Managing the performance of your trading account must go beyond the discipline of money management. While money management remains critical, it is a subset of the total picture of managing your trading accountâs profit and loss.That total picture is what Kenneth L. Grant aptly paints in his book, Trading Risk. Total performance management of trading [...]
Applying a more complete definition of diversification can help retail option traders diversify their portfolio profitably, beyond equities.A buddy started online options trading from home, in the last 6 months. He was trading a mix of Verticals, Calendars and Iron Condors using highly liquid Indexes but was failing to get consistent profits. Naturally, I asked, [...]
If you are trading a mix of Verticals, Calendars and Iron Condors across highly liquid indexes like the DJX, DIA, MNX, QQQQ, RUT, SMH, SPY and XSP, is your trading risk adequately diversified? No.In choosing the MNX, QQQQ, SMH, SPY and XSP, there is a duplication of stock components in these Indexes: for example, AMAT [...]
Time-based charts (namely Candlesticks, OHLC Bars and Heikin-Ashi) fail to truly depict price. This article will help you realize that time-based pattern recognition is an unreliable method for stock option trading.Some retail training firms like to popularize the myth that, âEveryone looks at these patterns in the chartsâ. They are partly right. Though, their use [...]
There are two types of options available: call options and put options.
Call options give the taker the right but not the obligation to buy the shares at a specific price on or before a specific date.
The put options give the taker the right but not the obligation to sell the shares at a specific price [...]
There are four different types of players in the stock option trading game. They are buyers of calls, sellers of calls, buyers of puts, and seller of puts. The buyers are called holders, and the sellers are called writers. Buyers of calls are said to have a long position, while buyers of puts are said [...]