Day Trading Options
Before we discuss day trading options we will first discuss day trading and what it is. Day trading is the buying and selling of financial instruments such as stocks, stock options, futures contracts, commodities, stock options and more. These financial instruments are traded within the same trading day and all positions (most often) are closed by market close. This type of trading resulted due to harsh market daily declines in the late 1980’s as well as a few in the early 1990’s. These large market declines made it impossible for investors to be able to communicate with their brokers resulting in legislation allowing everybody access to the markets. As a result day trading became very popular in the early to mid 1990’s.
When learning about day trading options, you will learn that options are legal agreements that give buyers the right, but not the obligation to buy the underlying assets at a future date. Additionally you will learn that you need to develop and implement a trading plan. There are certain rules that should be a part of your trading plan and these trading rules are included below.
Follow Strict Guidelines – first you must be sure that your trading plan is precise and very specific. You should have a tested, reliable plan to give you something solid when you hit a losing period.
Verification – verification is key to successful day trading. You must ensure that your trading plan has been inspected and that it works before you begin to trade. (you can practice paper trading options in order to verify your trading plan)
Testing – again you can test your trading plan via paper trading online. Through testing your plan you will be build the confidence that you need to trade successfully and to believe in your plan.
Investors will also learn about the two basic types of options orders called “puts” and “calls.” Puts are contracts that are offered by sellers outlining the conditions in which the investor will sell a stock. Calls are contracts made by a buyer offering the conditions in which he or she will buy a particular stock. Additionally you will learn that each contract will consist of the purchase item, the strike price, the expiration date, and the quantity.
For more information regarding day trading and trading options continue to read additional newsletters and blogs in the Candlestick Forum site and enjoy!
Each signal represents a condition of investor sentiment. A Doji or Spinning top illustrates indecision. A big Belt Hold signal, Bullish Engulfing signal or Piercing signal illustrate decisive investor sentiment. This information is very useful at market turns but the candlestick formations are also very useful for identifying what investor sentiment is doing at specific technical levels. It can be easily seen in the Dow chart that the top of the trend channel was a decisive resistance level over the past two days of trading. Identifying the type of signal that is created when that top trend channel resistance area was hit made it easier for a candlestick investor to start taking some profits.
DOW
Trend analysis, for the markets in general, help to provide the possible 'expectations' occurring in candlestick price patterns. This information allows an investor to take advantage of the expected results of a pattern that is setting up. If the general market is moving in an identifiable fashion, not demonstrating any severe selling, the candlestick patterns have that much greater probability of breaking out to the upside.
Because candlestick analysis is purely a visual analytical process, it is very easy to learn the patterns and understand the psychology that has formed them. The Candlestick Forum recently recommended SVA. It was setting up a nice Fry Pan Bottom pattern. Purchasing this stock was not deterred by the actions of the markets. The movementsof prices in a candlestick pattern are based upon the buildup of investor sentiment specifically related to the individual trading entity. Simply stated, the results of a Fry pan bottom are going to occur even when the markets in general are showing sloppiness.
SVA
Without any major deterrence for a big price move to occur, establishing the correct option strategies becomes much easier. The Candlestick Forum Option Trading videos negates the common thinking about options strategies. Most investors think successful option trading is a function of the sophistication of the option trades. The exact opposite is true. Successful option trading starts with identifying which price moves have specific potentials. There are price moves that make buying the call only the best strategy. There are other price move evaluations that warrant simple option spreads. Successful option trading involves applying the correct option strategy to the correct price move. Please check out the candlestick forum option training videos. Click here for more information.
The Candlestick Forum chat room is open during market hours. The chat room is a forum for learning how to use candlestick analysis correctly. It allows an investor to reinforce their learning process. It is a good source for bouncing ideas or getting second opinions about a trade. An excellent by-product is the identification of excellent trade situations being brought to everybody's attention as they occur. With many dozens of investors watching for specific price patterns, developed from candlestick patterns, produces a community of investors all looking for the same high probability price movements. The awareness of the SVA trade was the result of chat room participants bringing it to everybody's attention as a strong Fry pan bottom set up.
Today, CERS was brought to everybody's attention as a good Scoop pattern breakout. This sharing of information produces profitable trade situations as well as reinforcement to an investors education on candlestick analysis. The sharing of trade information in this room has produced multiple profitable trades during many market conditions.
CERS
Going into the holidays usually produces some excellent trade conditions. If you would be interested in visiting the daily chat room to experience the candlestick information and learning process, e-mail admin@candlestickforum.com for a two week introduction special. You're learning and understanding of candlestick analysis will improve dramatically when exposed to other investors insights and experiences in this room.
Chat session tonight at 8 p.m. ET - Learn how to find a high profit option trade potentials. Click here for instructions.
Good investing,
The Candlestick Forum Team
**NEW - Options Training Videos
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