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Stock Trading Tips

Proven Stock Trading Tips That Anyone Can Implement

Stock market investments can yield high financial rewards. Keep reading to learn some advice about creating the proper stock investing.

Don’t let your emotions enter in to play when trading. You ought to never purchase more cash right into a stock which can be rapidly losing its value. Always do trading together with your rational mind and never your emotions.

You may even want to check out investing in a helpful investment software which helps analyze and calculate your investments. This helps you in monitoring stocks and acquire a better idea of how their costs are looking. You will find a few software packages available so look online reviews to understand more about those work most effectively.

It is essential to constantly re-evaluate your stock portfolio several months. This is due to the economy is beginning to change over a dynamic creature. Some sectors will quickly do much better than others, while other businesses could even become outdated. The very best financial instruments to purchase is likely to vary from year to year.This is why you should make your portfolio and adjust it as a necessary.

If you would like to get comfort with full service brokers and in addition make picks yourself, consider connecting to your broker containing online options and also full service in relation to stock picking. This way you’ll have the ability to dedicate part of your stocks to some professional manager and take care of it yourself. This can present you with the very best of both control and professional assistance inside the world of investing.

When you are investing on the market, in the event you determine a winning strategy, and stay with this plan. Maybe your strategy is to find businesses with good profits, or maybe you’d prefer to handle companies that employ a larger quantity of cash. People have different strategies whenever they invest, and it is vital that you decide on the strategy which fits your life-style.

Don’t make an effort to time markets. History has demonstrated the greatest results visit those that steadily invest equal sums of money in the marketplace over a greater time frame. Just figure out how a lot of your revenue you can invest. Then, come up with a practice of investing regularly, and keep it going.

Be sure that you invest over a wide range of different investments. If you put all your money into one stock, as an illustration, you will be financially ruined.

Stocks are far over a notepad made for buying and selling. If you own stock, you then become a member of the collective ownership of this specific company you invested in. You will be granted a rite to earnings and assets that belong to the company. You might even be capable of vote for the company’s leadership and policies should your stock includes voting options.

You have to set a ‘stop loss’ point for the stock purchases. However, if you believe the stocks might go up in value again, then keep these and wait so they can do this. You ought to know that selling in order to avoid losses is oftentimes a loss is usually the most suitable option.

If you plan your portfolio diversification, understand there are many factors which result in diversification and it’s not merely about different sectors.

If you want to get involved in a number of trades, make certain to get easy accessibility to your trading account, even when your usually are not alongside your computer. Most trading companies gives you the option for calling or faxing trades. These alternative strategies for trading often come with a fee attached, but sometimes it is worth it.

When discussing companies, it is more favorable to get ones which may have better returns than management. A company’s management is likely to change more rapidly than its economic conditions. Businesses that cause high returns in the market will often stay in this way for a time, which can be good opportunity wise.

Be open minded if you’re considering buying a stock price. One guideline in the stock exchange is the fact once you pay more for an asset when relevant to earnings it gives you, compared to exactly how much you might be earning. A stock that seems overvalued at $50 a share may appear to be a killer deal once it drops to $30 per share.

Consider utilising your 401k being a 401k.Even though you need to hold off until retirement before accessing the amount of money, you happen to be entitled to tax savings. You can produce a good amount of cash available in the foreseeable future.

Don’t exclude other beneficial investment chances to invest because you’re stock trading. There are many good areas to purchase, including bonds, bonds, real estate and art.

This is only as vital as remembering to take into account commission when investing and acquiring stock. This means that it might be tough to sell stock when you wish to.

Spend money on sectors you are familiar for you. Peter Lynch mentioned that he did not spend money on electronic stocks because he failed to understand its behavior. He ended up being focusing his investments in underwear, like consumer staples and underwear. The thing is to merely purchase those things which you can understand.

Furthermore you will become more successful when you have realistic expectations, instead of attempting to consider a crystal ball that doesn’t exist. Keep stocks inside your portfolio for whatever time it takes to transform a profit.

If you are considering employing a brokerage firm for the investments in the stock exchange, you want one that is trustworthy. Many firms promise great outcomes, but take care as not all are properly educated or skilled. Look into the brokerage firms online before settling on the web.

It can be worth saying again: Making smart stock market investments could possibly be the path to earning extremely large profits. Stock investing is really a time tested approach to earn lots of money if you have some discipline. Utilize the tips that were presented to you, and venture out there to make some money.

Filed Under: OPTION TRADING STRATEGIES, STOCK MARKET TIPS Tagged With: option, software, stock, tips, trading

Commodity Option Trading System

Know Your Commodity Before you Implement Any Commodity Option Trading System

The best commodity option trading system is one that suits the kind of market environment in which you are trading. Commodity prices are well known to be extremely volatile and unpredictable at times. All you have to do is compare long term charts of some commodites like soybeans, sugar or oil to those of stocks and you’ll quickly realize how different the trading environment can be.

So it’s important you choose a commodity option trading system that fits well with this kind of price action. One factor that should be borne in mind is that the supply and demand for many commodities are seasonal in nature. Understanding this will help you to develop a trading approach that takes advantage of this.

Which Commodity Option Trading System is Best?

Let’s divide our discussion into two parts here.

1. Trending Markets

Understanding the seasonal influences on commodity market prices will help you to anticipate when a change or continuation of trend is most likely. This being the case, you can choose to simply ‘go long’ (i.e. buy) either call or put options, usually with at least 90 days to expiry, so that you can take advantage of this.

The best options to purchase under these conditions are those that are either at-the-money (ATM) or first strike price out-of-the-money (OTM). You don’t want to go too far away from that, or your option values will not increase much even with a big move. OTM options are cheaper than ATM ones, and this means your profit potential is magnified once the options are in-the-money. It is not uncommon for a well timed OTM option on a commodity to increase 1,000 percent in value once a new trend begins.

So never underestimate the connection between seasonal factors on commodities and the advantage that newly trending markets provides.

The In-The-Money Debit Spread

This commodity option trading system is a good one for newly trending markets and involves purchasing an in-the-money option and selling an out-of-the-money option, both with the same expiry month. One advantage of this approach, is that the implied volatility in the OTM option will often be greater than for the ITM option. This disparity not only lowers your initial costs, but should the price of the underlying go against you, the overpriced OTM ‘sold’ option value will evaporate much more quickly than the ITM bought option, enabling you to repurchase the sold option for profit.

If the price of the underlying continues in your favour, the price of the ITM option will increase at a rate closer to the rate the underlying increases, due to a higher delta and the sold OTM option will not experience this same rate of increase until it becomes deeper in-the-money.

2. Volatile Markets

Commodity options are unlike stock options in that the underlying is a product rather than a company. Products like wheat, sugar, oil and bonds are more affected by natural disasters and international news events than company share prices, unless the company’s fortunes are heavily connected with a particular product.

For example, war breaks out in any middle eastern nation. What happens next? Oil prices become very volatile. A hurricane sweeps over a major sugar producing area. What happens? Sugar prices soar … and so on.

Implementing the right kind of commodity option trading system as soon as news of this kind breaks, can result in profits that are not only healthy, but quite safe as well.

The Straddle

Straddle or option strangle positions in newly volatile markets can be quite lucrative, as they are ideally tailored for large moves within a short time frame. They are also non-directional, so you don’t care which way the underlying price moves, as long as it is significant. Quite often, there will be an initial reaction to the news, followed by a reversal once its effects are known. This is the ideal time for the straddle or strangle to come into play. On the other hand, some commodity markets such as gold, are typically volatile when certain chart patterns appear, so adapting your commodity option trading system around the straddle could prove very useful.

There are a number of ways you can implement and exit straddle trades. For some examples of this, take a look at:

Option Straddles

Straddle Option Strategy

CLICK ON THE BOOK to Review This Commodity Option Trading System

Filed Under: COMMODITY OPTIONS TRADING Tagged With: best commodity option trading system, commodity, commodity options trading strategy, options, trading

Minc Trading Review

Minc Trading – The Good, The Bad, But Nothing Ugly

Minc Trading are an Australian online broker who offer a range of services related to the Australian stock market, including option trading, shares, CFDs and warrants. The following Minc Trading review is presented without prejudice.

For option traders I would have to say they are worth a look, but with a few reservations.

Here are good points:

1. Free Trade Recommendations

They provide you with free market reports and option strategy recommendations. From what I’ve seen so far, most of them are quite profitable. They seem to have some partiality for stocks that have moved quickly in one direction for no apparent reason other than market sentiment and are due for a retracement. But they seem to know when to pick ’em and results are very promising.

This is really valuable.

2. Competitive Rates

Their online trading brokerage rates are very competitive – currently $24.20 per trade plus $2.42 per contract (usually covering 1,000 shares). You also have the choice of using their full brokerage telephone service which includes general advice for around $85 per trade … or a simple phone order only order will cost you $50 per leg.

3. Online Trading Platform

They provide you with an online platform which includes an advanced charting service, live option and share prices, market depth, advanced option valuation facilities, ability to place advanced option trades, customisable watchlists and many other features – all for $46.20 per month. There is a free “lite’ version but you can’t access option prices with it. Good if you’re just into share trading or buying warrants though.

4. Education

Minc Trading also provide a free service for option trading strategies, including directional spreads, delta neutral strategies and other things like explaining the “greeks”, option payoff diagrams and other basic option information.

In general, I have found their trading platform excellent and their service very helpful. You may find it takes a while for your account to be established though, due to their requirement for you to establish a “Cash Management” account with Macquarie Equities – and sending them all the identification documents. They are pretty helpful with filling out the forms though – once you apply, they will phone you and do it all for you, then email you the .pdf file. You then need to sign in the right places, attach your 100 points of ID and wait.

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What Minc Trading Lacks

Unfortunately, Minc Trading only offer either their own trading platform in the form of downloadable software, or if you can’t access it, a telephone service which costs almost twice as much to place trades with. They don’t have a web based trading platform.

If your focus is online trading, I have to say that Minc Trading’s WebIRESS trading platform leaves a few things to be desired. For example:

1. They don’t offer a web based online trading system, only software downloaded to your computer which you use to access their trading data. This means that if you are using a computer or network (e.g at work) that doesn’t allow you to download javascript, you may not be able to access your platform – so you won’t be able to open or close trades online. You will then have to ring the broker and they will charge you the telephone rates of $50 PER LEG. If you have an advanced option position in play such as a butterfly or condor spread, the brokerage will kill you, unless the number of contracts you’ve traded is large enough to offset it.

2. Minc Trading’s WebIRESS system doesn’t have the facility to bid for multiple positions as ONE order. You have to either “leg in” one position at a time, or ring the broker. If you ring the broker, they hit you for phone order rates, which are about double the trading platform rates. You also have to keep an eye on what brokerage they charge you – I have seen $75 per leg commissions on some of my spread or straddle trades and had to complain to get them reversed. But coming back to the “legging in” issue … if the market is volatile at the time you’re doing this, you can end up with a position that cost you more than you had planned. It’s not a very efficient way to trade, so you’re left with ringing the broker as your best option. Makes me remember fondly the OptionsXpress Australia alternative (they don’t do Australian shares anymore, only the USA) which allowed you to bid for a spread for the NET amount you wanted to risk.

So, in summary … if your main focus in option trading is to take out simple buy or sell positions and you intend to do this from your home computer where your downloaded software platform will function correctly, or if you intend to use advanced multiple-leg positions with at least 10 contracts per leg and don’t mind ringing the broker to enter, then Minc Trading come highly recommended.

But if you have a smaller account, the inefficiencies with their trading platform combined with phone order rates you will be charged, make trading more advanced option strategies prohibitive.

As of 31 December 2008, Minc Trading were taken over by Trader Dealer

Trader Dealer offer an online trading platform known as Rapid Trader as well as the WebIress system and their options brokerage fees are very competitive.

Filed Under: OPTION TRADING STRATEGIES Tagged With: minc, minc trading takeover, trading, what happened to minc trading

Option Swing Trading Strategies and Techniques

Option Swing Trading is Easy to Learn

Option Swing Trading focuses on using one of the oldest and most popular trading methods for trading the markets. It was popularized by the legendary W.D. Gann in the early 20th century, who made millions on the stock market after defining his own unique set of rules and applying them to futures contracts.

Many books have since been written about this technique, each containing variations of the one overriding theme – identify a trend, wait for the pullback and hop on for the ride when the trend resumes. To do this, you need to understand price charts and technical analysis.

Option Swing Trading takes advantage of short-term moves in share prices and uses the leverage available in options to create an income stream with much less capital than would be needed if you were buying and selling the shares themselves.

Options also give you the ability to make money whether the move is upwards or downwards. You simply use call options for an upward swing and put options for a downward swing. If you were trading stocks you would have to short sell the stock for a downswing and take on margin risk.

option swing trading

Option Swing Trading can be applied in either of two ways:

(1) Using Chart Patterns.
(2) Trend Trading – identify trends and enter on the pullbacks.

Stock Chart Patterns

Let’s take a look at identifying chart patterns. There are a number of well-known price chart patterns which help traders to anticipate potential entry and exit targets. These include the channel, rising and falling wedges, triangle patterns, head and shoulder patterns, double tops and bottoms, flags and pennants.

These are best recognized by drawing lines over the price action. The trader then waits for confirmation and preferably one that includes a confluence of more than one signal.

For example, it might be a candlestick reversal pattern at the top or bottom of a channel pattern, or it might be after the price consolidates a little and then breaks up or down. Price consolidations followed by a breakout at this point, or a candlestick reversal pattern, provide good confirmation signals and their confluence with the channel serves to strengthen the trader’s conviction about upcoming price action.

Once you enter the trade, the next challenge is to exit before the reversal blows itself out. You can often clean up with a tidy profit on your risked capital. If you understand the advantages that can be obtained from using vertical Debit Spreads over single options positions, in combination with this method, you can make excellent consistent profits with minimal risk.

option swing trading

Option Swing Trading – The Trend is Your Friend

The second way is to identify trending price action, using higher highs and higher lows in a bullish trend, or the opposite if the trend is bearish. The trader waits patiently for a pullback against the trend, at which point an entry level is planned.

Drawing trendlines under the “lows” if the trend is bullish, or over the “highs” if the trend is bearish, can help identify potential entry points. Trend lines also help you decide whether the trend is weakening or not.

Some prefer to make the peaks and troughs in a trend clearer by including zig-zag lines drawn through closing prices. If the trend is upward and you have drawn your trend line under the troughs, you should also take note of the peaks. If the angle of the peaks is turning toward the angle of the troughs, the trend may be weakening so you need to be more careful. The same goes for a downward trend, only in reverse.

In short, you need to have some knowledge of stock chart patterns and technical analysis so that you can recognize opportunities and time your entry. Good trading psychology and self-discipline are also essential.

It is far better to patiently wait for just the right entry signal, rather than jumping in because you feel you have to be in a trade. The same goes for your exit – accept a predefined target profit and don’t be greedy. “Greedy pigs end up in the bacon factory”.

Broadly speaking, you need a signal that indicates whether the stock is in an uptrend or downtrend. A favorite tool for identifying this is moving averages – typically, the 10 and 20 period EMA’s for the shorter timeframes, and 50 and 200 period simple moving average (SMA) to mark out the longer-term trends.

One of the best trend-identifying services I have ever seen is the “Trade Triangle” and market scanning service provided by Market Club. They offer a 30 day trial for just $1 and provide a wealth of services including their proprietary “trade triangles” (monthly, weekly and daily confluences) as well as market scanning for qualifying trades.

In stock option swing trading, new opportunities are usually identified after the market closes, so that you are prepared for entry within the first half-hour of trading after the market opens the next morning. When looking for a reversal signal from a pullback, candlestick charting patterns often provide good signals.

Another classic signal is called “Price Volume Divergence” – the price is still moving in one direction while the volume is drying up at the same time. This is a classic indication that price action is about to continue with the trend.

Risk to Reward and Profit Targets

Two important aspects of option swing trading are managing risk and setting profit targets. You can also use trailing stops for profitable trades. Once your first profit target is reached, some traders like to sell half their position at the target price, leaving the remaining half with a stop loss at break even.

Option Swing Trading presents a number of advantages for the novice trader. It is simple to learn and can be undertaken “without giving up your day job”. You can make a significant income without the need for a lot of trading capital, as you would with share trading.

Using Fibonacci Retracements in Swing Trading

Here’s an example of an option swing trading strategy that has an excellent risk to reward ratio. This works just as well for futures or forex trading as it does option swing trading.

  • You observe that the trend has recently reversed from bearish to bullish.
  • You’ve noted that it has broken up through the down-trending line and formed its first higher-high.
  • At this point, you draw a little box from the previous high, across to the right where the current price action is.
  • You then note that this previous high sits at a 50% or 61.8% Fibonacci retracement level to the latest high that is forming. This confluence of retracement level, together with the previous high, indicates a high probability that price action should bounce off this area and continue upwards in its bullish direction.

So you decide to enter a long position at the 61.8% retracement level and will set your stop loss at the 78.6% Fibonacci retracement level. But your profit target will be at the 11.4% retracement level, or even the zero retracement level.

An entry at the 61.8% retracement level with profit target at the 11.4% retracement and stop-loss at 78.6% retracement will provide the trader with slightly more than a 1:3 risk-to-reward ratio, i.e. risking one amount to make three times as much.

If you have the patience and are prepared to wait for the price to return to the previous high (zero retracement) then your risk-to-reward ratio is even better.

But remember, your original entry was based on a confluence of two signals – the 61.8% retracement coinciding with the previous high. As price action progresses and a trend is established, then if you can add a trend-line convergence to the mix, the confluence will be even stronger.

Traders can play around with these entry, stop loss, and profit target levels, depending on what they see the price action telling them.

Stack the odds in your favor – both with confluence entry levels and risk-to-reward ratios. Have patience! Wait for only the best signals, compound your profits so that you can increase your position entry size, and one day, you will be wealthy.

option swing trading

 

option swing trading

Option Swing Trading and Technical Analysis

Filed Under: EXPLAIN OPTION TRADING Tagged With: how to swing trade with options, option, swing, swing trading with options, trading

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DISCLAIMER: All stock options trading and technical analysis information on this website is for educational purposes only. While it is believed to be accurate, it should not be considered solely reliable for use in making actual investment decisions. This is neither a solicitation nor an offer to Buy/Sell futures or options. Futures and options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this video or on this website. Please read "Characteristics and Risks of Standardized Options" before investing in options. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVERCOMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.