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A financial contract between two parties i.e. the buyer and the seller of this type of option, is referred to as a call option. It is the option to buy shares of stock at a specified time in the future. Usually it is simply labeled a “call”. In call option, the buyer of the option has the right, but it is not the obligation to buy an agreed quantity of a particular commodity or financial instrument (the underlying instrument) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller (or “writer”) is obligated to sell the same commodity or financial instrument that is so decided by the buyer. For this right the buyer pays a fee that is referred to as a premium.

Buyer and Seller Anticipation

It is the will of the buyer of a call option that the price of the underlying instrument may rise in the future; the seller either anticipates that it will not rise, or he might be willing to give up some of the upside (profit) from a price rise in return for the premium (paid immediately) and retaining the opportunity to make a gain up to the strike price.

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A quotation of two different currencies is depicted by a currency pair. The first currency that is present in the pair is referred to as the base currency also called transaction currency. Whereas the second currency in the pair is know as quote currency #160; also referred to as payment currency and counter currency. By such a quotation it is depicted that how many units of the counter currency are required to buy one unit of the base currency.

For example if the quotation is EUR/USD 1.2500 then it means that one euro is exchanged for 1.25 US dollar. If the quote is moved from EUR/USD 1.2500 to EUR/USD 1.2510, then it showed that euro is getting stronger and the dollar is becoming weaker. On the other hand if the EUR/USD quote moves from 1.2500 to 1.2490 then it elaborates that euro is getting weaker while the dollar is getting stronger.

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Casual trading is a name referred to a newly developed variant of financial trading. It posses the same principles that are usually carried out in trading rooms but the use of trading platforms are involved in it that can be operated from the trader’s residence.

All trading actions that are carried out by individuals without the use of a mediator are given a single general name and that is what we call casual trading. We can find them in stock exchange, foreign exchange, commodities and other markets.

General Trading Markets

In casual trading there are three major markets. These are as follows:

• stocks

• foreign exchange (Forex)

• commodities

Stock Market

The trading of company stock and derivatives of company stock at an agreed price is called Stock market stock trading and it is also known as equity trading . Both of these two things are securities that are listed on a stock exchange as well as those that are only traded privately.

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Here I will explain you about algorithmic trading , fundamental trading and technical analysis in foreign exchange.

Algorithmic Trading in Foreign Exchange

In the FX market Electronic trading is growing, and nowadays algorithmic trading is becoming much more common. As estimated by financial consultancy Celent, by 2008 up to 25% of all trades by volume had been executed using algorithm, which has been increased from about 18% in 2005.

It is required for an algorithmic trader that he should be fully aware of all the potential frauds by the broker. A check should be included in part of the weekly algorithm to see if the amount of transaction errors at the time when the trader is losing money occurs in the same proportion as when the trader would have made money.

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