitor the current situation before putting your investment into the trade. Binary options are believed to attract much less taxes , compared to stock trading, thus , you can save even much more when you make huge profits. With binary options trading, you can put as much money as you can and conduct a single trading in one day and the profits you make can either be withdrawn or re-invested.
For these positive reasons, many Chinese investors are using the Binary options trading to escae from the harsh realities of losing everything they have to the fluctuating stock market prices. Investors who lost their hard earned money between July and October stock market crashes are still feeling the effect of such situations and are skeptical about returning to the stock market anytime soon. If you really want to safeguard your money more, then you should consider Binary options ahead of stock market trading.