Strangle Options Strategy » Investing

The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets [Hardcover]

admin — Thu, 22 Jul 2010 23:45:49 +0000

“Jeff’s analysis is unique, at least among academic derivatives textbooks. I would definitely use this material in my derivatives class, as I believe students would benefit from analyzing the many dimensions of Jeff’s trading strategies. I especially found the material on trading the earnings cycle and discussion of how to insure against price jumps at known events very worthwhile.” —DR. ROBERT JENNINGS, Professor of Finance, Indiana University Kelley School of Business “This is not just another book about options trading. The author shares a plethora of knowledge based on 20 years of trading experience and study of the financial markets. Jeff explains the myriad of complexities about options in a manner that is insightful and easy to understand. Given the growth in the options and derivatives markets over the past five years, this book is required reading for any serious investor or anyone in the financial service industries.” —MICHAEL P. O’ (more…)

Developing A Trading Plan – Pt 4

admin — Mon, 25 Jan 2010 08:51:04 +0000

Testing a trading Plan
Before they begin in the market, some traders find it helpful to ‘paper trade’ the market for a while. This involves taking ‘hypothetical’ positions in the market and then monitoring these to see what the outcome will be.
Before doing any physical futures trading at all, the first move is to start by paper trading. A trading plan must be able to be measured. E.g. “I’ll risk no more than 2% of my capital on any given trade”. It can’t say “I won’t use too much of my equity for margin.”
Traders whose systems are more technical in nature will ‘back test’ their system against historical market data to determine the success of the system in that particular market. A trading system can be as simple as a few rules or as complex as a Black box technical analysis package. The key is that the system matches your personal trading style. You can either create a system from scratch or buy a readymade package. Either way it is advisable to test the system with dummy trades before doing the real thing. Some experts recommend 10 years of back testing with historical data (black box systems) where as others recommend a shorter time span for the testing of a simpler system. It is very important to perform your own testing on any ‘off the shelf’ systems, and not rely purely on the seller’s recommendations.
While all of these techniques are beneficial, prospective traders need to be aware that simulated trading – no matter what its form, does have its pitfalls.
Experienced traders will often say that there is no substitute for having real money in the market. Depending upon traders own discipline, the way they react in this circumstance could be very different compared to when the trade was purely hypothetical. In addition, while a market’s past performance can provide some general clues as to its price behavior, there is no guarantee that this will be repeated in the future.
Individuality
Trading plans are individualistic, based on such factors as personal experience, education, risk capital and tolerance toward risk. For this reason, trading plans may differ greatly from one trader to another. A trading plan may work better with some people than others. Consequently, you must develop a trading plan that works best for you. Among other things, this requires patience, rigid adherence to the rules that you establish, meticulous record keeping of trading performance (which provides valuable feedback) and an open mind to try new methods. There are no guarantees of profitability in the world of futures investing, but the discipline of a trading plan goes a long way toward making you a successful futures trader.
Now let’s look at some of the
SAMPLE TRADING PLAN (GENERAL SUMMARY OF MARKET ACTION)
Trading Philosophy / Trading Psychology:
I believe that Financial Markets are 100% psychology driven.Price patterns are a reflection of the collective psychology of a large number of traders.Trading psychology also a major factor in my own trading. It is identified as my trading state. Fear and Greed are powerful enemies to profitable trading and I can overcome this by training my subconscious mind to be focused on following a defined trading plan versus focusing on wins and losses.I am a disciplined trader committed to trading only for profit strictly adhering too my trading rules, plan and standard operating procedures.My style of trading is aggressive with my preference to trade directional, and pattern set ups. I will trade full time as a day trader and also seek other trading opportunities especially dealing with Options.I will not have a bias as to where the market may or may not head, I will react to the price, patterns and my tools as they present themselves applying my trading rules.I trade what I see… Not what I think!I understand that I cannot control the market, I can control only myself. My trading state and mindset is the key to the success of trading. I must be rested, fit, healthy and mentally alert. Accepting the stress of trading by keeping focused, calm, disciplined and not distracted is essential for being a professional trader.Losses are acceptable, not desirable but I can minimize them with compliance to the rules, especially avoiding impulse trades and never being in a trade without a plan or a stop.Trading is a business and I am here for the profit.
Golden Trading Rules:
Check for Stops and targets resting in the Market then update or remove them.Look left for previous structure.Always Set a Stop Loss. Always!Maintain Discipline.Avoid impulse trading. Trade with a plan and stand by the rules.Identify, Predict, Decide and Execute (IPDE).Do not enter a market within 15 minutes after a news event.Get S.E.T. (Stop, Entry, Targets) before every trade. (Know where and how to Exit…)If I lose my ISP then call my Broker immediately and go flat, then work on the technical challenges to get back online.Keep it simple.
Money Management, Risk Reward and Financial Goals:
I will trade 4 contracts as a unit maximum for the S&P e-mini.I will trade 3 contracts as a unit maximum in the Russell e-mini.For every $5K that I add to my account I can add a contract to a unit. If I reduce my account by $2K then I will reduce the contract size.Commissions, fees, charting services, continuing education and other business related costs are considered essential to trading.Risk to Reward is preferred a 2 to 1 ratio, but waiting for the set up and trading the rules is paramount and given the opportunity this standard is a guideline. My goal is to successfully net 9 combined points per week in the market.My desire is to train for the FOREX so that I can diversify looking for the best opportunities as I see them.
Daily Routine
I will only trade on days when I am well rested, relaxed and not mentally distracted by matters that will divert my focus. I will spend at least 15 minutes relaxing to music or a form of meditation after a good nights rest before trading.Conduct a Pre-Market Analysis myself, perform a top-down review of the major markets and develop a plan of the day. The trading day is from 9:30 a.m. (EST) to 4:15 p.m. divided into a morning session, lunch and afternoon session.I do not trade for the first hour on Mondays.I do not enter any new trades the last half an hour of the market hours (1545 – 1615 EST).After I have met my goal or the market is closed I will log my journal and then spend quality time with my family.At some point before the end of the day I will revisit the S&P trading day and back test my plan and system.
Pre-Market Analysis
Understanding that 70% of the volatility occurs during the first 2

The Role of a Cta, Commodity Trading Advisor

admin — Thu, 21 Jan 2010 21:42:06 +0000

Commodity Trading Advisor, Genuine Trading Solutions, a registered CTA with the CFTC, says the role today of a CTA is constantly evolving.

Dwayne Strocen, President of Genuine Trading Solutions says once upon a time a Commodity Trading Advisor was content to be known as a Portfolio Manager trading commodities and futures for a managed futures fund. There is no question today’s investor has become more sophisticated. In response, today’s selection of investment products has become ever more complex and varied, the need for the CTA to understand the uses and management of these products becomes even more acute.

So what exactly is the role of today’s Commodity Trading Advisor. Certainly trading of derivative products for a managed futures fund continues to be as important as before. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.

The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth. The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor. No doubt as products continue to evolve so too will the CTA evolve to meet the need of today’s professional money manager.

Derivative products are no longer limited to exchange traded commodities futures and options. There continues to be an ever expanding list of over-the-counter derivative products. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy. The second problem is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.

A Commodity Trading Advisor’s role is no longer sufficient to be limited to trading. It is now imperative to understand the industry in a new light so to understand the changing investment environment. Analysis now becomes the catalyst to include a value added service to retain customers. This includes structured products, risk management and OTC derivatives. Continuing education has been and continues to be the hallmark of the best in the industry.

Start Trading: Throw Those Excuses Out The Window

admin — Tue, 19 Jan 2010 21:02:56 +0000

People make all kinds of excuses as to why they cannot get involved in investing or trading the financial markets. In this article, some of the most prominent are debunked.
“I don’t have time”
Despite being one of the most frequently heard, this is probably the most pathetic excuse for not trading there is. Why? Because the availability of technology and information in the modern day means that we can operate in literally any time frame we want. Many people, when they hear “trading”, think it means sitting in front of the computer all day. While that certainly is one form of trading, most of us do not have the schedule to allow us to dedicate hours each day to monitoring the markets. The good news is that we don’t have to in order to trade effectively.
I will use myself as an example. My college coaching position has me frequently in the gym, in meetings, and on the road. What’s more, I run a club program and a couple of businesses on the side. In 2004, even though there were long periods when I did not trade at all, and I probably only put on a dozen total positions all year, I was still able to make 200% in the stock market. If I can trade given my schedule, and have performance like that, anyone can.
“I don’t have the money”
In the past, this was a pretty viable excuse for not trading. These days, though, one can trade with relatively little money. Transaction costs have dropped dramatically over the last decade and there are more trading options than ever before. There is one particular trading platform which allows an individual to put on trades of at little as $1 in value, and they have no minimum account size requirement.
Is it better to have more money? Absolutely. The more capital you have at your disposal, the better are your available options and the more actual money you can make in raw dollar terms.
Having more money is not always a good thing, though. For the inexperienced trader, it is better to have only a little money at risk. Why? It is the same as anything else. Just like anyone new to a skill make mistakes as they are learning, so do new traders. And just as a coach would not willingly throw a new player in to a championship game against experienced opponents, neither should those new to the markets to take on large trades and put significant portions of their assets at risk. It’s common sense. Better to make the inevitable mistakes when there is relatively little at risk.
“It’s too risky”
Trading is only as risky as you make it. If you take risky trades, then trading is risky. If you don’t, then it isn’t. There will always be the risk of losing money on a trade. That is completely unavoidable. But that could be said about all of life.
Driving is one of the most risky things in the modern world, but we still do it. We reduce the risk by obeying traffic rules, planning our route, wearing seatbelts, paying attention, and all that. Does that completely eliminate the risk that of ending up in an accident? No, it doesn’t. Nor does it necessarily keep us out of traffic jams or from getting lost. We understand the risks, though, and weigh them against our need to get places in a timely fashion.
Trading is the same. We do it because it helps get us where we want to go, in this case financially. There are going to be hiccups along the way, but if we are focused and conscientious, we can minimize the risks, and potentially the damage an unfortunately turn inflicts, and remain on course.
“It’s too complicated”
Technology and competition have combined to make trading so much easier than it has ever been before. All it takes is a couple of clicks and you can execute a trade, check your positions, get news, and anything else you need to do. The fact that you are reading this article says you have all the basic skills necessary to trade or invest.
Can trading be complex? Sure it can. There are those in the markets who use complicated software, mathematical algorithms, even artificial intelligence. None of that is necessary, though. Some of the best traders use little more than price quotes or a simple bar chart. How intricate you get is strictly a matter of personal preference, not necessity.
Is there a learning curve? You bet. Trading is like anything else. There are things you need to know. The good thing, though, is that there are loads of resources out there to help you learn.

Directional Vs Non Directional Trading Strategies

admin — Tue, 12 Jan 2010 21:11:29 +0000

We can classify trading strategies followed by all types of traders into two broad categories as directional trading strategies and non directional trading strategies. Both strategies require different types of approaches, different levels of market knowledge and different trading requirements. Directional trading strategies are trading strategies which include taking long and short positions in market. Traders profit when the prices of instruments in which he take long positions rises and when the prices of instruments in which he take short positions drops. Most of the trading strategies practiced by common traders are directional trading strategies. Some common examples of directional strategies are trend trading strategies, breakout systems, moving average cross over strategies and pattern recognition strategies.Non directional trading strategies, on the other hand, are market neutral strategies. The trader does not take any net long or short positions; instead he matches his positions smartly. Most non-directional trading strategies are complex strategies which require very good automation and pre-defined trading rules. These strategies are for expert traders and big players. Some common examples are sector matching strategies, pair trading strategies, arbitrage strategies and stock matching strategies.Advantages of directional trading strategies include,1. Most of them are simple and flexible, so that any kind of trader can follow.2. They can be used to trade all kinds of financial instruments – stocks, options, futures, funds, bonds, currencies, commodities, all.3. They need less automation and technical analysis skills.4. The basic idea is to go long in an uptrend and to go short in a downtrend.5. Traders can use basic risk minimizing tactics like stop losses and position offsetting.The disadvantages are; most of them can only be practiced when market is trendy, there is higher downside risk and position sizing limiting, also traders are limited with their risk minimizing tactics.Advantages of non-directional trading strategies include,1. They suit you, if you are a large-scale trader with high position sizes.2. Most of these strategies demand calculated diversification, which is a good risk minimizing tactic.3. Trades are done according to pre-determined strategies thus less human interfere (and emotion) involved.4. Traders can limit their trading risks in may ways – traditional and innovative.The disadvantages are; not suitable for all types of instruments and markets, require complex trading system and good market knowledge, and require extreme money management.

Day Trading Software Choices …Puts You In The Right Call

admin — Mon, 11 Jan 2010 21:34:51 +0000

As a former broker for a few years, in the late 90’s, I had many of my clients tell me that they couldn’t take advantage of a certain recommendation because they had lost their extra money day trading. Back than the access to sophisticated software programs was limited and also rather costly. Today we are so inundated with software systems, it’s almost impossible to know where to turn. There is a way to make your decision easier if we break it down into the areas you wish to learn more about. For instance, are you searching for educational help or a better method to track an asset concentrating on its trends? Stock trading has become one of the Internet’s largest growing activities, not only at the professional level, but as an investment-based extra activity as well. This will also determine which program or system best fills your requirements.To properly consider what software will best suit your needs, we must first determine a mutual understanding. Most investors who use the internet, know about swing trading. If you are not a day trader or long term investor, you are a swing trader. Many so-called experts lump all online traders into the bag of day trading. For the sophisticated observer it is plain to see the obvious differences. A day trader rides the rush of the asset, while a swing trader diagnosis the trends and holds onto it as long as the momentum last. If we are in agreement on these points than you will be able to comprehend the following suggestions I strongly feel is 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 to small to be useful) 4. It must be cost effective. (Most good systems can be purchased for between one to two hundred dollars)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 everyday. 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? Take these examples:

1. Lets assume a stock opens two cents higher than it closed yesterday. It later closes three cents higher than that. Should we get in? Not necessarily. Because as the candlestick showed us, even though it had a five 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 pass 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, 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.

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.

Swing Trading…Less Pressure Than a Day But Big Rewards

admin — Mon, 11 Jan 2010 08:58:50 +0000

Between Day Trade and TrendsIf you are not a day trader or long term investor, you are a swing trader. It usually means you are holding on to a stock for at least a few days, but not more than a few weeks. Swing trading is traditionally considered a low risk venture, especially for thosewho trade the large cap stocks. But is there really such things as low risk in these volatile times? Of course you can always just keep shorting the market. I think that can be the most risky in our current atmosphere. Some experts will tell you that swingtrading only works in a stable market, where the prices don’t fluctuate. I think most regular folk always saw the market as a playground for the big cats. That was until the influx of trading companies to the internet. So how much investment capital should you have? To quote the investment companies disclosure, and I’m paraphrasing; “never invest more than you have to lose.” It is like gambling, make no mistake about it. However 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. Before we go any further, I would first like to determine that you are indeed researching swing, and not day trading. All part time traders are swing traders, because you simply can’t monitor an asset that you might want to transact at any second, on a part time basis. These rebels of tradition are literally traders, rather than investors, but can reap huge rewards in a relatively short period of time. This is the itinerary of a day trader. If you can’t commit or don’t have the time to pursue this strategy properly, I suggest you do indeed look into swing trading. Please don’t misunderstand me, swing trading can be a full time job as well, and for thousands it is. You just can’t do day trading part time.

Make no mistake however, in both strategies as with anything connected with investments, you had better be knowledgeable. Always have an exit plan or stop loss in place and it is essential that you have an excellent technical charting platform. Knowledge and Training Lead to ConfidenceConfidence Leads to ProfitLet 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. 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 are too small to be useful) 4. It must be cost effective. (Most good systems can be purchased for between one and two hundred dollars)Let the Candles Light Your WayInclude Candlestick Charting for Even Greater ProfitsFor 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?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.

Stock Market Trading Software…Up Or Down You Make Money

admin — Sun, 10 Jan 2010 21:31:48 +0000

These Fundamentals Aren’t TechnicalI believe in order to lay a solid foundation for successful trading, there are three basic fundamentals you must adhere to. The first is knowledge. There are only three things really that separate us from an expert. Training and experience comes after knowledge. Knowledge comes first, and expertise is accomplished through experience and constant training. So, how knowledgeable are you? Let us assume that you have some knowledge or you wouldn’t be researching the market. Do you know the difference between day trading and swing trading? To me there is a major difference. Many so-called experts lump all online traders into the bag of day trading. For the sophisticated observer it is plain to see the obvious differences. A day trader rides the rush of the asset, while a swing trader diagnosis the trends and holds onto it as long as the momentum last. Knowing these subtle nuances will determine what kind of software you need.Training encompasses a lot of different meanings. For our purposes I want to address technical analysis. I strongly feel any trader not taking advantage of the immense knowledge gained from technical charts is wasting time and money. Of course the fundamentals are important. They are much more important to the investor than the trader, however. A company’s financials don’t matter a great deal if you are planning on dumping the asset in a few minutes, a day, or a week. If there was any news about the company’s financials, believe me you would see it reflected on the technical charts.Use Software for Your AdvantageA Solid Platform to Build Your WealthNow based upon the idea that my assumptions are accurate, and you are still with me, 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 to small to be useful) 4. It must be cost effective. (Most good systems can be purchased for between one to two hundred dollars)More on Candlestick ChartingA Candle Burns Bright in Your FutureFor 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?Take these examples: 1. Lets 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.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.

Stock Trading Tips…Power Moves For The Day Trader

admin — Sat, 09 Jan 2010 20:59:15 +0000

Day Trading Power and Understanding All of the Rules To understand the concept of day trading power, you must know a few other key facts first. Most people who trade online have some kind of understanding about the differences between the styles of trading. First of all, if you are buying and selling any asset in a short term manner, you are a trader, not an investor. Many traders are also investors. There are basically two kinds of traders, although that is sometimes up for debate, day traders and swing traders. Many so-called experts lump all online traders into the bag of day trading. For the sophisticated observer it is plain to see the obvious differences. A day trader rides the rush of the asset, while a swing trader diagnosis the trends and holds onto it as long as the momentum last.Day trading power is the limit of the amount of these trades that can be done by an individual trader, which also includes a minimum amount of trades that can be transacted per day. You must also be aware of The Securities Exchange Commission, and all rules concerning day trading. A day trader must function under certain regulations which include minimum equity requirements for a day trader account, as the day trade buying power of that account and what defines a trader as a day trader.

Once a trading account has been designated as a day trader account, you must calculate the day trading power of that account. That formula is fairly complex, and I highly recommend that, as with all online investing, you seek professional guidance. There are many ways to get help with this information, with a minimal cash outlay.For those of you math wizards that love formulas, here it is.4X Maintenance Excess = DTBP. For those of you currently scratching your head, you must also figure what maintenance excess as well. That calculation is: Total Positions + Total Cash = Total EquityTotal Equity-Non-Margin Positions= Margin EquityMargin Equity-Maintenance Requirement= Maintenance ExcessThese figures are based on the previous day’s closing prices. Along with figuring DTBP and knowing what makes a trade account a day trader account, you must understand the minimum equity requirements for such an account. Most brokerages require a fairly substantial amount of twenty to thirty thousand to set up your account. If your day trading account goes below that minimum equity requirement, you will be issued a “call” to bring it up too minimum, if not, your trades left in the account can be liquidated. Your day trading power can only remain operational if you maintain your minimum equity requirement and your trading activity remains within the set limits. 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.

Trading Stocks…Online Way to Make Your Day

admin — Sat, 09 Jan 2010 09:21:28 +0000

Knowledge and Training Lead to ConfidenceHaving an online broker account can afford you a total sense of power. All of them offer the traditional personal help for a price. Some online brokerages will give out free advice, however, as always, the decision whether or not to trade is left totally at your discretion. For the novice, the easiest ways to get involved with on line trading is with stocks. As a beginner you must be made aware of the stock market vernacular. Day trading is trading that from the moment you take a position to the second the transaction is complete, only one trading day has elapsed. This may seem very obvious to most of us, however, there are so-called experts who lump all online traders into the bag of day trading. For the sophisticated observer it is plain to see the obvious differences. A day trader rides the rush of the asset, while a swing trader diagnosis the trends and holds onto it as long as the momentum last. Anyone who is just getting their feet wet with online trading should begin as a swing trader. With the proper software you can swing trade while keeping your job or enjoying your retirement. Swing trading is traditionally considered a low risk venture, especially for those who trade the large cap stocks. But is there really such a thing as low risk in these volatile times? Some experts will tell you that swing trading only works in a stable market, where the prices don’t fluctuate, but I feel that if you are properly trained you can make money no matter what the market is doing. So how much investment capital should you have? To quote the investment companies disclosure, and I’m paraphrasing; “never invest more than you have to lose.” It is important to set a limit on how much you plan on trading with, and the amount you are comfortable with losing. It is like gambling, make no mistake about it. However 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. For example, the term stop loss is one that you should know and understand its meaning before placing any position. It is the amount of money you are willing to bet that you are right about your decision to get in when you did. If you are long, than the stop loss is placed just under lows it has already reached. That way if the stock goes south your losses are kept at a minimum. There are three basis fundamentals, I believe that every foundation for sound trading should be built upon. Knowledge Training SoftwareKnowledge is Gained by ExperienceProper Training Will Lead to a Successful ExperienceThe only thing that separates an intelligent person from an expert is knowledge. 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. They are many facets to technical analysis, but the one I’d like to touch on briefly is candlestick charting. When I first started trading, it was the one part of training that is the easiest to comprehend. Don’t get me wrong. It takes a keen eye and patience to master it. 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?Your Software Platform Should Be Technically SoundFour Ways to Ensure ProfitsAs 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 are too small to be useful) 4. It must be cost effective. (Most good systems can be purchased for between one and two hundred dollars)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.