Stock options allow you to make huge returns in the market. When they are winning it is easy to get carried away with them and risk too much, but if you are going to survive as a trader you must make risk management your number 1 concern.
So how do you manage your risk with options, especially ... Views: 620
Stock options hold many advantages over just holding a stock. This ranges from higher leverage to managing risk. Below are all the ways options can be a better way to go.
1. Higher Return
Options offer a higher return then holding the stock. Even a small move in the stock can give you a huge ... Views: 791
Options can be a powerful wealth building tool if used properly. But one big mistake you can make when trading stock options is buying the wrong strike price. This can work against you in so many ways. So let’s examine some strike prices and how they can help you.
1. In the Money
An in the ... Views: 867
Stock options give you a way to get leverage in the stock market. They can greatly increase your returns, if done right. But before you take the leap to trading options there are a few things you should know.
1. Not For the Long term
Options eventually expire. They are not for long term ... Views: 727
Everyone has a different personality. So it makes sense that everyone has a different stock trading personality. Some people trade very aggressively and like to go after the short term movements. Some people are less aggressive and like to ride the longer term trends.
Finding your trading ... Views: 547
One of the things we are constantly reminded of in the stock market, especially at times like these, is that stocks can always go down. You need to remember this always.
Even if you combine the best technical indicator with the most fundamentally undervalued stock and buy it on an historical ... Views: 633
Options are powerful investment tools. They allow you to profit from rising stocks or from falling stocks by an incredible amount if you are right, but they also come with the risk of having you lose an incredible amount if you are wrong.
Let’s look at an example. Say we find stock XYZ ... Views: 564
There is a lot of debate out there whether it is better to trade stocks or options on the open market. My personal opinion is options give you such an advantage that you shouldn’t ignore them.
Let’s compare buying the stock with buying an option. When you buy the stock you are buying the ... Views: 658
Stop limit orders allow you to put two different orders into your position, a stop and a limit. It allow you to get in or out at a good price.
When you set a stop limit order you tell your broker that you want to buy a stock between two prices and if you can’t get it between those two prices ... Views: 574
Placing stops on option plays is extremely important for anyone looking to trade options profitably. There are 3 ways you can limit the amount you lose on your option.
1. Let it expire
I will use this every now and then when I am looking to either make a huge gain or a small loss. What it ... Views: 518
Options can be very risky because it is possible to lose 100% of your invested capital if you are wrong. One thing you can do to prevent this is to put stops on your options.
You can place a stop on an option in two ways.
1. Put a Stop on the individual Option
The first thing you can do is ... Views: 762
All successful traders will take complete responsibility for their trading actions. You will not find a successful trader who blames others for losing their money in the stock market. This is the first step to becoming a great trader.
This step is very important because until you take ... Views: 621
The stock market can be both a rewarding place and an “evil place bend on taking away your money”. In order for you to be consistently profitable you have to realize there are some times you should just take a break and let the market work itself out.
Whenever the direction is unclear and ... Views: 573
Technical analysis is a non-traditional way of picking stocks to buy and sell. It is based off of human emotions and patterns in those emotions.
A technical trader realizes that stocks do not move up and down because a company is making or losing money. A stock goes up and down based off of ... Views: 586
Most people buy options without even considering what they are buying or how the option will move. They do not look at the risks of an option and try to predict the possible profits and losses. Instead they just buy hoping that eventually the option they bought will make them rich beyond their ... Views: 567
Everyone always searches for the infamous holy grail of stock trading. The magical trading system that will make them rich and allow them to never lose money again.
So does it exist? Is there a trading system or oscillator that will allow them to never lose money again? No, there is no ... Views: 711
There is no such thing as the magical trading system. All trading systems have their strengths and weaknesses.
Many Gurus’ out there will talk about a secret trading system that cannot fail. It supposable is the insider trading system that only a few people know about, and the professionals ... Views: 522
When trading, especially short term trading, there are a number of things that are important to look at. Each individual chart should have these things before you decide to trade them.
1. Do they follow your trading rules? You should have a set trading system in place every time you place a ... Views: 550
The biggest mistake I have seen people making in the stock market is not getting out when they are wrong. Instead they allow a trade they are in to pull back 50% or more if things turn against them.
The larger you let your losses get the shorter you will be trading the market. Here are the ... Views: 632
Trading against the trend is not a great idea when you think about it. Everyone seems to want to pick the top or the bottom but there are so many consequences to that kind of thinking.
1. It is low probability
I have heard people say if only they would have picked the bottom they would be ... Views: 1367
All traders have to pay commissions; there is no way around it. But commissions will normally make up only a very small amount of your portfolio, so it normally isn’t too bad.
If you are seeing commissions take a large amount of your profit here are some tips to help you reduce their effect on ... Views: 532
Trading with the trend is the best way to make a great return in the stock market. Regardless of what your strategy is trading on the same side as the overall trend can improve your winning streak.
Trend trading has 3 major advantages.
1. Trends are likely to continue for a while
A trend is ... Views: 616
Trading Option Spreads allows you to have many advantages over trading simple stocks. It can also be very rewarding. Here are some of the main advantages.
1. Non Directional
The major advantage to trading spreads is that they offer you a way to make money in the stock market without having to ... Views: 573
Most traders fail to make money in the stock market because they fail to treat trading as a business. They believe they can just buy a stock it will go up 200%, they sell and everything is good.
That is not how trading works. Sure if you did that you would occasionally get some pretty big ... Views: 2408
No matter how many times you have heard it, it is worth hearing it again. You must trade with the trend and not against it if you ever plan on being successful in the stock market.
It can be difficult to trade in the same direction as the market especially when prices have fallen so much. ... Views: 570
The Option delta is a great way to predict how much an option will increase or decrease as the stock moves one way or another, but how do you use it?
A delta is a number between 0 and 1 that estimates how far a stock option is likely to move for every 1 point move in the stock. Every option ... Views: 584
Sometimes you can be researching a stock and find it is a great investment. By all fundamental means this stock should go up, but none of that matters unless the technicals tell you it is a good buy.
It can be very hard to resist buying something that should go up logically, but if it isn’t ... Views: 580
One of the ways to catch a stock is by catching it as it falls on support. When a stock hits support it is normally a good sign that it will go up. But should you wait for the bounce or not?
It depends on your own personality. There are advantages and disadvantages to waiting for the bounce. ... Views: 542
There are 3 major ways you can make money in the stock market. Each of these ways has its advantages and disadvantages.
1. Buying and Selling Stocks
This is definitely the most popular way to make money. It involves simply buying a stock either because of some fundamental data or some ... Views: 564
If you pay attention to the stock market at all you will get bombarded with tons of useless facts about what is going on with the country, how the economy is improving/ getting worse, how inflation rates are changing, what the unemployment rate is.
It is difficult to find out which information ... Views: 739
Today the markets have been acting crazy. Stocks will be up huge one day and down huge the next. In general they are not doing very much.
That is what makes covered calls such a great idea. When you buy a stock and sell a call you make an income from selling the calls and you do not need ... Views: 584
Successful trading systems provide the best way to make money in the stock market. In order for a trading system to work it needs a few things.
The first thing you need in a trading system is specific buy signals, when X happens you do Y. This seems pretty obvious and most new traders stop ... Views: 620
Selling covered calls allow you to make an income off of stocks you own and increase your profit in the long run. But what are they?
When you sell a covered call what you are doing is selling the right for someone else to buy the stock from you at a given price sometime in the future. This ... Views: 619
It seems like there are just as many mutual funds now a days as there are stocks. But what are they? What happens when you put your money into a fund?
Well a mutual fund allows you to invest in how well you think particular management company will perform. Basically your money gets pulled ... Views: 670
Stocks are shares of a company. When you buy a stock you are actually buying a piece of the company and to some extent profit as the company grows and lose money as the company loses money.
Companies issue stock for one simple reason to help them raise cash. By selling large amounts of ... Views: 674
A diagonal spread is a spread that allows you to produce a monthly income from the stock market and at the same time being able to profit from appreciation or depreciation in the stock.
Ok so how does it work? Simply put you buy an option that will not expire for many months. You also sell an ... Views: 705
Poker is really a miniature stock market on so many levels. You can apply much of what you learn from one to the other.
One of the biggest similarities is how little your profits matter. If you make $1,000 in anything it is a big deal, but if you make $1,000 in the stock market or in a ... Views: 734
Stock options give you a wonderful way of getting leverage in the stock market. But it is also important to remember that sword goes both ways.
Before you trade options you should consider the following.
1. Options should not make up a large part of your account
Options are better used for ... Views: 594
Swing Trading Can be hard, both mechanically and emotionally. But when you are comfortable and confident about your approach it is definitely worth it.
Some things you should know about swing trading are.
1. Losing Streaks can happen
All swing traders will have a losing streak from time to ... Views: 540
Stop limit orders can be very powerful if you use them correctly. However there are certain times when you should just not use stop limit orders.
Before we go into when you should not place stop limit orders lets go into what they are first. When you set a stop limit order you are attempting ... Views: 857
Selling Covered calls is a wonderful strategy in general. It allows people to make consistent money from the stock market, but there are some times when it is better to avoid placing a covered call position.
1. When the Markets Are Falling
When a stock is down trending it is better to avoid ... Views: 770
Iron Condors can be very profitable at times so how do you find the best time to place an iron condor? When should you enter the trade? This is what everyone wants to know.
Well there are a couple of things that might be helpful.
1. When the Market is going Flat
When stocks are not trending ... Views: 1166
3x ETFs can be a great way to either increase your profits or increase your losses in the stock market. Before you trade them make sure you are prepared.
If you trade them consider the following.
1. Not for long term
Tipple leveraged ETFs are not for long term investing no matter which way ... Views: 895
Stop limit orders are very powerful in the stock market if used correctly. They can give you a new way of placing a trade that can potentially benefit you.
So when might it be a good idea to place a stop limit order?
1. When a stock is at resistance and you are expecting it to break through. ... Views: 1412
There are a few reasons why I am selling naked puts in my own portfolio at this time. I just believe that this is a great time for doing it, properly anyway. And here is why.
1. Stocks are undervalued. The market has crashed so far in 2008 that nearly every stock that is left is undervalued. ... Views: 599
Put options are a great way to make money as the stock market goes down. There are a number of benefits to trading them, and when the markets are falling there is no faster way to profit.
Here are some reasons that Put options can be fun to trade as stocks fall.
1. It allows you to have some ... Views: 792
Chart patterns give you buy and sell signals that can make you profits and help you limit your losses in the stock market. But what makes them work so well?
Chart patterns work because of psychology. Take the rectangular patterns, this pattern occurs when a stock is bouncing back and forth ... Views: 1002
Chart patterns are naturally occurring patterns in the stock market that can indicate a big move either to the upside or the downside. They can be a good indicator for short term movements.
So why are they so important? Why can they give you a great way to trade the stock market?
1. They ... Views: 664
Day trading is a great way to make money in the stock market. It has many advantages over other strategies in the stock market, some of which are.
1. You Don’t Have the Gap Risk
Stocks can gap, and sometimes they can gap big. I have seen stocks gap over 20% overnight on a rare occasion. If ... Views: 1240
Counter trend trading is a pretty sought after strategy. Everyone wants to buy a stock as it bottoms or short a stock as it is forming a top. It is the whole buy low sell high idea. Why not buy when a stock is at its lowest and sell right before it turns around.
The only problem with this ... Views: 1238