Options Trading… Small Risk, Big Payout For Small Investors

admin — Sat, 02 Jan 2010 21:40:06 +0000

Even though trading in the market is, in many circles considered gambling, it appeals to people for a wide variety of reasons. All of the reasons preferably lead to only one conclusion, making money. Whether you’re interested in just trading part time, you must treat it as your own business. You don’t need a lot of money to invest, however, you can lose a lot if you’re not completely dedicated. Those people who “play” the market for fun, had better have money to burn. For the rest of us let me go over your options. The popularity of option trading has grown over the past couple of decades, mostly due to everyone having easy access to the internet. Like most things having to do with the market, options began as way that commodities could be assured of a future price. No one knows who came up with the concept, but to hedge their bets options were created. Remember, an option is a contract between a buyer and a seller that gives the buyer the right, BUT NOT THE OBLIGATION to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price. What began more than 150 years ago at the Chicago Board of Trade, Kansas City Board of Trade, the Minneapolis Grain Exchange, and the New York Cotton Exchange, has evolved into the fastest way to make or lose a fortune.Like penny stocks, options appeal to small investors because the initial cash outlay is smaller than actually having to purchase the assets. It is for this reason that many go swimming in the option pool without first learning how to swim. Before they know it, they are in the deep end, treading water and going under. Many of the online brokers have their new clients show proof of option trading experience before allowing them to trade in options. So why, you ask, should someone even consider toying with option trading? The answer is, you shouldn’t. Unless of course you already know a little something about day trading. The modern trader does not hold onto an option very long. In most cases the option gets sold the same day it was acquired. The secrets to finding the right asset to option are twofold. You must look for a stock or commodity that has a lot of movement, up or down doesn’t matter. Second, there must be higher than normal volume. If you are not properly trained or at least have some options market knowledge, you can lose your investment in an instant. I am of course referring to the American market where an option may be exercised on any trading day on or before expiration. A European option may only be exercised on expiration. There are several different styles of options available. This is just one of the many things you must know about to become a successful options trader. Types of options are Exchange traded options which are: 1. stock options, 2. commodity options, 3. bond options and other interest rate options 4. stock market index options or, simply, index options and 5. options on futures contracts And…Over-the-counter options: 1. interest rate options 2. currency cross rate options, and 3. options on swaps or swaptions.This is why you must be knowledgeable and confident before attempting to do even one option transaction. I don’t profess to being an expert, but I do know of some. I obviously don’t have the time to go into all the details now, but at my site Market Mentalist you will find all you need to know about investing online. There is access to some of the top trading systems available including software, books, newsletters, and Forums. Whether you are an inquisitive novice or a seasoned pro Market Mentalist offers the online investment resource you just might be seeking.

Online Trading Temptations…Too Much Power At Your Fingertips

admin — Mon, 14 Dec 2009 21:16:26 +0000

Your Computer Is Not a One Arm Bandit Where would we be without computers, and the technological advancements the internet offers us? Just as there is a generation getting addicted to video games, there are an alarming percentage of internet junkies. Keep in mind that online trading is becoming more and more popular too. With anything that is extremely popular comes extremist. Whatever style or strategy you engage in, remember that you are gambling with real money. You can’t continually treat your computer like a slot machine, and expect to always hit the jackpot. Without a solid and proven plan, things like going by instincts or by the seat of your pants, you will eventually fail in major way. You can however, take some of the more frightening aspects of gambling out of the equation. Instead of just rolling the dice, putting your chips all on lucky 7, or hopelessly watching the little pea spin around, you can learn what is the equivalent of counting cards. Let’s turn a tempting passion into a money making habit.I know that addiction for online trading can completely envelop a person 24 hours a day, if they allow it to. Any online trading system or plan, should have three very important elements of success. Knowledge…Training…Software… Without any one of these three basics, as tempting as it might be to trade online, you will ultimately lose your entire investment capital. Let us assume that you have some knowledge or you wouldn’t be researching the market. Any training you receive should be for technical analysis, or you are just wasting time and money. Technical analysis training must be centered around candlestick charting, which will become your equivalent of counting cards, which I just referenced. It matters not what market you trade in, stocks or options, currency, commodities and futures, the following advice will help you. For those of you not yet familiar with candlestick charting, I will try to give a brief but accurate explanation. The Chinese invented the market concept, and the Japanese perfected charting techniques with the use of the candlesticks. It is easy to understand this complex system, if we simply break it down to the ticks on the chart you follow every day. We know that the lower tick is where the stock opened and the higher is where it closed. Now if we made the two lines parallel and connected them, what would we have? A candle. However, during that movement, the stock might have gone lower or higher then where it opened or closed, so our candle has formed a tail and a wick. Is it starting to make a little sense to you? Can you see the advantage of knowing this information, for getting in and out, and setting a stop loss?Knowing Candlesticks Will Ensure Your Online ProfitsTake these examples: 1. Let’s assume a stock opens twenty cents higher than it closed yesterday. It later closes ten cents higher than that. Should we get in? Not necessarily. Because as the candlestick showed us, even though it had a thirty-cent swing from the day before, a long wick was created. This meant that it went even higher then it eventually settled on. That tells us that the pressure to go higher wasn’t strong enough. We will put it on our watch list, and keep a keen eye on it.2.A few days passes with similar results. Suddenly there is a break in the resistance. The stock has formed a candlestick with a long tail. What does this convey? We might put a buy signal for a couple of cents higher than it has previously gone, because the long tail tells us that the bulls are ready to take over.3. Ideally you want to wait for clusters to form. Of course the greatest indicator is a long candle. One that opens and closes with hardly any wick or tail.This synopsis could have very easily taken place over a few hours rather than days, if you were day trading, for example. There are many “characters” in candlestick charting, and those who master reading them become successful.

Software That delivers Gives You a Successful PlatformChoosing the Right Program Is like Hitting the Jackpot. As far as software platforms, the following suggestions I strongly feel are necessary for any software to be useful.1. It must be able to offer live streaming technical data. (Otherwise the program is merely educational) 2. The platform should defiantly include candlestick charting.3. Visually it has to be large enough for all the data to be seen easily. (Many of the online brokerage’s technical data is too small to be useful) 4. It must be cost effective. (Most good systems can be purchased for between one and two hundred dollars)If you can acquire software that gives you even the slightest edge in your favor, it is well worth the Investment. I don’t profess to being an expert, but I do know of some. I obviously don’t have the time to go into all the details now, but at my site Market Mentalist you will find all you need to know about investing online. There is access to some of the top trading systems available including software, books, newsletters, and Forums. Whether you are an inquisitive novice or a seasoned pro,Market Mentalist offers the online investment resource, you just might be seeking.

Option Strangle Magic » penny stocks

Options Trading… Small Risk, Big Payout For Small Investors

Online Trading Temptations…Too Much Power At Your Fingertips