Candlestick Trading Blog
October 30, 2009
Currency Trading Basics
The forex market is the largest market in terms of volume and you can trade this market 24 hours per day. Traders are able to enter or exit the market whenever they would like and there are no commissions, lock limits, or daily fx trading limits. Currencies are always bought and sold in pairs directly between forex investors. When learning about the currency trading basics it is important to learn about the different forex markets that are available to forex traders. These markets are listed below. As you continue to learn about the fx market there are terms that you should become familiar with such as stop order, trailing stop order, take profit order, day order, market order, and limit order. Continue your forex trading education and see if this is the market for you. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 1:14 PM
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October 27, 2009
Stock Market Beginner
| If you are a stock market beginner, I suggest you prepare yourself for the roller-coaster of emotions all traders must learn to control. It is well noted that the markets capitalize on investor greed and fear. Fear makes investors get out of the market at any price, and greed causes them to buy at any price to get in. Your first educational goal should be learning all you can about your trading personality. The psychology of investing affects not only you, but the stock market as a whole. Which illustrates why learning emotional strategies is as important as trading strategies. Are you an overconfident trader? As a stock market beginner, overconfidence can cause you to place too many trades. Confidence is otherwise a great character trait but placing too many trades causes more fees, and can lead to higher tax consequences, resulting in overall lower profits. Are you a “me too” investor ? A common pitfall among new traders is the need to be part of the group. Everyone else is talking about the great ride they’re having on stock XYZ, causing you to feel a bit left out. Resist that urge to jump in and force a stock trade. Anyone can run with the pack. You want to lead the pack. Are you a “late joiner”? Do you follow an investment on your potential trades list, only to watch the prime entry point pass by? Does that missed opportunity chew away at you until you join in way too late? You will find more trading prospects than you can possibly watch at one time. Successful stock investors understand the importance of following a proven trading strategy. We are not suggesting that you strip yourself of all emotions. That wouldn’t be good either. Rather, learn to recognize both positive and negative feelings, and make yourself aware of how they affect your stock trading decisions. The best investors, and ultimately the most profitable, learn to balance these sensations and even put them to good use. Don’t let your investing career get cut short because you didn’t learn to handle your emotions as you trade. Join us October 29, 2009 at 8:00PM Eastern Time as we welcome Adrienne Toghraie presenting the Evolution of a Master Trader on our free public stock chat session. (Or, listen to the recorded archive session) Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 4:42 PM
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October 22, 2009
Psychology of Trading
| The psychology of trading is a concept that many investors don’t necessarily know about. Unfortunately, as a result, many traders go through a lot of money and quickly that they otherwise would not have lost to the markets. Instead of focusing only on the technical aspects of trading such as technical indicators and trading strategies, investors must learn about psychology of trading and how it greatly determines their level of success. While knowledge of trading and the markets is absolutely necessary, it is simply not enough. There are a lot of concepts associated with the psychology of investing that can not only greatly improve trading but that can also keep traders from developing bad trading behavior. Additionally, traders learn that they need to focus on their actual trading and less on the possible results. Instead of worrying about whether or not the next trade will be profitable traders must focus on the task at hand. Trading anxiety occurs when traders worry about what the result of their trade will be. This anxiety can quickly cause a trader to make poor trading decisions. Too often these trades are based on greed or fear, rather than on technical indicators and strategy. Also, when learning about trading psychology and trading behavior, the stock trader learns about the importance of having confidence in their trades. The focus is on meeting goals and measuring one’s progress on accomplishing those goals in order to build confidence. Keeping a trading journal is one way that many stock traders will accomplish this. Through documenting each trade and the progress made, this allows the trader to go back and to see what he or she has accomplished. It is also allows the trader to go back and see mistakes made. The truly successful trader will take those mistakes and will channel them into something positive. He or she will see that mistake as a learning opportunity and as a means for self improvement in one’s trading. We are pleased to have Adrienne Toghraie presenting a free webinar on Thursday, October 29th, 2009. Topic; 'Evolution of a Master Trader' and what it takes to get there. Ms Toghraie is an internationally recognized authority in the field of human development. She is the noted Author of "The Winning Edge 2" and "Traders' Secrets". Information to join this open session, (or to listen to the archived recording after the 29th). Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 3:30 PM
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October 21, 2009
Options Volatility
| What is Options Volatility? It is very important that options traders understand volatility as they learn how to trade options. Volatility tells the trader how much movement a stock is estimated to make over a specific amount of time. This helps the investor to determine whether or not an option is expensive or cheap in relation to its historical price. Through determining the volatility of a stock, investors are able to determine whether or not the option is likely to expire in or out-of-the-money. There are actually two types of options volatility when trading options. There is implied volatility and historical volatility. Implied volatility is the view of where volatility will be in the future. Pricing models are used by investors when options trading in order to determine the fair value of an option. This value tells the investors if an option is undervalued or overvalued. The option will either have high volatility or low volatility and this is determined by comparing the current market price of the option to the fair value. If the market price of the option is less than this value, then the option is cheap. Conversely, if the price is more than this value then the option is considered to be expensive. The historical volatility is the second type of option volatility and is it is calculated by using standard deviation. The calculation is statistical and it tells the trader how fast the price movements have been over a specific period of time. This deviation, which is used to determine this second type of volatility, measures the distribution of a group of data points from its average. The more spread out this data is the higher the deviation is and conversely, if the data is not as dispersed then the deviation is said to be lower. Basically, your options education should teach you that those assets that have price movements that are slow and expected are considered to have low volatility. Those assets that have large and recurring movements are considered to have high volatility. In summary, some concepts that you should learn about if you would like to trade the options markets include implied and historical volatility, and standard deviation. There are also many other concepts to understand when learning how to trade options. Continue your options trading education and see if this method of trading works for you. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 2:43 PM
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October 16, 2009
Selling Options
| Neutral Options Trading Strategies Many investors considered selling options riskier than making straight equity trades. However, with proper options training, many experienced traders make additional profits from taking option trades with stocks already in their portfolio. While the majority of options held through expiration will expire worthless, they can still provide insurance for the underlying asset. As in any stock market position, the hardest part of selling options is determining which direction the market will move, and when. Selling Covered Calls - Selling a covered call means that there are investors willing to pay for the right to take a stock if it reaches a much higher price. You should have at least 100 shares of the stock, as options are priced in 100 share lots. This can be a great stock market strategy to implement while waiting for a stock to reach your sell point. This technique can be used over and over, as an additional way to create income from the same stock. Sell Straddle - This is a more risky stock option trading strategy to sell a call option and a put option on the same asset with the same price and expiration date. This results in a limited gain for an unlimited risk. Selling a straddle requires extreme caution and constant monitoring of the position, and you must be accurate on the price direction of the stock. A Sell Straddle is definitely not recommended for all investors; the risk reward ratio is not favorable to anyone but the most experienced trader. Sell Strangle - Whether the market is stable or volatile, bullish or bearish, there is always a way to find a profit. Such is the case with a Sell Strangle. This technique requires the investor to sell a Call Option that is out-of-the-money as well as a Put Option that is also out-of-the-money; both the Call Option and the Put Option need to be on the same stock with the same expiration date. This is similar to a Sell Straddle but with a Sell Strangle, the strike prices are not the same. Calendar Spread - When market conditions are neutral (neither bullish nor bearish), a Calendar Spread is another way to make money investing in stock. A Calendar Spread, also known as a horizontal spread or time spread, is an options selling strategy where strike prices are the same, but with different expiration dates. Simple options strategies provide a tremendous source of income when the right trading strategy is applied to the correct price move. These simple trading techniques will be demonstrated thoroughly during the Candlestick Forum Option Trading program on October 17 and 18th. If you would like to learn how to dramatically increase your income while at the same time reducing your risk, take advantage of the trading knowledge that has been applied to over 20 years of candlestick application. Click here for more information. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 12:30 PM
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October 13, 2009
Options Education
| Bearish Trading Strategies As you learn how to trade options there are numerous strategies available for to you to use. In today’s article we discuss the bearish options trading strategies that options traders will use as part of your options education. Bear Call Spread – This options strategy is used when the market is extremely volatile and moderately bearish. This strategy is also known as the Bear Credit Spread and is used when there are erratic movements in the bear market. Bear Put Spread – This strategy is also used when the market is volatile and moderately bearish. This method is also known as the Vertical Bear Puts and it is used at times to realize profits when the market is looking to the money of the investor. Buying Puts – When options trading, traders will use this strategy when they anticipate that a stock will decrease in price during a specific time period. The profit is recognized when the stock and its underlying put option decrease in price during a determined amount of time. You will learn that the profit potential is limited because a stock price can never go below zero. Selling Calls – This stock option strategy is also known as selling bear calls and vertical bear calls. This strategy is bearish because the trader profits if they underlying stock decreases in value. The strategy requires the trader to buy out-of-the-money call options and sell in-the-money call options on the same stock with the same expiration date. The trader realizes maximum profits from selling calls when the in-the-money stock closes lower than it strike price at its expiration date. Put Hedge - This strategy occurs when the trader buys put during a bearish market in order to protect stock shares that the trader is reluctant to sell and that are vulnerable to a decline in the market. Traders will use this strategy to insulate their portfolios from loss in a bearish market. Simple options strategies provide a tremendous source of income when the right trading strategy is applied to the correct price move. These simple trading techniques will be demonstrated thoroughly during the Candlestick Forum Option Trading program on October 17 and 18th. If you would like to learn how to dramatically increase your income while at the same time reducing your risk, take advantage of the trading knowledge that has been applied to over 20 years of candlestick application. Click here for more information. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 3:44 PM
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October 9, 2009
Buy Gold Online
| It is more difficult to invest in commodities than it is for investors to invest in stocks and bonds. Many investors find that it is more difficult to buy gold online (or other commodities) because stocks and bonds are easily transferable and accessible to investors. Commodities are typically seen as more complex than stocks and bonds because they are traded through options markets and futures markets. When looking to buy gold you can purchase an exchange traded fund that copies the gold prices or you can trade futures or options in the commodities markets. You can also opt to buy gold as a physical asset as well. This is easier to do for the average investor because gold bullion can easily be purchased from either a bank or a dealer. This practice is considered somewhat outdated however. Investors can also look into previous metals futures contracts when looking to buy gold online or to buy other commodities online. These precious metals futures contracts are legally binding and they require the delivery of gold or another commodity such as silver, at an agreed upon price. These contracts contain information such as the amount of the commodity, the quality of the commodity, as well as the time and place of delivery of the commodity. The prices are variable, and keep in mind that delivery of the actual physical commodity rarely occurs. Hedgers (see hedging) actually use these futures contracts in order to manager their price risk on an expected purchase or sale of the physical metal. Speculators are also provided with the opportunity to partake in the markets with the requirements of any physical backing. For those investors looking to buy gold online he or she must put future supply and demand issues out in front. He or she should also understand that gold investing can be very helpful during times of hyperinflation. Gold has been able to hold onto its purchasing power better than paper during times of hyperinflation. Keep in mind that hyperinflation has never occurred in the United States however it did occur in Argentina. This strength in purchasing power in not just relevant for gold however, it is true for most commodities. Continue to learn about the gold market to see if gold investing is something you should look into. You may find that gold as well as other commodities will be a good addition to your portfolio. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 11:44 AM
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October 6, 2009
Online FX Trading
| Online FX Trading Introduction For those investors looking to participate in online FX trading this article provides some basic information that you should know. Trading forex is a great way to make money if you know what you are doing. Begin your forex trading education and read this article, then continue your forex trading education further once you have determine if this market is the right market for you. There are numerous books and online resources that you can find information regarding the forex market. When deciding on what resources to utilize make sure that you cover the following: The basics of online FX trading and the forex market in general, fundamental analysis, and technical analysis. Forex traders should also read the newspaper such as the Wall Street Journal or Financial Times. Additionally helpful resources are any publications that discuss political and economic events as well as publications that cover general news. There are also websites that cover the FX market specifically so that you can keep up-to-date on any new developments. It is very important that you find sites that offer this type of information to ensure successful online FX trading. There are also online forums as well as mentoring programs that you can sign up for whether online or in person. You can find these mentoring programs online and some mentors will even offer one-on-one time with you if necessary. Many forex investors find these programs as well as online forums extremely helpful. Mentors and your fellow investors in these forums can provide you with information from personal experiences so that you avoid making mistakes that others have made in the past. It is a great way to draw on others’ experiences in a way that can improve your forex trading skills. When online FX trading you will also need to find a forex broker that suits you. Once you found a broker you will then need to find forex trading software as well. You can open up a demo account first so that you can test drive the software to ensure that it works for you. You must learn how to use the trading platform to ensure that it has the functionality that you are looking for. With the demo account you don’t actually trade with real money but it can at least give you and idea of what you will have to work with. You must ensure that you do your homework when choosing your software. You don’t want to get stuck with a trading platform that you end up disliking. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 11:11 AM
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October 2, 2009
Buy FX
| For those investors who are looking to buy FX there are two types of analysis that you should understand. In today’s article we will discuss fundamental analysis and technical analysis as well as some of the investment strategies involved with both types of analysis. When you buy FX using fundamental analysis you are buying based on the value of the company. You will look at things such as the company’s earnings, their quarterly or annual review, inflation, interest rates and much more. Fundamental analysts study the forex market in attempts to predicting long term trends (see long term investing) rather than short term trends. They look at many different indicators regarding the value of currency including the following: Purchasing Manager Index (PMI), non-farm payrolls, retail sales, Consumer Price Index (CPI) and durable goods. Investors will also rely on information provided by their broker depending upon the type of broker they have. When you buy FX using technical analysis you are buying forex based on price trends. You can buy 24 hours a day when forex trading since the markets are always open. This is one reason that forex trading is so popular. Technical analysis is based on past price movements to indicate future price movements and technical analysts don’t look at the fundamental factors affecting the price because they believe these factors are reflected in the price. Some of the common forms of technical analysis tools that are used include the following: Fibonacci indicators, Elliott waves, parabolic SAR, and pivot points. These are only a few of the technical indicators used in technical analysis. Forex traders will use a combination of technical indicators when trading rather than just one. Investors who buy FX take the time to develop a proven forex trading strategy and they stick to it. Some experts will use a combination of both fundamental and technical analysis however it seems as if most stick to mostly one method of trading. Technical analysts must be sure that they define their entry and exit points and that they develop a trading plan and follow their trading rules. Focus and discipline as well as a good trading education are the keys to success. Continue to learn about the forex market and the different types of analysis that you can use. Determine if you would like to practice investing in the long term with fundamental analysis or if short term trading using technical analysis is right for you. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 10:45 AM
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