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The Ugly Truth About Out-Of-The-Money Options

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Options enable investors to trade contracts worth 100 shares of stock that expire by a given time. Investors then leverage these contracts by essentially betting on where they think the stock price will be by a given date. New investors turn to options due to their “cheapness” compared to buying underlying shares of stock. If an investor were to buy an option, they could purchase this contract from a seller for a small fee, otherwise known as a premium. With this contract in hand, the investor can then choose to hold the contract until expiration in the assumption that their price selected will have value, or they can sell the contract back into the market for an additional premium to collect. However, investors truly don’t often consider the risks associated with options trading. Let’s take a closer look at a popularly traded stock such as Apple ($AAPL). Currently, $AAPL is trading at $130.81 a share. If I were to own one share of $AAPL, I would have to invest $130.81 to buy a share.

How To Create A Trading Gameplan

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I'm sure you have heard countless times from various outlets about always having a trading game plan. But let's be honest the majority of traders don't really have a solid understanding, let alone proper execution of a trading gameplan. Novice traders emotionally fall in love with a stock and ride it either down to zero or sell at a loss. Oftentimes people will just follow others they deem are experts (unlikely they are), and that's their trading gameplan. In reality, this is no way to trade, eventually, your account portfolio will show this, as you will realize you cannot outpace Market returns in the long run. This begs to question, what exactly are you doing wrong? The answer is probably many things, from the lack of an actual trading system to even having the most basic of a trading game plan. In this article, I will help break down the essence of a trading game plan. The aim of this is to have you become a much more solid trader, and one step further to possibly be

Unlocking the Power Of The Relative Strength Indicator

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Trading financial instruments is a constant process of speculation. Knowing the right time to buy or sell an instrument can greatly aid in ensuring that you rake in profits from trading. This can be done through the use of tools that aid in predicting the future movement of the price of a stock.  The RSI indicator measures the momentum in the price movement. This means how strong the stock is moving up or down. A strong movement in a particular direction may indicate a likely future trend but it may also show when a stock is overbought or oversold. The RSI's ability to give multiple signals with high accuracy in predicting future prices is why it is one of the most powerful indicators available to traders. The Basics Of The RSI Indicator To measure momentum, technical traders use RSI as a key indicator. RSI stands for Relative Strength Index and is represented as a value in the range between 0 to 100. Values above 50 show that an upward movement is likely to occur, while values bel

Four Top Must-Have Books To Help You Become A Winning Trader

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Becoming a winning trader is certainly one of the most difficult careers (90% of retail investors fail). I certainly struggled at the start. It can take an average of one year to become a winning trader (but most never become one). At the start of my trading career, I didn't know where to begin and I was often clueless. I had to constantly research on my own, and my trading suffered as a result. Below, I have a few books ranked in order of importance that helped me greatly into becoming a purely technical, winning trader. The books listed below will offer a boost for the losing traders and winning traders looking for a bit more of an edge! The following 4 books are ranked in order of importance (one being the most important). Japanese Candlestick Charting Techniques, Second Edition  - Possibly the easiest and most important book on this list. This book describes candlestick patterns in detail. It has a very easy learning curve and can do wonders for your trading. Once you unders

How To Unlock The Power Of Japanese Candlesticks

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Candlestick charts, also referred to as Japanese candlestick charts, are tools that are used in technical analysis of price movements of shares in the stock market. These charts analyze price fluctuations just like bar and line charts. With a certain amount of skill in mastering candlesticks, predicting future movement and direction of prices of shares is possible. In this article, I will highlight my top five bullish candlestick patterns as well as pass on some tips and tricks I've learned over the years to help maximize your profits and minimize your losses. Unlocking The Power Of Japanese Candlesticks Before we get into the list there are a few tips and nuances that I've picked up over the years that should be discussed.  I've found candlesticks to be one of the most powerful tools out there in predicting future price movements. What I've learned is it isn't cut and dry, for example, it's rare to see a bullish reversal candlestick pattern formed on a daily st