Forex CHECKLIST For Forex Option Trading

This post will present a set of strategies and analytical steps to accomplish this result. There are many dimensions that define the optimal condition for a forex option trade. 

Certainly, foremost among them is the nature of the price action. But at the start of the process is the overall fundamental environment of the price action. 

It is essential for the trader to develop a currency outlook for all of the currency pairs. In order to do this, the trader can use the following currency outlook checklist to establish a framework for deciding on the direction of a currency pair. 

The currency outlook checklist serves to keep the forex trader accountable to assessing fundamental issues. These are too often overlooked. 

The forex trader will greatly benefit by being able to complete this checklist. Some traders will look to be very detailed, while others will be more cursory in their decision process. 

Ultimately, anticipating a direction is the key first step in developing a forex option strategy. 

Currency Outlook Checklist 
1. Expected Economic Growth 
Negative 
Slowing
Uncertain 
Steady 
Slow growth 
Fast growth 
Decelerating

2. Inflation Latest 
Central bank target 
Actual target

3. Sentiment Indicators 
Consumer sentiment 
Manufacturing sentiment 
Market Sentiment 

4. Possible Recession
Housing starts 
Home price 
Yield curve inversion 

5. Central Bank Interest Rate Policies
Lowering rate mode (.25 basis points, .50 basis points) 
Nothing Increase (.25 basis points, .50 basis points)
Binary option sentiment 

6. U.S. Dollar Sentiment 
Central bank currency reserves of dollars 
U.S. dollar index 
Trade-weighted index 

7. Commodity Markets 
Gold
Commodity index 
Oil 

8. U.S. Dollar Data
 % Dollar holding of currency reserves of central banks 
Foreign ownership of U.S. Treasuries—declining