November 2, 2008
Make Money Trading Stocks and Shares
You make money by day trading online. So, bullish call and bearish put spreads are two of the very basic option trading strategies. However, it is not guaranteed a 100 % win from the stock market. You still need to learn to predict the stock price direction accurately using technical, fundamental and news analysis.
Your choice of what method to enter and exit stocks plays a critical part in your stock market success. Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market. Too many people and too many Wall Street experts or mutual fund managers are buying and selling stocks like madmen, with no sound strategy or any hope of long term success. Ironically, they’re the ones who create opportunities for prudent, long term oriented investors.
Are you ready to follow the wealth cycle so that you’re earning more when you’re ready to retire? Or, do you want to depend on social security and the ever-volatile stock market for your future well-being. You can choose a wealth cycle today. All it takes is the first step.
But be very aware. The NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual funds had rude awakenings after the huge losses and scandals in many of the famous fund names.
I remember reading some years ago that 97 percent of all gamblers lose over time. If you gamble on the stock market then the odds are well stacked against you. However, if you invest in the stock market then you have the potential to do very well.
Also be wary of mechanical trading systems, the thought of having mechanical trading systems you can simply use to generate automatic profits, is obviously very attractive to many traders. Most traders however, end up disappointed with mechanical trading systems, as they never seem to live up to the sales hype, and the performance figures used to sell the system never seem to be repeated in real life.
Another problem is curve fitting or optimization of mechanical trading systems. These systems yield extraordinary performance in back testing because of the tweaking of the system rules to make them fit the data. A trader once likened this to shooting holes in a barn door, and then drawing circles around every hole to make each shot a bulls-eye!
Not all mechanical trading systems are doomed to failure, but if you want to get one that works, be realistic and do your homework first. As mechanical trading systems need historical data inputted into them in order to calculate what might happen in the future. Of course what has happened in the past is not always an accurate predictor of how any kind of stock will behave in the future. If this was true then we would all be rich!
By: Allen Jesson
About the Author:
Your choice of what method to enter and exit stocks plays a critical part in your stock market success. Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market. Too many people and too many Wall Street experts or mutual fund managers are buying and selling stocks like madmen, with no sound strategy or any hope of long term success. Ironically, they’re the ones who create opportunities for prudent, long term oriented investors.
Are you ready to follow the wealth cycle so that you’re earning more when you’re ready to retire? Or, do you want to depend on social security and the ever-volatile stock market for your future well-being. You can choose a wealth cycle today. All it takes is the first step.
But be very aware. The NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual funds had rude awakenings after the huge losses and scandals in many of the famous fund names.
I remember reading some years ago that 97 percent of all gamblers lose over time. If you gamble on the stock market then the odds are well stacked against you. However, if you invest in the stock market then you have the potential to do very well.
Also be wary of mechanical trading systems, the thought of having mechanical trading systems you can simply use to generate automatic profits, is obviously very attractive to many traders. Most traders however, end up disappointed with mechanical trading systems, as they never seem to live up to the sales hype, and the performance figures used to sell the system never seem to be repeated in real life.
Another problem is curve fitting or optimization of mechanical trading systems. These systems yield extraordinary performance in back testing because of the tweaking of the system rules to make them fit the data. A trader once likened this to shooting holes in a barn door, and then drawing circles around every hole to make each shot a bulls-eye!
Not all mechanical trading systems are doomed to failure, but if you want to get one that works, be realistic and do your homework first. As mechanical trading systems need historical data inputted into them in order to calculate what might happen in the future. Of course what has happened in the past is not always an accurate predictor of how any kind of stock will behave in the future. If this was true then we would all be rich!
By: Allen Jesson
About the Author:
Allen Jesson writes for several sites, making sense of internet marketing strategy and shows you how to make money online with a home based net marketing business.
Filed under Non Fiction by Administrator
October 24, 2008
How To Get An Edge In Stock Option Trading
A good understanding of volatility is important to option trading. A misunderstanding of this topic could leave a trader with losses and frustration as to why their trades that and go as planned. In this article, I am going to discuss the two primary types of volatility that an options trader may want to consider before placing their trade.
There are two types of volatility that should be considered before placing an option trade. The first type is called implied volatility and is more closely tied to the options price. The second type is called statistical volatility and is more closely tied to the price of the underlying security.
Statistical volatility is sometimes referred to as historical volatility. It’s a measure of how volatile and market is and reflects the day-to-day fluctuations of the prices for that market. So, a market with a statistical volatility of .90 will be more volatile than one with a measurement of .25.
Implied volatility is derived from an option pricing model. It’s the volatility that is implied in the price of the option. If traders who are involved in option trading are expecting some future event to radically move prices of the underlying security, they may want the buyer to pay more for the option that they are selling. When this happens the implied volatility increases. However, if the option seller is not very excited about what could happen in the future, options prices may reflect very little implied volatility.
So, how is all of this useful? When options traders compare statistical and implied volatility they can determine whether or not the option’s price is over or undervalued based on the difference between these two values. If the implied volatility is higher than the statistical volatility, the option’s prices would be more expensive than if the option’s pricing model reflected the implied volatility closer to the statistical. If the statistical volatility value is higher than the implied, it would mean that the option prices are cheap because the daily fluctuations are greater than the anticipated future price movements of the underlying security.
Some traders fine option trading very rewarding. And, a good understanding of these two topics will go a long way in the education and trading results of options trader. This is especially true if the option trader buys options or options spreads for a net debit.
By: Sam Perdue
About the Author:
There are two types of volatility that should be considered before placing an option trade. The first type is called implied volatility and is more closely tied to the options price. The second type is called statistical volatility and is more closely tied to the price of the underlying security.
Statistical volatility is sometimes referred to as historical volatility. It’s a measure of how volatile and market is and reflects the day-to-day fluctuations of the prices for that market. So, a market with a statistical volatility of .90 will be more volatile than one with a measurement of .25.
Implied volatility is derived from an option pricing model. It’s the volatility that is implied in the price of the option. If traders who are involved in option trading are expecting some future event to radically move prices of the underlying security, they may want the buyer to pay more for the option that they are selling. When this happens the implied volatility increases. However, if the option seller is not very excited about what could happen in the future, options prices may reflect very little implied volatility.
So, how is all of this useful? When options traders compare statistical and implied volatility they can determine whether or not the option’s price is over or undervalued based on the difference between these two values. If the implied volatility is higher than the statistical volatility, the option’s prices would be more expensive than if the option’s pricing model reflected the implied volatility closer to the statistical. If the statistical volatility value is higher than the implied, it would mean that the option prices are cheap because the daily fluctuations are greater than the anticipated future price movements of the underlying security.
Some traders fine option trading very rewarding. And, a good understanding of these two topics will go a long way in the education and trading results of options trader. This is especially true if the option trader buys options or options spreads for a net debit.
By: Sam Perdue
About the Author:
Sam Perdue has been actively trading the markets for over 13 years. He has written a computer program that helps traders analyze the stock, Forex, commodities and options markets using Fibonacci ratios, Elliott Wave, option pricing and nonlinear programming algorithms. For more information, please see our option trading software.
Filed under Non Fiction by Administrator
October 18, 2008
The Pitfalls Of Day Trading Stock Online
An intelligent trader once said, `The only difference between gambling at a cassino and day trading stock online is that you have to serve yourself drinks when sitting at your home computer.`
Sure… some day traders have made some decent money through day trading stock online. But these are the exception, not the rule. Most day traders lose in the long run and that `long run` aint too long at times!
You see, the trouble is… most day traders are seeking a `quick fix`. Their persona isn`t suited to mid term or long term trading. They quite likely have lost money in the past, either through gambling of some sort, or through losing patience with longer term trading strategies that turned sour. They most likely don`t have a large capital base, especially if they`ve been wiped out a few times in the past. And so the concept of… day trading stock online is incredibly appealing.
Unfortunately, far too many traders who`ve either made the switch to day trading – or who are brand spanking new to it and thereby lack basic risk management skills, embark on a journey they`ll never forget… for the wrong reasons!
For one thing, seduced by the apparent simplicity of it all, many traders approach the whole thing of day trading stock online without really knowing what they`re doing. Secondly, they have little or no concept of the underlying risks involved. Thirdly, as I`ve already alluded to, they often find themselves `horribly undercapitalized`. Fourthly, and most definitely a deal-killer…
They play with borrowed funds!
Not a good move… and a breach of fundamental trading basics to boot!
So, is it even possible to make a living from day trading stock online?
Yes it is. But the odds are stacked against you from day one. You absolutely positively HAVE TO HAVE A PLAN… or you`ll lose… simple as that.
For starters… you have to know your entry and exit points BEFORE entering the market. It`s no good waiting until the market has moved so far against you that you`re too frightened to take the loss! When you participate in day trading stock online you have to leave your emotions at the door and follow your plan like your life depends on it (which some might argue `it does`).
Suppose you buy 1,000 shares of abc-xyz at $1 per share – on a day trading basis… and you notice that the stock rises 30 cents a share before lunch. The left-side of your brain coolly advises you to `get out and pocket a massive $300 profit`. Hells bells… 30% in a morning is a good earn!
However, you also have this other side of your brain which has no basis in logic. It is commonly referred to as the `emotional side` or right-side of your brain. It also has a deeply embedded relationship with every gambler`s nemisis… `Greed`. Accordingly, you decide in your professional lack of wisdom to… `Just hold on in there a little longer… it`s bound to go higher`.
You go out and make some lunch, have a coffee… and smile…in the knowledge that you`re a day trading wizard who is on the brink of making a fortune. And it`s all so damn easy!
1.45pm…
The stock has reached intraday highs of $1.37… `Maybe it`ll hit $1.50 by closing bell?`
2.52pm…
News comes out that the company`s patent is invalid… the stock plunges to $0.60 in three minutes…
For you, the dream has not only been shattered, but the sky has just fallen in… and your $1,000 investment has reversed a $337 profit into a $400 loss… and it`s still falling.
You find yourself hurled into a maelstrom of helplessness, fear and chaos…but with no plan in place, you simply hang on in there.
3.30 pm…
Trading in the stock is suspended. The last trade went through at $0.42. You are so stunned you can`t even shed a tear. Your day trading career lasted precisely 6 hours, 22 minutes and 8 seconds…
`Welcome to the frenetic world of… day trading stock online`.
For some of you, this article may very well bring back some rather painful memories. For others, let it be a warning…
If day trading stock online is something that you are serious about and want to succeed in, then at least show you`ve got the intelligence, emotional control and discipline to survive the bad hits as well as bagging the big profits!
There are over 10,000,000 web pages in Google dealing with courses and coaching on the subject of day trading stock online. So, before you risk another cent… do yourself (and your bank account) a favour… and start researching the mentoring options out there… until you find one that suits.
By: Jimmy Cox
About the Author:
Sure… some day traders have made some decent money through day trading stock online. But these are the exception, not the rule. Most day traders lose in the long run and that `long run` aint too long at times!
You see, the trouble is… most day traders are seeking a `quick fix`. Their persona isn`t suited to mid term or long term trading. They quite likely have lost money in the past, either through gambling of some sort, or through losing patience with longer term trading strategies that turned sour. They most likely don`t have a large capital base, especially if they`ve been wiped out a few times in the past. And so the concept of… day trading stock online is incredibly appealing.
Unfortunately, far too many traders who`ve either made the switch to day trading – or who are brand spanking new to it and thereby lack basic risk management skills, embark on a journey they`ll never forget… for the wrong reasons!
For one thing, seduced by the apparent simplicity of it all, many traders approach the whole thing of day trading stock online without really knowing what they`re doing. Secondly, they have little or no concept of the underlying risks involved. Thirdly, as I`ve already alluded to, they often find themselves `horribly undercapitalized`. Fourthly, and most definitely a deal-killer…
They play with borrowed funds!
Not a good move… and a breach of fundamental trading basics to boot!
So, is it even possible to make a living from day trading stock online?
Yes it is. But the odds are stacked against you from day one. You absolutely positively HAVE TO HAVE A PLAN… or you`ll lose… simple as that.
For starters… you have to know your entry and exit points BEFORE entering the market. It`s no good waiting until the market has moved so far against you that you`re too frightened to take the loss! When you participate in day trading stock online you have to leave your emotions at the door and follow your plan like your life depends on it (which some might argue `it does`).
Suppose you buy 1,000 shares of abc-xyz at $1 per share – on a day trading basis… and you notice that the stock rises 30 cents a share before lunch. The left-side of your brain coolly advises you to `get out and pocket a massive $300 profit`. Hells bells… 30% in a morning is a good earn!
However, you also have this other side of your brain which has no basis in logic. It is commonly referred to as the `emotional side` or right-side of your brain. It also has a deeply embedded relationship with every gambler`s nemisis… `Greed`. Accordingly, you decide in your professional lack of wisdom to… `Just hold on in there a little longer… it`s bound to go higher`.
You go out and make some lunch, have a coffee… and smile…in the knowledge that you`re a day trading wizard who is on the brink of making a fortune. And it`s all so damn easy!
1.45pm…
The stock has reached intraday highs of $1.37… `Maybe it`ll hit $1.50 by closing bell?`
2.52pm…
News comes out that the company`s patent is invalid… the stock plunges to $0.60 in three minutes…
For you, the dream has not only been shattered, but the sky has just fallen in… and your $1,000 investment has reversed a $337 profit into a $400 loss… and it`s still falling.
You find yourself hurled into a maelstrom of helplessness, fear and chaos…but with no plan in place, you simply hang on in there.
3.30 pm…
Trading in the stock is suspended. The last trade went through at $0.42. You are so stunned you can`t even shed a tear. Your day trading career lasted precisely 6 hours, 22 minutes and 8 seconds…
`Welcome to the frenetic world of… day trading stock online`.
For some of you, this article may very well bring back some rather painful memories. For others, let it be a warning…
If day trading stock online is something that you are serious about and want to succeed in, then at least show you`ve got the intelligence, emotional control and discipline to survive the bad hits as well as bagging the big profits!
There are over 10,000,000 web pages in Google dealing with courses and coaching on the subject of day trading stock online. So, before you risk another cent… do yourself (and your bank account) a favour… and start researching the mentoring options out there… until you find one that suits.
By: Jimmy Cox
About the Author:
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Filed under Non Fiction by Administrator