Visit RiskDoctor.com for Options Trading Education from thinkorswim Co-Founder and Author of Options Trading The Hidden Reality, Charles Cottle.
www.guerillastocktrading.com I have got oodles of interest on my pair trading article and the play I entered in both Apple and Research In Motion. I went long Apple and short Research In Motion. The approach of matching a long position with a short position in two stocks of the same sector is called pair trading. This forms a hedge against the sector and the general market that the two stocks are in. The hedge created is essentially a gamble that you are placing on the two stocks; the stock you are long in against the stock you are short in. As its name suggests, a pair trading line of attack is a double-pronged method, where two apparently unrelated option or stock positions are opened simultaneously. The tactic can give somewhat of a safety net to defend against an unexpected move in a certain sector, while capitalizing on a specific equity’s relative-strength backdrop. In effect, a pair trader hedges his or her bets, opening positions in two interrelated equities or indexes and working them against one another, choosing 1 call (bullish) position and 1 put (bearish) position. The duo of positions then collectively gives money-making returns amid a number of outcomes. For instance, I had a great point of view regarding Apple, but a pessimistic sentiment concerning Research In Motion. I went long on Apple whereas I shorted Research In Motion. I also had an uneasy sentiment concerning the entire technology sector. By taking a short position in Research In Motion, it … Video Rating: 4 / 5
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Looking for a way to hedge your currency exposure with limited risk? What are the best strategies for implementing your views on the major currencies? Where do you think the US dollar is headed?Join John Jagerson, a renowned author and Forex trader, as well as founder and contributor to LearningMarkets.com as he explores the latest market developments and the best ways to manage risk and make profits using FX options strategies. FX options may be a new product to many Forex traders but they have been indispensable tools for successful investors in other capital markets for years. In this presentation, you will be introduced to the core concepts of options and how they work in the Forex. While Forex trading offers fantastic benefits for leverage or gearing, income opportunities and massive liquidity, it also has some serious disadvantages. It can be very difficult to create an effective hedge in a volatile FX market and the market’s inherent volatility makes whipsaws a common occurrence. Forex options can be used to reduce or eliminate these problems. Come find out why institutional and retail traders are using options to speculate, control risk and make income in the FX market.
www.trading-strategies.info , showing you how to read and trade Forex Price Action the easy way. This tactic is one of the corner stones to my current forex trading strategies. Its simple, but don’t under estimate the power of this method. It can be used as a “bolt on” to any Trading Strategy that you currently use.
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October 5, 2011 at 6:36 pm
Contrary to what you may believe forex trading systems are not just a set of rules. They includes other aspects of trading such as how you enter a trade, how you exit a trade, money management and last but not least, psychology. Goes without saying, effective forex trading systems will give you an edge in the market and ultimately, a profit.
Ideally such a system will give you an edge in the markets such that you are right more than 50% of the time. As you may have seen, there is no shortage of “trading edges” on the internet. But be careful when choosing which one to go for as many are just too complicated, expensive or plainly ineffective.
Successful traders operate with a mindset that allows them to make clear, timely and objective trading decisions. This isn’t something you find in a trading system. This is something you develop across generally a long time of trial and error. However, the specific forex trading strategy has a huge influence on how long it takes you to get that trading mindset.
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So what do people mean when referring to forex trading systems?
It generally means a set of strict trading rules (or approaches) that can come in various forms. Some of them use explicit indicators such as moving averages or momentum oscillators. Others use more obscure (and proprietary) indicators, generally in the form of software or “black box” indicators.
Some people argue that there is an inherent flaw in these systems. Many of these systems claims that the traders must follow every single trade signal the system generates, else the profitability of the system will be void. Some go as far as programming all the rules (be it explicit or more obscure) into a piece of software (trading robots) and letting the software do the trades with the broker directly without any human interaction. This invariable (in the good and the bad) eliminates any emotional trading mistakes.
To a large extent I agree with these views. One of the main benefits of forex trading systems is that they are automated and backtested over a number of years. If you believe history repeats itself, then you have a good chance of making a profit. If you start “tweaking” the system you risk eliminating the profitability of the rules and hence reducing your probability of making a profit out of it.
Some of the most popular forex trading systems are nothing else than an optimized version of forex strategies such as range trading, trend trading, scalping and carry trading. Perhaps the more objective one is forex news trading.
One key element all of these systems need to have for you to develop the appropriate mindset is that they need to allow you to control the amount of leverage you are taking, no matter how profitable the system is.
Alberto Pau (BSc, MSc) is a leading online options trader and risk management consultant in the forex and commodity markets. Alberto spent 7 years trading derivatives (both vanilla and exotic) for some of the world’s largest investment banks.
Next, I have put together perhaps the greatest gift of all times. If you want to be able to do what you really want with your life and generate as much cash as you want anytime and anywhere, you’re in luck.
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“A real decision is measured by the fact that you’ve taken a new action. If there’s no action, you haven’t truly decided. “ Tony Robbins.
John would love to help traders learn how to trade using weekly options for weekly gains, conservatively and consistently. For more info on trading weekly options go to www.optionsweekly.org
John would love to help traders learn how to trade using weekly options for weekly gains. For more info on trading weekly options go to www.optionsweekly.org Video Rating: 5 / 5
As the decline from the last major 85.90 corrective high lacks pace with 3 wave price swings in both directions, we suspect the market is in the midst of a declining wedge pattern. This formation typically has 5 separate waves that themselves break into 3 wave patterns, labelled ABC. Thus as the recent 83.30 base holds there is scope to extend the short term recovery back to about 84.40. However, as short term resistance at the 85.25 level contains, stay bearish for a decline to new lows of about 30 to 40 points or an ideal interm 82.80-90 objective. Only over 85.90 as this point would be out of character and suggest a larger upside reversal has already begun.
This is the first of a series of reports that I will post each quarter summarizing my trades and performance. My aim is to give you an options trading tutorial by breaking down the sources of my portfolio results so that you can track how each strategy is doing. I’ll also include anything that I’ve learned for the quarter and what I have planned for the near future. Also, I’d love to respond to any questions or comments that you may have. I hope you enjoy this Q1 report.
Important Events – 2011 Q1
The year began with some disappointment in that my account at TD Ameritrade was being closed due to my being located in a “high risk” country. It turned out to be a blessing and I have been really happy with Interactive Brokers since switching over.
Japan and Libya were the big stories this month, no point going over the details, I’m sure everyone is familiar. I actually thought the market would fall a bit lower than it did, and did not benefit from the recovery as much as I perhaps should have.
I achieved my goal of a 1-2% monthly return with no major drawdowns. This is my goal each month so that my yearly target is a return of somewhere between 12-24%. I am on track for roughly an 18% yearly return. Thankfully, I was able to avoid the 7% drawdown that the market experienced between February 18th and March 16th.
Below is my portfolio breakdown:
Portfolio Results
IRON CONDORS, CREDIT SPREADS AND NAKED TRADES
This was my best strategy for the month. I have a couple of open trades due to expire on April 16th but these are quite likely to expire worthless which is the best possible result for me. Highlights include: • Earned a total of ,725 from a total of 17 trades. • 88% success rate (15 out of 17)
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SHORT TERM TRADING AND DAY TRADING
This was my worst strategy for the month, due to a single bad trade. On Jan 28th, it looked like the correction everyone had been expecting had finally arrived, I bought 2 SPY 132 Feb puts in and watched as the market dropped nearly 2% for the day. I had a roughly 0 gain on the first day, and expected the market to continue to fall. Unfortunately the market bounced back over the next couple of days and rallied right up to expiration leaving my position worthless. Ironically the day after the options expired worthless, the market started to correct for real this time falling 7% over the next couple of weeks. Looking back on this trade my main error was that I didn’t have a clearly defined exit strategy for the trade. I could have done a number of things differently:
1) Closed the trade at the end of the first day for a nice short-term profit 2) Closed the trade at the end of the third day as the market had rallied hard and it was obvious my view was wrong. I would have broken even or had a small loss at this point 3) If I still believed the market would correct, I could have potentially rolled the position to the next expiry month which would have been a very profitable trade
One of the main things with trading is to learn from your mistakes. With this trade I learnt that I need to clearly think about my exit strategies from both a profit and a stop-loss perspective. I’ve also learnt that perhaps this strategy may not be suited to my trading style so I will need to look at my trading plan again and re-evaluate.
Below is a summary of this strategy: • Lost 6 for the quarter (lost 4 on one trade) • 75% success rate (9 out of 12) • 1 large loser, a lot of small winners. Not an great outcome……
COVERED CALLS AND CASH SECURED PUTS
I did not trade this strategy heavily this quarter as I was expecting the market to correct and these are bullish strategies. I did enter trades as the market was correcting and placed trades between late Feb and late March. This strategy did well for the quarter proving that sometimes patience is important. A few positions are still open and due to expire in April and May but are looking good so far. Some highlights include: • Made ,656 from 5 trades • 100% success rate (5 out of 5)
Summary
Overall I made ,964.25 for the quarter or 4.51% on my starting capital of 0,106. This nicely met my goal of 1-2% per month and I am on target for an 18% yearly return. My winning trade ratio was 85% with 29 out of 34 trades making a profit.
During Q2 I hope to again achieve my goal of 1-2% per month. I will stick with what is working for me and reduce my short term trading and day trading. My Q2 target for the S&P 500 is 1375 and my year-end target is 1400.
Thank you all for your continued support and I hope you enjoyed this options trading tutorial. Best of luck with your trading over the coming quarter. As always, I would love to hear from you with any comments or questions.
Happy Trading!
Gavin McMaster is an options trading coach at Options Trading IQ where you can find loads of free options trading tutorials.
Foreign exchange Arbitrage is a trading technique aimed to gain revenue out of the inefficiency in overseas forex pairs. Although arbitrage strategy requires large amount of funding, there is not a risk concerned compared to other current trading strategies.
The currencies often traded in overseas alternate are mentioned to be self-correcting as a consequence of the transaction relies upon merely on the regulation on supply and demand. Hence, the opportunity introduced to earn profit is limited and it requires the traders to behave quickly upon seeing the real-time pricing quotes.
With the intention to make revenue, it’s vital to take benefit of the inequalities and inefficiency in currency pairs. The value distinction should be handled swiftly by shopping for the foreign money which presents a lower price and concurrently sells it on a better price.
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The dedication of arbitrage necessitates using arbitrage calculator. There are quite a few forex calculators accessible on-line which you’ll find a way to download to your convenience.
Ordinarily, the arbitrage strategy involves two to three currency pairs. Foreign money pair refers again to the quotation of the price of one country’s foreign money when exchanged to a distinct currency. Examples of forex pairs are EUR/USD, GBP/USD and AUD/USD. Click her to forex trading software Download
Supposing that the alternate fee for EUR/USD is 0.291; EUR/GBP is 0.427; and USD/GBP is 1.4690. If you’re a trader with an investment amounting to US0,000, you can buy 87,300 value of Euros. Your 87,300 Euros can be utilized to purchase 204,449.sixty four Pounds. In flip, your Kilos can be bought for US0,336.52. That provides you a profit of US6.52.
Primarily based on the calculation, your US0,000 only offers you a small quantity of earning. As a market trader, you have to be affected person in watching the fluctuation of the currencies based on real-time pricing quotes. The mispricing of currencies is considered an ideal funding opportunity which it is best to take benefit because the scenario is merely temporary.
The arbitrage strategy has two kinds. The primary is a two-means arbitrage which is essentially the most commonly used hedging strategy. On this sort, there are two foreign money brokers providing different quotations for the currency you wish to sell. To earn revenue, you will promote your foreign money to the broker that provides you higher worth than your purchasing price.
The only way to win in a Forex Market is to use proper technical analysis which is mainly depends on proper technical analysis. We have to learn exact price action methodology to survive in this dynamic market.
Technical analysis is based on three underlying principles:
1. Market Action Reflects Everything This means that the actual price is a reflection of everything that is known to the market that could affect it. For example, supply and demand, political factors and market sentiment. The pure technical analyst is only vital issue with price movements.
2. Prices Move in Trends Technical analysis is used to identify the pattern of market behaviors. For many given patterns there is a high probability that they will produce the expected results. Also there are recognized patterns which repeat themselves on a consistent basis.
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3. History Repeats Itself Chart patterns have been recognized and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little with time.
If you are involved in online FOREX trading you can look at charts and see long term trends that last for months or years and many of them (in fact most of them!) run against what the papers and the so called experts say!
To be a successful in online FOREX trading all you need to do is focus on these trends and forget the news and media, media experts don’t get paid to trade, they get paid to write ‘stories’. Focus on the reality of the price, not the media hype and you can make big profits in online Forex trading.
Does Forex Technical Analysis Really work?
Absolutely! Forex technical analysis works to produce winning trades; many successful traders encourage taking an approach by using technical analysis to determine which trades are going to produce profits.
What being an Professional Forex Technical trader can do for you?
He can give you trading education, or he help you with trading signals. If you not convinced, let him trade your account for free. Right, you don’t pay any money; you pay only a percentage from profit.
Helmut Renner is a highly experienced Forex full time trader, with over 10 years specializing in Currency Analisis. He is action-oriented and has a strong work ethic. But more than that, he develop trading systems, strategies, and computer systems for international business management. Want to learn more about how to trade forex for profit online? Claim Helmut’s popular free e-course, available at: http://www.forexheli.com
