Posts Tagged ‘Using’

Pt 4 John Jagerson – Hedging with Limited Risk Using FX Options

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.

Investment Series: Infer Bias – By Using Seasonal Factors

The Blog Entry that Accompanies this Vlog is here: investorandtrader.blogspot.com My Daily Blog is at: investorandtrader.blogspot.com My Podcast is at airelon.podbean.com and embedded in the daily blog and can be found at itunes under “Airelon” This video is part of a series. The introduction to this series, can be found by clicking here: investorandtrader.blogspot.com After that introduction, I discussed the fact that Buy and Hold is not dead. Within this “Investing Playlist”, I then discussed the fact that the kernel, the root of my investing approach, is that of the “Dogs of the DOW” approach. Modified of course. I then discussed the importance of dividends, and then I discussed what I look for when it comes to dividends. We then discussed the power that DRIP (Dividend Reinvestment Plan) has to compound your returns. Now let’s talk about inferring bias to your purchases, so you can get the best price for your investment …NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and risk tolerance
Video Rating: 4 / 5

Ratio Trading: Making money using options

Ajay Jain of Kare Global is the author of a book on Ratio Trading, it is an intraday strategy which uses options; and using options it can make money apparently even regardless of the direction of the stock market. In an exclusive interview to CNBC-TV 18, Jain explained how this ratio trading strategy, using options, works.

A Scalping Trade using the Forex 4x Pip Snager System

A Scalping Trade using the Forex 4x Pip Snager System More information about Forex Pip Snager: www.forexpipsnager.com

Using Forex Binary Options To Hedge Your Position In The Spot Market

You can bet on the direction of the currency market with the help of forex binary options. Forex Binary Options are also known as Exotics. These contracts give you a fixed payoff of 0 if the market is above or below a certain price level on the expiry of these binary options contracts. And in case the market does not cooperate, you get as a payoff. You can trade forex binary options on currency pairs like EURUSD, USDCAD, GBPUSD, USDJPY with intraday, daily and weekly expirations.

The most popular forex binary options are the hourly and half hourly forex binary options. Forex Binary Options can be used in hedging your spot positions in the forex market. Let’s illustrate this with an example. Suppose, you are trading EURUSD pair on the daily charts. You go long at 1.2567 with a stop loss of 30 pips hoping that the uptrend will continue for the next few days. You are expecting to make some nice pips.

Forex Binary Options come with half hourly, hourly, daily, weekly and monthly expirations. You can trade them in many ways. But here we are going to show you a unique way in which you can use them to hedge your spot positions. This forex binary options strategy can be used to reduce your risk further in the spot market. Suppose, you want to trade the EURUSD pair. It is in an uptrend. You take a long position on EURUSD when the exchange rate is 1.2567 and place the stop loss 30 pips below your entry. Suppose, you are trading on the daily charts!

So, you decide to use forex binary options to hedge your position in the spot market. Your stop loss order will be triggered at 1.2537. Suppose it is 11:00 AM. You buy 5 forex binary options contracts on EURUSD with strike less than 1.2537 for a premium of . This contract will expire next day at exactly 11:00 AM. Now,if the exchange rate ended up lower than 1.2537, you will get 0 per contract and if it doesn’t, you will lose your . In other words, you make 0 if the EURUSD rate expires below 1.2537 next day at 11:00 AM and you make nothing if it expires above 1.2537 next day at 11:00 AM. You total cost for creating the hedge is 0 or 10 pips if you are trading a standard lot of 0K.

Now, in case your spot trades develops as you had planned, you lose 0 that you had invested in creating the hedge with the forex binary options. But this is a small premium that you had to pay just like the auto insurance premium that you pay to insure your car. Suppose, next day, you are already up in profit by 30 pips. So your cost of creating the hedge is already covered. But suppose, you lose 30 pips and the EURUSD exchange rate ends up below 1.2537. Your payoff on the five forex binary options contracts will be 0 minus the 0 you lost when the stop loss was triggered giving you a payoff of 0 when the market had moved against you!

This forex binary options strategy can be used in hedging your position in day trading, scalping and swing trading. Sometimes, traders are reluctant to enter into a trade with a stop loss of 30-40 pips or more even when there is a good risk to reward ratio. Using this forex binary options strategy you can hedge your spot positions and lower the risk even more making you comfortable in using a 30-40 pips stop loss.

www.informedtrades.com An overview of the primary purpose of the futures markets which is to hedge price risk and why this is important to futures traders.

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Q&A: How to build a position over time using technical analysis?

Question by Richard: How to build a position over time using technical analysis?
specifically how best to reduce risk when building a position over time (typically a bear market lasts 9 months to 2 years and a bull 4-6 years). e.g., If you want 100k invested in a stock or ETF, how to schedule each buy for a long position over time? e.g., moving averages identify the trend but not sure exactly when to schedule buys using moving averages

Best answer:

Answer by MVD34
technical analysis is largely garbage. It cannot tell you anything with certainty and most people are unable to correctly assess the (very low) probability within the models.

Instead let me given you what the numbers tell you to do with a lump sum: invest it all now.

(Yep. It’s really that simple)

And what behavioral science tells you to do: divide the money in “relatively large” chunks and pick a “relatively short” time frame and an inflexible trigger. Then invest each chunk at the trigger and never look back.

Assuming 100k is a relatively large amount of money for you (a year’s income or more), the behavioral method would recommend investing 1/6th of the money on the 15th of the month every month for 6 months.

If 100k is not relatively large, a rule might be 50% today and 50% exactly 5 weeks from today.

The particulars aren’t important — only the requirement that you invest the money largely and quickly but with just enough of a lag to make you feel (notice word choice) really smart if the market takes a 20% dump while you are doing it (a 20% increase is statistically more likely).

——————–

The problem is with trend identification. It is only, ever obvious after the fact. In statistical models — a lot of technical analysis is really “art” and “gut” not numbers — the probability is rarely above 50%. This means we will see trends that aren’t statistically meaningful in real time.

Give your answer to this question below!

Traders of Stocks and Forex Escape the Office By Using Mobile Trading Apps on Android and iPhones

Traders of Stocks and Forex Escape the Office By Using Mobile Trading Apps on Android and iPhones

Santa Monica, CA (PRWEB) January 22, 2011

Serious Forex traders are always on the lookout for the newest trend in technology for making better trading decisions and creating a better lifestyle. With the advent of Google Android which has a great potential to take the mobile operating system industry by storm, traders are naturally curious to find out the best way they can take advantage of these addictive little gadgets.

There is no doubt that Forex trading has become more available and flexible for everyone today. A Forex trader can choose from a wide array of phones and tablets now available and the device seems to be getting smaller and smaller – from laptops to mini notebooks and now to something that would fit in the palm, a mobile device. Ironically now some of the devices are getting bigger again in order to have a larger screen such as the Apple iPad. These devices make it possible to do Forex trading anytime and anywhere.

But the next question is – does the latest always mean the best? Will a smaller size device mean the trader would have greater flexibility and convenience? Technology is changing fast and no one can deny the fact that the place of Windows Mobile as the leader in mobile device operating system is now rapidly being replaced by Google Android. Android may even pass Apple’s iPhone in popularity.

The current situation puts Forex traders in a dilemma if they should purchase an Android phone right now. Fortunately, the latest video of Scott Shubert, founder of Trading Mastermind, sheds light on this matter as the Forex guru himself did his own research to find out the pros and cons of utilizing a mobile Android phone for Forex trading.

In the 12-minute video, Shubert tried out different gadgets such as Samsung Galaxy and Apple iPad to test out different Forex trading software and cites their good features as well as the shortcomings of different applications.

Forex Software Reviews

Oanda mobile trading for Android phones: This software is okay because it has a trading platform for Android phones. However it is not ideal for those who want good charting software. Users would have a hard time doing some technical analysis that would help in making sound trading decisions.

ThinkorSwim Mobile: This application has its own proprietary Android application trading platform. It has its own chart window and users can add an indicator. The downside though is that the window is so small and it’s impossible to zoom.

Swiss Forex Android App: It has a small rudimentary chart that one can enlarge by double tapping it. Users can add an indicator and change units. The number of indicators that one can add though is limited to one per channel. Shubert thinks that this application is okay for charts but still lacks some essential features that a Forex trader would need.

Mig Bank mobile: Although this broker is highly recommended by Shubert, and it is convenient because it has a trading platform for Android so users can place trades at Mig Bank using Android phones, the chart is a little too basic and lacks the vital functionalities that are desired.

Interactive Data mobile (USD $ 59.95 per month): This one is not a broker trading platform but is a mobile charting software from Esignal, now known as Interactive Data. Shubert found the inability to zoom in and out, scroll and add multiple settings of the same indicator in one channel to be a little disappointing vs. the cost.

In the end, Scott Shubert concludes that MetaTrader Mobile is by far the best Forex trading software for a mobile device. It has about everything a Forex trader needs and one can easily add multiple indicators in the same channel and save the settings to automatically remain each time the platform is opened. Unfortunately it is not yet available for Android and the developer, Metaquotes now has a reputation for being extremely slow to release new products.

As Shubert thinks that development of MetaTrader software for Android phones may take some time, he cited two software apps that can be considered the best software that is currently available for Android phones.

One is the Trade Interceptor from Android app market (http://www.tradeinterceptor.com): The application has a fully functional window that one can zoom in and zoom out. Furthermore, adding a wide variety of indicators is not a problem. Even if one cannot add two indicators in the same channel using this application, Shubert is almost satisfied with it.

Another Android app that Shubert recommends is Team Viewer Mobile (http://www.teamviewer.com) and Logmein Ignition (https://secure.logmein.com/). This software offers a breakthrough technology that has a great potential to enhance the lives of Forex traders because of its unique remote access feature. This means that one will be able to open and access his/her personal PC via a mobile device.

For more information visit: http://www.forextradingseminar.com and opt in to receive this series of free videos as well as the latest updates on trading financial markets.

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Technical Analysis using Stock Market Trading Software

Technical analysts use Stock Market Trading Software to perform technical analysis or charting as it is also commonly called. These charting tools are very helpful in providing information on momentum, direction, historical relevance and other good information that can go into making a trading decision. For the new trader it is important to note what is meant by technical analysis and how it is different from fundamental analysis, which is another commonly used stock analysis method.

Fundamental analysis, as the term suggests, relate to the fundamentals of the company in question. It has to do with its revenues, earnings, stock price in relation to its earnings, the company’s financial and management stability, its market capitalization and other such fundamental data that relate to the company and many times also to the industry that the company is in. Based on fundamental analysis, we can determine whether a stock is attractively priced, fairly priced or it is overpriced. And, we would make the decision to buy or sell based on that determination.  Fundamental analysis is more of a qualitative analysis of the company and its stock price. More often that not long-term investors perform fundamental analysis and make their investment decisions based on the results of the fundamental analysis. The drawback of fundamental analysis is that it only looks at the companies numbers and does not look at other quantitative aspects such as price movement, accumulation, short and long positions, stock price historical performance and other such data related items.

That is where technical analysis comes in. Technical analysis uses stock market trading or charting software to plot the historical stock price movement in relation with time. The most basic version of this is what comes up when we click on “charts” from a stock ticker’s main menu. Depending on what level of chart one uses, one can overlay this basic chart with a number of other significant and relevant information that can tell you whether the bulls or the bears are in charge (meaning the stock price is trending downward due to bear pressure or trending upward due to bull activity), the moving averages, the trading volume information, the periodic highs and lows, the resistance and support levels and many other relevant and important factors that enable a technical analyst to make a judgment on which direction and how quickly the stock price is likely to move in the near term. Hence, this type of analysis is more used by short-term and options traders who typically want to get in and out of the market quickly. The drawback of this method, as one may expect, is that technical analysis does not look at the fundamentals of the company at all. It is not concerned with the company’s performance and financial numbers.

Needless to say, as you may have guessed it, neither method used alone is a good way to make trading or investment decisions. One can make a buy decision looking at the charts only to realize that the company declares terrible results in the next earnings release. Similarly, one can look only at the fundamentals and make a buying decision only to see that the stock price has reached a long-term resistance level and rebounded downward.

Moral of the story: Do not only rely on stock market trading software to make your buy and sell decisions. It always helps to look at the fundamentals too.

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