trading pro system Archives - How to Trade Options

Winning Trade System Review

Some time ago, I purchased the Winning Trade System video series after receiving an email offer from the creator of the very successful Trading Pro System. Since I had been so impressed with the original course, I decided to buy it, primarily because it was promoted as “the sequel”.

Some very impressive profit numbers were presented in the advertising material, taken from sceenshots of David Vallieres’ ThinkorSwim brokerage account. When you see them, believe me, you want to know how to make that kind of money!

A Review of the Winning Trade System From Someone Who’s Actually Seen It

The system comprises 16 training videos and is highly analytical in nature. Once you get past the obligatory “introduction to options for those who don’t know much about them” videos, it explores various factors that need to be taken into account, in terms of strike price, expiration date and “the greeks” in order to choose the optimal trade. By “optimal” I mean a trade that will produce a good profit while at the same time, allowing you the best buffer against loss, should the price action go against you. You may have heard that “option spreads” are the way to reduce risk, but using this technique, you can avoid the need for them – and the extra brokerage fees that spreads accrue.

The Winning Trade System also delves further into stock chart analysis and compares price action against other indicators to predict the future of the market. It also explains what it calls “the breadcrumb trail” and two important clues you must always observe.

Building upon these foundations, you move on to apply specific strategies for high and low volatility environments including how to adjust your trading strategy to suit. In connection with this, there is further instruction about “the greeks” and in particular, the relationship between the “gamma” and “vega”. It is about understanding the clues that help you spot easy, profitable trades.

A specific example is provided for assessing the purchase of a put option in a real life trading situation. The correct setting of stops and alerts is also covered. Next, you’re taken into the world of company takeovers and the strategies you can employ when this is in process.

Finally, the Winning Trade System explores a strategy which it claims, is being used by only one percent of traders. It is called “ratio trading”. The final three videos explore ratio trading in depth, with some final advice on trading safely and profitably.

All in all, I found the Winning Trade System to be an eye opener about some areas of option trading that I had never considered. If you like a simpler approach to trading options in preference to the more complicated and exotic setups, this system is the one for you. It combines simplicity with optimization for the best results.

You can learn the Winning Trade System by clicking here.

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Daily Stock Market Options Trading

The Three Faces of Daily Stock Market Options Trading

Daily stock market options trading could mean different things to different people, depending on where you’re coming from, so let’s break it down into a three main areas and deal with each one separately:

(1) Day Trading

(2) Short Term Trading

(3) Option Strategies – monitored daily

Stock Market Day Trading

Day trading is certainly a daily stock market options trading approach that will need your full attention. To be classified as a “day trader” the distinguishing feature is that you don’t hold any positions overnight. All positions are opened and closed out within one trading day. Some of the benefits of this way of trading include avoiding “gaps” between trading sessions, broker discounts in recognition of high volume of trades executed, the instant gratification that comes with following the market action and the “sleep at night factor” from being able to assess your trading performance at the end of each trading day.

Stock market day trading is not for everyone – it has to fit with your personal style and in particular, your ability to cope with the sometimes capricious nature of intraday price action. We have covered the subject in more detail on our stock option day trading page.

Daily Stock Market Options Trading – Short Term

Short term trading is the next step up from day trading. Postions taken are usually either call or put purchases or debit spreads and held for up to one week. To gain maximum advantage from the options greeks, you take either at-the-money or first-in-the-money positions, with about 6 weeks to expiration date. Once the options have less than 30 days to expiration, you are very vulnerable to the effect of option time decay (theta) which from that point onward, increases at an exponenential rate and is particularly rapid within the final two weeks before expiration. If your long positions are out-of-the-money during this time, you will see the value of your trades almost evaporate before your eyes.

Daily stock market options trading with a short term focus, usually relies on what is called “technical analysis” of stock charts with a view to predicting future short term direction of the underlying.

The most popular technical analysis concept would have to be:

The trend is your friend – comparing “weekly” and “daily” charts and timing your entry so that the odds are in your favour on the assumption that, unless there are reasons to believe a reversal is possible, the price action will continue in the direction of the trend. Trendlines are drawn over a 3 month daily chart to indicate short term direction. If this direction is downward, you then compare with “weekly” charts and the downward direction MUST be confirmed by the “weekly” chart trendline as well. The reverse applies for upward trends.

An even stronger trending confirmation signal is when monthly, weekly and daily charts all point in the same direction. This philosophy is the basis for the “trade triangles” approach taken by MarketClub. Trade triangles, in conjunction with their impressive SmartScan technology, locates strongly trending securities in the US, Canadian and Australian markets.

Once you establish the trend, you want to ensure your stock is not hitting a support or resistance area – also confirmed by horizontal or channel lines on your chart. These areas, particularly if the stock is in a longer term channel, are danger zones for trend traders because they indicate a possible reversal point from the main trend.

Other Reversal Indicators

Another reason why a trend may not continue is that it is running out of steam. Various “momentum indicators” including the relative strength index and oscillators such as the stochastics provide warning signs of over-bought and over-sold stocks. If the stock or index has reached levels never before seen, or “blue sky” then momentum indicators become more significant.

Along with technical indicators, daily stock market options trading this way includes being on the lookout for reversal patterns. The “double-top”, “double-bottom” and “head and shoulders” patterns are among the most well known and reliable reversal patterns.

So in summary, short term daily stock market options trading simply involves (1) following the trend and (2) not trading the trend when reversal signs are present. You enter long call or put positions with the intention of only holding them a short time. As a final note, you should always check the “implied volatility” in the option price. If it is low compared with the historical volatility of the underlying stock, you now have an extra advantage. If the IV is high compared to HV, you are paying too much for the options and even if the stock price moves in your favour, you may not realize much profit. Better to wait for the best deals.

Advanced Option Strategies – Monitored Daily

Some traders prefer strategies with a longer term focus and for this reason, a number of advanced option trading strategies have been developed. These are combinations of bought and sold positions, some involving different numbers of contracts and different expiration dates. The whole idea is for them to work slowly in your favour, usually over a period of one month or more. These are low stress trades and best suited to people who are either otherwise occupied with careers, or who simply don’t want to sit in front of a computer for too long each day. They monitor their positions for about half an hour on a daily basis – and that’s it.

Longer term stock market options strategies tend to take advantage of the one certainty with all options contracts – they eventually expire. If you can be on the “selling” side of an option contract that expires out-of-the-money, then you keep the premium you received when you sold. There are a some popular strategies which involve short (sold) options positions while at the same time, limit your risk. An in-depth education about these positions and in particular, how to adjust them when necessary for more profit, can be found in the very popular Trading Pro System videos.

Daily Stock Market Options Trading, when understood and applied with discipline, is without doubt, one of the most secure and profitable enterprises anyone can embark on. Yes, it carries risk, but so does any business venture – and according to statistics, 95 percent of start up businesses fail. The secret is to understand your product and how to manage the risk.

Stock Option Trading Course

Things You Should Expect in a Real Stock Option Trading Course

In searching for a great stock option trading course you will come across some wild and amazing claims that promise to turn a few thousand dollars into over a hundred thousand – in exchange for a princely sum to learn the “secret”. Most of these I have found to be unrealistic, or based on option trading systems that are either too open-ended and subjective, or turn you more into a day or short term trader than a low risk, low stress smart trader.

Many a stock option trading course will rely on the fact that you need to anticipate the future direction of the market AND get the timing right. This will involve understanding chart patterns and indicators, drawing trendlines, having a source that supplies data about the fundamentals of the market – and then hope that whatever option trading strategy you’re employing, the market will either move fast enough or slow enough to achieve your objectives.

If you’re only a beginner with options, this may be where you are right now. If so, I suggest you enlist some serious help by using a service that will scan the entire market and analyze stocks for you. One of the best I’ve found is MarketClub and they are currenly allowing potential members to test drive their facilities with full access for 30 days for only $8.95.

Stock Option Trading Course – Essential Ingredient

I believe the best type of stock option trading course will show you how to take advantage of the one certainty that comes with options – expiration and time decay. Future market direction is always uncertain but the fact that all option contracts expire at some point, is the one ultimate certainty.

The other thing a reliable trading course should do, is teach you a system that doesn’t rely on your ability to predict the future, but rather, to react to the past. The best traders don’t make a consistent income because they’re good at predictions or getting the timing right, but because they know how to adjust their positions once they observe what has already happened.

Would you rather be the kind of trader that needs to sit in front of your live charts on a daily basis so you can be ready for when the market is about to turn, or resume its trend, in the hope of making a killing by entering and exiting positions “at the right time” . . . or would you prefer an approach where you simply check the charts at the end of each day and decide whether you need to adjust your positions, knowing that when you do so, it will not only add to your existing profit potential, but that each day, the market will be paying you a sum of money just for “being there”?

If I was new to option trading, I would also want a course that gives me a good understanding of “the basics” so that I know how options work and where the risks are.

For the above reasons, the best stock option trading course I have seen, is the Trading Pro System. It was developed by veteran trader David Vallieres and is the result of over 25 years experience in the markets. With the technology and analysis tools that are freely available today in places like the ThinkorSwim trading platform and those supplied by similar brokers, you can take advantage of the one certainty about options and make a regular, low stress, time tested income. It may not promise sudden and spectacular gains but it will show you how to steadily grow your account, month by month.

The Trading Pro System comes almost entirely in video format, which in my opinion, makes it a more enjoyable way of learning than reading e-books. It also comes with a series of “wealth building” capstone video files that give you additional insight into methods that provide longer term wealth, in addition to a monthly income stream.

For More Information About This Impressive Stock Option Trading Course click here.

Stock Option Trading Strategy

Which Stock Option Trading Strategy Works Best?

The best stock option trading strategy is one with a high degree of certainty for consistent profits. To achieve this, you should be prepared to accept a profit level that is less than the maximum potential. This is vital. There is a saying among traders that “greedy pigs end up in the bacon factory” and there is no greater temptation when your positions are profitable than to want to squeeze as much as possible out of them before closing out. In many cases, this is where profits turn to losses. If you can master the art of taking some profit and then moving on, you have a far greater chance of success.

A Directional or Non-Directional Stock Option Trading Strategy?

Next thing to consider is which strategy best fits your preferred trading style. Do you have time and inclination to watch your computer screen all day, or is your lifestyle better suited to just checking your positions for a few minutes at the end of each trading day?

When you place directional trades, this means you have a view which way the price action of the underlying is about to move. Your strategy might be simply to purchase calls or puts with target profits and stop losses. But many a trader has been “stopped out” due to market volatility before their options positions then took off in their anticipated direction. It takes a certain mindset devoid of emotion to accept these situations in the belief that it will all average out to an overall profit.

Directional plays also include swing trading techniques, following the trend while staying alert to potential reversal signals, debit spreads, credit spreads and some ratio spreads. Because they rely upon a view of future market direction, there is a greater degree of uncertainty associated with such trades and consequently, less chance of profits.

A more effective stock option trading strategy may be to use Non-Directional positions. The options straddle and the amazing Victory Spreads are examples of this.

However, there are some great range trading strategies that are also non-directional in the sense that they only require the underlying stock to remain within a predetermined trading range for a few weeks in order to realize a profit. You can explore these on the option trading strategies page.

The beauty of range trading strategies, is that profits accrue on a daily basis from what is known as “theta” or “time decay”. There is an optimum time to put these on and you should also be prepared to adjust your positions should the price of the underlying come too close to either of your range boundaries. When you set up these positions correctly, your daily profit accrual is guaranteed. It then simply becomes a matter of when you choose to close out for a profit. All this is explained fully in the Trading Pro System videos. Once you have seen these, you won’t see option trading the same way again!