Forex Trading Info » trading education

Protect Your Stocks Using Put Options

ghost — Sun, 25 Apr 2010 04:00:36 +0000

Hoping and praying that the stocks that you just bought will go up is not the best strategy to use, however it is the one very often used by the average Joe stock trader who is stock trading internet. The only salvation they have is that in bull markets most stocks will go up.

Statistics show that in a bull market about 75% of the stocks will follow the general trend and go up, and in a bear market 75% will also go down. Trading with the trend is the best way to trade as 9 out of 12 stocks will follow the trend and give you the best chance of making gains on your stock purchases.

But what if you own some good stocks and don’t want to sell when the market is clearly going down, or about to go down?. There are a couple of tactics that you can consider, both of which involve the use of options, CALL options and PUT options. There is the widely known strategy called Covered Calls, and the much lesser known one called the Married Put.

If you are going to trade options it is important that before you start trading you get the best option trading education that you can. You should also practice stock trading until you are comfortable with the process. This is a very important point that must be taken seriously, if you don’t understand the terminology and the theory then you should not be trading options. If the terms Put option, Call option, Married Put and Covered Call are new to you then don’t trade until you have studied sufficiently.

Selling calls against your stock in 100 share increments is the basis of the covered call strategy and it can provide about a 2-7% buffer against the loss in stock price. However a bigger drop in the stock price will not be compensated for using the covered call strategy, in general.

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Stocks in a bear market, and even in a bull market, can drop quickly on news or earnings releases, as much as 15 to 40% within a month. Using covered calls to protect your stocks will only provide limited protection of less than 7% at best and so will not save your account if the stock takes a 40% tumble.

The better solution to providing down-side stock protection is the option strategy called the Married Put. As the name suggests the PUT that you buy is used to provide protection when the stock goes down because Put options will increase in value when the stock decreases in value. The term married is used because the option that is selected has to be very compatible with the stock, in other words a good match, if the strategy is to work.

The selection of the best Put option is not straight forward and involves several criteria which are listed below:

1. The strike price of the option

2. The current stock price

3. Choice of options, in or out of the money

4. Put expiration time

Even though the married Put protection only has a limited life span if offers much more protection than the covered call. It can provide as much as 90-95% loss recovery in the event of a significant drop in the stock price.

The downside of the good protection is that you have buy the Put which is a debit whereas the covered call is a credit. But there are ways of off-setting this expense and there is much more to this strategy when executed correctly. The Married Put can be made to pay for itself and used to generate good gains if the market, or stock to be specific, moves a lot.

The general idea of the Collar Trade is to combine the covered call and married Put strategy into one, this is what is called the Collar Trade. In effect you put a collar around the stock, sell a call and buy a PUT. If you do this correctly most of the cost of the Put can be offset by the credit from the covered call so you can protect your valuable stock at almost no cost. Yes this is a great strategy which the general public is unfortunately very ignorant of, and most brokers don’t understand.

The strategy that I have outlined above is unknown to the average stock market trader but is one of the best trading systems you could have.

Forex Trading Technical Analysis

ghost — Sun, 13 Dec 2009 04:54:25 +0000

Forex Trading Methods: What makes a trading method “good”?

Technical Analysis: In my last articles, I shared that for any Forex trading method to be considered, it must be first, a complete method (insert link to previous article) and second, it must teach specific risk management rules. Today’s article on how to find the right trading method for Forex trading revolves around Technical Analysis. For additional info see read my Forex Income Engine 2. I think the best Forex trading strategies are primarily based on technical research, without being 100 percent mechanical or automated.

As you are already aware, there are 2 first forces acting in the Forex markets : elemental information, which include such indicators as balance of trade information, money supply, IRs, financial and economic reports, for example. For additional read this ForexIncomeEngine 2.0. Utilizing technical indicators means the fundamentals are already reflected in the price of the market at any given instant.

While this means you are working more often with slightly lagging indicators, the advantages to using a forex trading method based on technical analysis mean that you spend less time identifying potential trades and when you have identified a trend and look to enter a trade, you have much more data to support the trend’s existence than if you are simply trading on the ‘news’.

Furthermore, by using technical analysis and applying it through a trading method, you can trade the markets on your own terms, when you want to trade and how you want to trade them, without needing to grasp the minute details of what fundamental reports ‘really’ mean.

If you’re interested in Forex, or have been somewhat “spooked” by what’s been going on with the markets, then this may be the most important trading video you’ll ever see this year.

Why is that? Because after you watch it, you’ll be scrambling to get started trading Forex this way…

At last bringing flexibility and customization to Forex day trading so that anyone can have an “edge”, even if you only have 20 minutes to trade, or all day. Your choice.

Of course this Forex video is by none other than Bill Poulos. This is a little preview of the Forex Income Engine 2.0. Yes Bill Poulos has upped the ant. It is not enough to have release the best trading method course for 2008, IMO. He come out with even more pip pulling methods and advice. For additional info see see my Forex Income Engine.

What Makes a Trading Method “Good”?

ghost — Wed, 09 Dec 2009 00:47:08 +0000

Foreign exchange trading Techniques : What makes a trading strategy “good”?

Today I would like to take a jiffy to speak about currency trading strategies, as we are continually snowed under with new techniques or systems almost everyday, and I think traders have little risk of having the ability to identify the right ones to use, the best performing or the most tutorial. With so many techniques, systems and automated programs, how does one select the one that is best for you, or the one that gives you the best opportunity for foreign exchange trading success?

I’ve developed an easy set of guidelines to follow when assessing a currency trading methodology, course, system or program and today I need to share them with you.

First and foremost, any currency trading technique you consider must be complete. More info Forex Income Engine 2.0 Flexible Forex Day Trading By complete, I mean the Forex trading method must teach you the following:

1. The exact conditions in which you can consider a Currency exchange trade to be entered into. These are called the “setup” conditions and refer to the technical suggestions ( sometimes ) a Foreign exchange trade likelihood exists.

2. The precise point at which you would enter into a Foreign exchange trade ( price ). This refers back to the Entry Point ( or Entry Rules ) and means the price at which a Foreign exchange trade would be executed.

3. Rules for establishing initial and ongoing Stop loss marks for an open Forex trade. As a part of Risk Management, it is insistent, particularly in Foreign exchange , to have Stop Losses ALWAYS in effect. If a currency trading system or currency trading system does not teach or outline these, you must desert it — without effective stop loss management you may be simply wiped out in a single Currency exchange trade if the currency market move against you.

4. The precise points and an efficient method for exiting a Currency exchange trade. Unlike stocks, you can infrequently, if ever, end up holding a Currency exchange pair position in the Foreign exchange markets for extended amounts of time. More on Forex Income Engine 2.0 Lunch Time Trading , it’s also crucial a strategy teach you a technique for exiting a Foreign exchange trade once that trade has become profitable.

Combined, these four elements will help you to dump chance by streamlining your foreign exchange trading decision making process. Without any of these, no forex trading method, system or program should be considered because in each individual case, forex traders will be exposed to steep losses or taking poor Forex positions. Bear in mind, not every setup will execute into a Foreign exchange trade, nor should each Foreign exchange trade be taken. Mixed , these rules will help to guard you both in judging a technique for its use and in executing the strategy when trading Forex.

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Finding a Better Forex Trading Method

ghost — Tue, 01 Dec 2009 18:01:20 +0000

If you are reading this article, you’re potentially inquisitive about entering the currency market, but do not know where to start. There are loads of folk and organizations out there claiming to provide you with all the answers to a successful forex trading experience. The best way to truly begin learning forex is to enroll for one of many forex trading courses available. Before you begin ,however, it’s important that you sign up for a forex trading course that will give you the data you want to succeed. Read more on ForexTimeMachine

Watch out for folks and firms saying that the forex training they offer is certain to make you rich. You want to target learning everything you can about forex trading and the forex market itself, before you even think about profits. Profits are important, but you can’t get to those profits without a correct forex trading education. If you’re truly inquisitive about making a profit trading in foreign currency, you may learn about the market, its fluctuations, as well as the risk and rewards.

Before you sign up for a forex trading course, consider how much data you already have about currency exchange. If you have basic understanding but feel you need more to be successful in the foreign exchange market, you may want to consider a forex instructional course that you can take online for the further information. With some background info on foreign currency, you may need to consider register for a free forex coaching course.

Time is money, this old addage is even more true when it comes to trading forex. For this reason many people rely on a machine to do their trading. Afterall machines are fast and efficient at analyzing information and can trade 24 hours per day. The disadvantage to machines is they are restrained by the algorithm which controls them and will all too often loose cash additional cash than the make.

There’s no substitute to learning the art of forex trading from forex pros such as Bill Poulos of Profit’s Run. Forex Time Machine is Bill’s latest forex training course is the culmination of years of experience both as a professional trading and forex trainer. Find out more on the Forex Time Machine

If on the other hand, you haven’t any idea how to work out U.S. Greenbacks ( dollars ) to EU Bucks ( EUR ), there are plenty of beginners’ forex trading courses available. Many of those forex coaching classes are available on the net for convenience and at local learning centers for a more in-depth study of trading foreign currency.

Since you are looking into foreign exchange trading to beef up your income, it is also vital that you don’t become a victim of expensive forex trading courses. While you should be expecting to pay some fee for these courses, you should not over extend yourself learning how to make cash. If your forex coaching instructor charges too much cash, simply move on to the subsequent tutor.

With such a lot of information, available, learning forex is so simple as purchasing a book or enrolling for a class. There is not just one forex guru from whom you want to learn. Find a forex training class that promises to teach you the basics at an amount that you are feeling happy with. Since the forex market isn’t bound to one single location,eg the NY Stock Exchange, you can find classes online that give you free demos.

If your position doesn’t make allowance for pricey forex trading courses, a little research will yield masses of results for free forex coaching. More about Forex eduction Find out additional information on here by Profits Run

the only way to begin learning forex is to enroll for a training course. If you make a decision to sign up for a free forex training course, supplement what you learn with books on foreign currency, watch the market for changes, and learn all that you can thru other inexpensive means. You don’t have to be a millionaire to find pre-eminence in forex trading ; all you need are the right tools for success. Learning forex and changing your fiscal future all begin with the right forex training.

Collar Strategy Can Protect Your Stocks

ghost — Sat, 10 Oct 2009 12:08:36 +0000

If you are going to trade options it is important that before you start trading you get the best option trading education that you can. You should also practice stock trading until you are comfortable with the process. This is a very important point that must be taken seriously, if you don’t understand the terminology and theory then you should not be trading options. If Put option, Call option, Married Put and Covered Call are new to you then don’t trade until you have studied sufficiently.

The better solution to providing downside stock protection is the option strategy called the Married Put. As the name suggests the PUT that you buy is used to provide protection when the stock goes down because Put options increase in value when the stock decreases in value. The term married is used because the option that is selected has to be very compatible with the stock, in other words a good match, if the strategy is to work.

The selection of the best Put option is not straight forward and involves several criteria which are listed below:

1. The strike price of the option

2. The current stock price

3. Choice of options, in or out of the money

4. Put expiration time

The downside of the good protection is that you have buy the Put which is a debit whereas the covered call is a credit. But there are ways of offsetting this expense and there is much more to this strategy when executed correctly. The Married Put can be made to pay for itself and used to generate good gains if the market, or stock to be specific, moves a lot.

The general idea of the Collar Trade is to combine the covered call and married Put strategy into one, this is what is called the Collar Trade. In effect you put a collar around the stock, sell a call and buy a PUT. If you do this correctly most of the cost of the Put can be offset by the credit from the covered call so you can protect your stock at almost no cost. Yes this is a great strategy which the general public is unfortunately very ignorant of, and most brokers don’t understand.

The strategy that I have outlined above is unknown to the average stock market trader but is one of the best trading systems you could have.

More Currency Trading Methods

ghost — Thu, 27 Aug 2009 13:30:30 +0000

Forex Trading Methods: More Keys to a good method

Forex trading is littered with methods, systems and automated programs — the challenge is finding the right one for you. IN our latest series we covered many of the keys to idenitfying a good trading methodology. Today, we would like to expand on that list.

First, a good trading strategy will duck using too many technical indicators, or, avoid any use of the inaccurate technical indicators. The significance here is simplicity. See more info Forex Income Engine 2.0 Forex Day Trading. Any strategy that weighs a forex trader down with too many indicators is rather more likely to puzzle the currency exchange trader , or, create conflicting trade potential.

So one key to a good technique is the use of some indicators which together can identify a robust trade opportunity. We have found it rarely requires more than 3 or 4 indicators working together to accomplish this. If a forex trading method is using more than that, forex traders should be cautious.

As well, any method should not be 100% mechanical. See Forex Income Engine 2.0 Review. By mechanical, we mean no room for market interpretation. A good trading method will allow the forex trader the flexibility to see the larger picture – for example, is a forex pair in an extended downtrend? If so, is now the right time to buy an uptrend? A mechanical system may ‘signal’ buy – but a forex trader who doesn’t apply the bigger picture or direct interpretation of what’s happening in the market may blindly follow such signals and be at risk of significant loss.

A good method should use simple indicators to identify a trending forex pair, and use them in such a way to provide higher probability profit potential and lower risk.

Last, a good forex trading method should provide objective rules that help the forex trader establish trading discipline. On discipline, we are referring to the actions of trading — purchasing, selling, setting stops, for example. If too many decisions are left to the forex trader, they are too likely to be indecisive, afraid or unable to pull the trigger on their trading actions. So it is vital the rules of a trading technique be simple to follow, but make allowance for some interpretation about entering a trade.

With these extra keys, a currency trading methodology is rather more likely to offer a successful trading experience for the currency exchange trader . See more info Forex Income Engine and Flexible Forex Day Trading.