Investing Articles

While this was printed almost 10 years ago, it is still valid in today’s market. Simply stated, 10 percent away from the current price and 6 months out .

That is it in a nutshell, but to implement this we need to understand a few things. This is the important part. Miss this and you might as well not trade this way.

1) Do not try these on individual stock you will understand the reasoning for this after we talk about rule 2

2) Know where the underlying has been sounds good so far.

What you have here is a high probability trade. If we look to history we see that a normal market in equities rises typically not more than 10% in any given time. So we have run ups and then consolidation.

That is where the sell in May and go away mantra came from. The markets most movements tended to be in the periods from Nov. to April. So year over year while the net for the year is about 8% (yes we are talking more than the gaga years as history) So now that we know what is typical, when we see a market move that far in a short time frame, we have good probability that the market is prone to stall if not go down.

Knowing this we can now go up 10% from the current price and sell a spread. Now we all know that going that far out of the money will not generate enough premium for the credit to make it worth our time. So we go out 6 months to collect enough premium to make it worth out while.

If you did nothing more than sell these spreads every May you would come out with a very good return.

Bear in mind (pun intended) that this works for the down side as well, in other words when we have a market correction of 20%-30% we can have great expectations that the market will rally from here. So a credit strategy 10% below the current price will accomplish the same effect.

If you are looking to enhance a portfolio of conservative investments, you may want to look to an idea like this. It should not take more than 5% of a portfolio to gain the extra 5%-10% gain you are looking for.

This will take some practice and should be tried with a Virtual account. Many of the topics we discuss are not intended to be used solely but are meant to be used to put your portfolio over the top and stay ahead of inflation.

Make sure you feel confident in this by trading virtual before you try it with real money. CBOE.com has a virtual trading platform on their site.

“The business of investing can be like basketball: The game can turn on a dime. To be truly successful, you have to know how to handle the ball - and more importantly, how to correctly anticipate the ball. That’s what separates the ordinary player from the great player” With over 28 years experience both as an adviser [ 3, (commodities broker) 6, (mutual funds) 7, (stocks, bonds, options) Life and health insurance] Participating in most forms of investments. From taking companies public to speculation. Educating investors is easy. The web has too many sites to mention full of information. In the information age, there certainly is no shortage of information. Teaching investors to be successful is much harder today that it has ever been. Don’t mix information with success. With too much information, comes too much failures. It sounds like a contradiction, but in reality, the educated end up being talking heads. The successful investors quietly live next door. As an investor, adviser etc. It has been my greatest pleasure to see others grasp success in whatever level they are looking for. Dell Chryst Article Source:http://EzineArticles.com/?expert=Dell_Chryst

Most of you with money to invest must decide either to “do it yourself” or hire someone else to decide where the money should go. This process of asset allocation always involves placing (usually) the majority of funds in stocks of companies worldwide. The “best” way to accomplish this is certainly subject to argument and controversy; however there is a significant body of academic and historical study that can help.

Here are a number of relatively well accepted facts:

1) Over long periods of time (10 years and more), stocks outperform bonds and cash.

2) Although there may be some actively managed mutual funds and stock pickers that can outperform the indexes that they invest in, it is doubtful that you or anyone else can identify them in advance. It is much more likely that owning a group of stocks in an index (index fund or equivalent) will outperform and cost less than paying someone to pick the “best ones.”

3) Investment success is highly correlated with buying when others sell, and vice versa.

4) The above is very hard to do.

Given this information, what is the investor/advisor to do? The facts support so-called “passive” investing, in which funds are placed into low cost, diversified index funds and occasionally rebalanced. This sounds simple, but is misleading. Although investing in different market segments (American Stocks, Overseas stocks, Natural resources stocks, etc.) is probably done most efficiently with indexing-the investor must make the active choice of how much each asset class must be used at any given time.

For example, over the last two years-the Natural Resources and Commodities, and general Overseas market indexes have markedly outperformed the American stock market. How much of your portfolio should have been in the former categories two years ago? How about now? Of your American stock market investments-how much should be in a total market index instead of some other mixture of small vs. large companies?

The point I’m making is that the process of investing and asset allocation is never simple. One must carefully weigh historical valuations, investor risk tolerance, investor time horizons and have some “feel” for future trends to do a good job. This process is being performed by thousands, if not millions of full time professionals worldwide-and is not a process for amateurs. The financial press doesn’t help with its myriad lists of “ten best stocks or funds to own now,” as study after study has demonstrated that this type of trend following is doomed to failure.

Certainly, there are reasonable compromises that allow an investor to self invest and have probably decent long term returns. However, even these asset allocations require discipline, investigation and review. There is no short cut to investment success. Paying an expert is certainly reasonable, given that we all do so for help with medical, legal and accounting issues on a regular basis.

Summing up, investing in stock markets involves actively choosing an asset allocation, and then usually using a “passive” vehicle (like an index fund) to invest in each of the different asset classes chosen. Both the initial asset allocation and changes in the future require time, work, knowledge and continued learning.

best-way-2-invest.com provides free stock tips and investment advice. Learn the stock market investing basics to protect your money and investments. Article Source:http://EzineArticles.com/?expert=Revy_Azhary

Do you hold yourself accountable for your performance? Does your ego keep you from acknowledging the truth? The basic premise of  a successful investing strategy-particularly for short-term investing (trading) - is that by cutting losses as quickly as possible and letting profits run, over time, there will be a pre-ponderance of profits over losses.. Having losing positions will happen, no matter how well the system or the trader. It’s a fact of life. To help keep perspective, a trader must constantly keep in mind that the “name of the game” is to have higher margin winning trades than minimized losses on the losing trades. Losses will happen. Even a 50% win-loss ratio can be a winner over the long term!

When trading options, traders should be constantly aware of:

1) the percentage of profitable option trades they expect to generate, as well as the profit margin of the average profitable option trade compared to the average losing option trade;

2) how many estimated option trades will be made over a specific period. With these two statistics, an option trader can get a sense for the estimated profit potential for trading options over a specified period of time. This estimation can serve as an important, measurable goal and used to help set-up psychologically expectations.  

For example, let’s be conservative and say that 50% of your option trades would be winners with an average net profit margin (profits less transaction costs) of 14% and losing option trades to have an average net loss of 8%; the trader can expect a net return before taxes of 6% on 50 % of the total amount invested in total trades. If the trader anticipates making 5 trades per month at an average premium of $1,000, then the trader can expect to make about $150 net profit per month (2 winning trades = $2,500 x .06 = $150). Of course this depends on how long positions are held. Annually, this would translate into $1,800 on an account of let’s say $5,000 (in this example, the trader would have an account of $5,000 but only use an average of $1,000 as a maximum for each trade). This translates into an annual return of 36% on the account capital. If you have a system with a 75% win-loss ratio, then your estimated monthly return would be $225 with an annual net of $2700 for a return of 54% on the account capital of $5000.  The variables are: win-loss ratio, premium capital to be used, and profit and loss margins.(In the above example if you used $50,000 in premium capital and traded 10 contracts with the same other variables, profits would be 10 times greater or $27,000. But don’t quit your day job just yet.)

Of course, the above example is a simplification of the option trading premise but the concept can be used to help set option trading goals to shoot for. Moreover, after each option trade is completed, the trader should track- at least: win-loss ratio, profit and loss dollars and percent for each trade and cumulative trades. Creating benchmarks and using metrics to track variations on a trade-by-trade basis is essential to help the option trader measure the performance of the system; moreover, the option trader must assess how closely trading parameters and procedures are followed for each trade. The idea is to track the option trading system’s performance and not the trader’s.  It’s like using a mathematical function; use a consistent system of indicators and plug in the numbers and look for a consistent result. If the trader alters the parameters and procedures, it only measures the option trader. The idea is to identify high probability option trades and use consistent option trading procedures. If the trader’s system is good, it will produce a win-loss ratio of over 50%. Some successful traders who have learned to identify high probability trades and execute an option trade with consistent discipline have win-loss ratios above 70%.

To learn more about options, take advantage of Options University to give you the education on everything you need to know about options-from basic to master. Article Source:http://EzineArticles.com/?expert=Blaine_Findlay

What is all the hype about penny stocks? Let’s explore what penny stocks are, and determine if they are right for you.

Penny stocks are shares of a company that are usually trading at or below one dollar. However, the term “penny stocks” can also mean stocks that are relatively cheap, or under $5.00. Penny stocks have strict market caps and are usually considered high risk.

But if they are high risk, why journey into these dangerous waters? Great question. The risk factor is balanced by the number of shares you get for a certain amount of money that you can invest. For example, let’s say that you have $100 to spend on investments, and you have two stocks you are currently looking at: “Big Corporation” and “Mom-and-Pop Shop”. A share of Big Corporation runs for about $33. A share of Mom-and-Pop Shop runs for about $0.22. Now, with your $100 you can either buy 3 shares of Big Corporation or you can buy 454 shares of Mom-and-Pop Shop. Now lets say that you buy the 454 shares of Mom-and-Pop Shop and 2 years later it hits the big-time and skyrockets to the same $33 a share that Big Corporation was. You would go from your $100 investment to almost $15,000 in two years. The potential for penny stocks is huge, and the price/share is excellent.

Does this mean you should risk all your money in penny stocks? Of course not. It is a good idea to be diversified in your portfolio. However, if you find a sweet little coffee shop that you believe might just be the next Starbucks, look it up in the stock market and consider throwing a few dollars at it. You never know, your small investment might put your kids through college or land you on the beaches of Hawaii.

There are all kinds of ways to choose good penny stocks, from computer program formulas to trusted analysts, it’s a great idea to use all the resources at your disposal to take advantage of today’s stock market.

All in all, penny stocks are a great hobby and fun to explore. More importantly, they can make you some serious cash.

John Frainee specializes in teaching about genuine online money-making techniques to help people in their finances. He’s written a book entitled “The Online Money Project” and also provides free information regarding money-making tactics on his website at: http://www.TheOnlineMoneyProject.com Visit his site to learn valid ways for you to make real money on the Internet. You’ll be glad you did! Article Source:http://EzineArticles.com/?expert=John_Frainee

Last week I mentioned the 3% Risk Trading System which is much more aggressive than the 10% Rule used with our portfolio. Just a reminder before we proceed, the 10% Rule = 10% of the portfolio value is placed in each trade. As the portfolio value increases, the dollar value placed in each trade also increases, compounding gains while minimizing risk.

I have used the 3% Risk Trading System in the past with great returns; I have not used it recently though. Fair warning: it is for aggressive traders only. You will need tough skin and nerves of steal to use it. If you have a heart condition, you may want to consult your physician before entering any trades using this system.

The 3% Risk Trading System requires more capital to be allocated in each trading position compared to the 10% Rule. Please do not get this system mixed up with the 10% Rule. Our trade record is based on 10% allocation in each trade, and it will stay that way. I am disclosing the 3% Risk Trading System as an alternative approach some members may find attractive. If you decide to use this system, please set up a separate account and do not blend this system in with the trading account you are using to follow our swing trades.

In the 3% Risk Trading System, the money allocated to each trade will vary based on your buy point and your stop price (more on that later). What is important is to limit losses to a maximum of 3% of your portfolio. This means that in a $100,000 portfolio our maximum loss of 3% will be $3,000 in our first trade. If we are starting with a $25,000 portfolio then our maximum loss of 3% will be $750 in our first trade.

Here is how it works:

Let’s say you want to enter stock XYZ as it breaks above a resistance of $25.00. You set a buy stop order at $25.10. Once you are filled you MUST IMMEDIATELY set a stop loss order. This stop loss is not an automatic 3%. Instead, the stop loss is based on previous support. Let’s say the support for XYZ is at $20.00. Our stop would then be just under support at $19.90.

To calculate the number of shares to purchase:

1. Take the difference between the buy price and the stop price you have determined: $25.10 - $19.90 = $5.20.

2. Divide the difference into your risk level of $3,000 (3% of $100,000) $3000 / $5.20 = 576 shares

To calculate the value of your trade:

Multiply the 576 shares by the buy price of $25.10 to get a total of $14,458 (14.5% of your 100K).

Let’s look at this example more clearly below along with two others.

Example 1

Buy Price = $25.10

Stop price = $19.10

Risk per share = $25.10 - $19.10 = $5.20

Max loss of 3% = $3,000

$3,000 / $5.20 = 576 shares

576 X $25.10 = $14,458

$14,458 = 14.5% of $100,000 portfolio balance

In Example 1, you have to use 14.5% of your trading capital and you risk 3%.

Example 2

In this example we will use the same buy price but a different stop price for XYZ. The different stop price will depend on the chart and where you see the support levels. Again, you will risk 3% or $3,000 of your $100,000 portfolio.

Buy Price = $25.10

Stop price = $22.10

Risk per share = $25.10 - $22.10 = $2.20

Max loss of 3% = $3,000

$3,000 / 2.20 = 1,363 shares

1,363 X $25.10 = $34,211

$34.211 = 34.2% of $100,000 portfolio balance

As you can see in Example 2, you will use 34% of you portfolio balance because of the tighter stop you have placed on the trade. You risk the same amount ($3,000) but you must use more cash in the trade.

Example 3

In this example we will use the same buy and sell points as Example 2, but the risk will be narrowed to 2% instead of 3%. This system can be adjusted to risk any percent of your portfolio you wish. You can bump it up to 5% risk if you wish. It is the same formula; you will just be adjusting the dollars you want to have at risk.

Buy Price = $25.10

Stop price = $22.10

Risk per share = $25.10 - $22.10 = $2.20

Max loss of 2% = $2,000

$2,000 / $2.20 = 909 shares

909 X $25.10 = $22,815

$22,815 = 22.8% of $100,000 portfolio balance

As you can see, it does not matter what you pay for the stock or how much of your portfolio goes into each trade as long as you risk only 3% (or whatever % you are comfortable with) of your total portfolio. Some trades will cost more or less based on where you determine the stop price to be on the chart to insure a maximum loss of 3%.

This is obviously a much more aggressive approach then our 10% position size rule. Let’s take Example 1 again using our normal 10% position size rule. We will assume we will be stopped out of the trade with a 10% loss according to our trading rules.

Buy $25.10

10% of $100,000 = $10,000

$10,000 / $25.10 = 400 shares

Stop $2.50 (10% below buy price) = $22.60

Sell at $22.60 = $9,050

$10,000 - $9,050 = $950

$100,000 - $950 = $99,050

The loss of $950 = 10% of your 10% position but only 1% of your total $100,000

As you can see, the 10% Rule is more conservative compared to the 3% Risk Trading System. The 3% Risk Trading System is ideal in Bull markets, but performs poorly in flat markets. It is too easy to get whipsawed out of you position in a flat market, and those losses will add up quickly. However, in a Bull market, the 3% Risk Trading System should out perform the 10% rule. Using the 3% Risk Trading System, only four or five positions are open at any one time.

Example 4

If you bought JRCC when we first recommended it on March 26th (see chart) http://stockcharts.com/h-sc/ui?s=JRCC&p=D&yr=0&mn=4&dy=0&id=p29039817531&a=132229947&listNum=19

at $17.50, you would have done very well when it closed Friday 31.10. Let’s use the 3% Risk Trading System with this real example. Keep in mind, JRCC is still running and should move higher next week.

Buy Price = $17.50

Stop price = $13.90 (based on $14.00 support on chart)

Risk per share = $17.50 - $13.90 = $3.60

Max loss of 3% = $3,000

$3,000 / $3.60 = 833 shares

833 x $17.50 = $14,578

$14,578 = 14.58% of 100K portfolio balance

Sell at $31.10 x 833 = $25,906

$25,906 - $14,578= $11,328

$100,000 + $11,328 = $111,328

The gain is $11,328 and your risk was only $3,000. This one trade could balance out almost four losing trades with a 3% risk level. This shows that you can lose 3 out of 4 trades and still break even if you keep your losses to a minimum. Remember to risk 3% of the new balance. This means, if the GENC trade was your first trade you now would risk 3% of $111,328 instead of $100,000. This is how you compound your gains very quickly.

To Reiterate

I can not stress this enough, it is imperative with this system to PLACE YOUR STOPS IMMEDIATELY AFTER YOUR BUY ORDER IS FILLED. You are risking substantial loss if you fail to place stops with 34% of your capital at risk as with Example 2.

I hope you have enjoyed tonight’s Commentary and the introduction of the 3% Risk Trading System. If at some point in the future we decide to open an aggressive portfolio, this is the system we will be using. We currently have two portfolios we trade, a long term portfolio (Dynamic Dozen) in which we buy and try to hold for a year or two and our short term swing trading portfolio which we trade in and out of positions frequently. I have described the 3% Risk Trading System in advance so you will be familiar with the system if we do decide to open an aggressive portfolio at some point in the future.

David Colletti Founder StockTradersHQ.com Copyright © 2008 StockTradersHQ.com This article is courtesy of David Colletti, a ten year veteran stock trader and founder of StockTradershq.com. Our staff of professional technical traders analyze 1,000’s of potential stocks every day to provide you with a list of stock recommendations nightly with the greatest potential for explosive gains. These stock picks are traded with our real-time portfolio. Email alerts are sent to members for every entry and exit. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses. StockTradersHQ.com offers a 21 day free trial with full member access. http://www.stocktradershq.com/ Article Source:http://EzineArticles.com/?expert=David_Colletti

I was presented with the following question from a fellow trader.

“I like to trade the overall market (QQQQ). Is there a rule of thumb on how much loss to take before I sell a losing position? I’m always scared if I pull the trigger and bite the bullet, as soon as I get out, the market will rally but if I don’t, I’ll sit on it until I have lost a few thousand dollars. It’s frustrating at times.”

My conclusion statements follow.

This is not intended to be flippant, but the amount of loss to take is the amount of loss you should take according to your technical analysis system. A good trend following method/system inherently provides you with loss guidelines through its exit points. And if you additionally use a 10% stop-loss (as a general rule of thumb, broadly speaking), then you should be sufficiently covered.

I know this may not sound entirely clear as to precisely how much loss to take. Perhaps the best notion to hang onto is the fact that if one stays on trend, adheres to the trend following buy/sell signals and has a stop-loss put in place to catch the big and sudden drop, trading success will improve which means there will be net gain.

If the markets are extremely volatile, then you will get caught in the volatility. However, trading an index such as QQQQ should make it less volatile relative to individual stocks.

Comments are for informational purpose only and do not constitute stock trading recommendations.

Feb 22, 2009 copyright © David S.Y. Wong, published in EzineArticles.com

StockTradersPlace (http://stocktradersplace.com) provides a trend following system based on candlestick technical analysis. http://stocktradersplace.blogspot.com provides a “Stock Trading with StockTradersPlace” companion guide. Show yourself that you can repeatedly execute winning trades using StockTradersPlace as an element of your trading tool box. Article Source:http://EzineArticles.com/?expert=David_S._Y._Wong

If you’re not educated on the ABC’s, you could end up with a failing grade in portfolio management. The ABC’s I’m referring to are the share classes of commission mutual funds.

“A” Shares

“A” shares are where you pay an upfront commission for a mutual fund. The typical commission is from 4% - 6% of the amount invested. If you invested $20,000, you would probably pay a commission of around $1,000 for the transaction, therefore leaving you with a balance of $19,000. For larger amounts, companies usually offer breakpoints (commission discounts). Still, if you invested $100,000, it would probably cost you $3,500. That’s a lot of money. After the big payday, your broker then earns about 0.25%/year to “service” the account. If you were a broker, where would you spend your time - servicing your existing accounts for 0.25% or prospecting for another big commission? And you wonder why they never call you…

“B” Shares

“B” shares of mutual funds still pay the broker their commission upfront, however, you do not see it taken out of your account. A $20,000 investment yields a $20,000 balance. The catch is that you would incur a deferred sales charge if you were to sell within the first four to six years. These charges usually start out around 4.5% and go down every year. Larger contributions are often not rewarded though, as many companies do not offer breakpoints on B shares.

B Shares come with higher expense ratios too, usually in the neighborhood of 2.25%. If you look at the prospectus of any commission fund, you will usually find that over a holding period of 5-10 years, B shares are your most expensive option. Like annuities, B shares are often sold, they are not bought. People just don’t ask to buy the most expensive, under-performing funds; they are coaxed. Similar to A shares, brokers only receive a small “trail” fee to service your account. Expect a phone call when your deferred sales charge goes away though. Also, expect a recommendation to a different fund as your “trusted advisor” is looking for another payday.

“C” Shares

With “C” shares you do not have an upfront sales charge, and your deferred sales charge is usually limited to 1% for one year. You still have the higher expense ratios similar to B shares though. Instead of the 4% - 6% commission, your broker only earns around 1% upfront. However, they also earn that 1% for subsequent years meaning that they are more likely to pay attention to your account. The problem with this arrangement is that the 1% per year is not transparent. It’s built into the price of the fund so you never see it come out. After awhile, you may forget that you are paying it.

Commission funds are an expensive option. Let’s also not forget that the majority of them fail to beat their benchmark in any given year. Basically, you could be paying higher fees for sub-par results. If Donald Trump were around, I’m sure we’d quickly hear the words “you’re fired!”.

Avoiding the ABC’s is not too difficult though. There are many funds available for which you do not have to pay a commission. There are also professional advisors who, for a fee, will recommend a portfolio of no-load (commission-free) mutual funds. Invest some time in investor education and get your “A” in decision-making. Your future self will thank you.

Terry A. Green, CFP®, AIF® is an independent, fee-only financial planner with Blue Water Capital Management, LLC in San Diego, California. Their website is http://www.sandiegofeeonly.com Article Source:http://EzineArticles.com/?expert=Terry_A._Green

Traders want to be profitable and consistent winners in the market, above all they all want to develop their own system. However, even after years of education, refining of their methodology, and simplifying the systems to a small number of indicators, traders still struggle. Why? I have three simple explanations;

1) Traders can’t stop interfering while specifically trying to call and highs and lows of the market. So essentially when they get a “short signal” at some all time low, they are hesitant on pulling the trigger on their own system.

2) Traders start to doubt their system when their get a few losing trades in a row, failing to realize that the number of losing trades can exceed the number of winning trades.

3) Traders don’t trust their system after a prolonged period of draw-downs, again failing to realize that the best systems would go through drawdown.

What is the solution? Today with the advent of algorithmic trading, traders can automate their systems with a number of vehicles such as Ninja Traders, Strategy Runner, and Trade Maven just to mention a few. All these vehicles could accommodate algorithmic trading with features such as trailing stops, bracket trading, once order cancels other, etc. As such, no human intervention is necessary and traders could trade their system “emotions free”.

Also, there are many systems developers who sell or lease their product and could be used by traders and investors alike. You could choose one based on your risk capital and risk tolerance. Keep in mind, trading always involves a substantial risk of loss. Past performance is not indicative of future results. To find more details about systems, please contact us at www.optimusfutures.com/commodity-futures-trading-system.htm

By Matthew Zimberg President Of Optimus Trading Group http://www.optimusfutures.com Matthew has over a dozen years of experience in the area of futures and commodities trading. Managed Futures and systems trading is his specialty while putting a strong emphasis on execution, pricing and employing strong due diligence on the system’s methodology. Article Source:http://EzineArticles.com/?expert=Matt_Zimberg

Depreciation of purchasing power of money

There are two historical economic truths that have worked inexorably since they came into existence. They are like the two sides of the same coin wherein, while one side is bound to the win, the other is bound to lose.

The concept of money was introduced as a tool to purchase commodities, services or products. The truth about money is that its purchasing power has depreciated since its golden times. It is quite apparent from the fact that while money originally was used in form of gold coins, it gradually fell to silver and then to copper and now it is paper.

The second truth, or the other side of the coin, is represented by commodities, products or services. Their value has been increasing since they came into being.

Those who fail to understand these two simple facts come to grief.

There are two way to meet the increasing costs. Either, you pay from your existing reserve of money and deplete it completely in course of time, or, you earn more money to make up the short fall due to extra payments.

Yet another reason to make money is that the interest rates on fixed securities too have been falling. The once coveted and dependable source of passive income has dried up. Instead of paying you interests on your money, some banks charge you for keeping it safe for you.

Apart from the depreciation of money, there are several other reasons why you still need to make money even in your old age.

You cannot easily change your spending habits formed over the decades of your active life. It pleases us to feel we have the power to spend. You become accustomed to a certain standard and style of living that you must maintain so that you do not feel helpless and deprived. It is, therefore, bound to hurt us in our old age if we cannot earn and spend as well.

During the Old ages people tended to feel more insecure about the sudden diseases and similar other emergencies. Old age is when time hangs heavily upon your head and refuses to move. No other form of entertainment can capture and retain your attention. But the lure of money never ceases to cast its spell even on the aging minds. You will never feel bored and sick of life if you keep earning money. And if you can make money when you are old, it boosts your sagging morale and vitality. It brings in a new zeal, a thrill and a kick in the life. It makes you live longer, stronger and happier.

Why should invest in stock market?

It is, therefore, always advisable to plan for old age when you are young. And even if you ignore it in your early age, it is never too late to mend.

One reason why you should invest in stocks and not in other financial schemes like fixed deposits and mutual funds is that investment in stocks keeps you busy. You never feel idle even for a moment all through the day. You rise from your bed with expectations. You keep your mind creatively busy devising strategies and plans as nowhere else.

How do you counteract the argument that stock trading may incur huge losses, take away all your hard earned money earned over your life time and render you penniless?

The answer to this is that you should invest small and carefully. Invest an amount you can afford to lose. It must be noted that you do not lose all your investment in stock trading. You only lose a small percentage of it.

Thousands of old men and women spending time gambling in casinos all over the United States just to kill their boredom. Even they know too well that they visit casinos only to kill their time even if it means losing money.

Gambling is a blind game. You just throw the dice without thinking. In fact there is nothing to think about. You feel monetarily, mentally and physically drained at the end of the day.

Investing in stock trading provides your mind a healthy, productive exercise. You have the whole world of time to learn the tricks and other knick knacks of the trade now that you are retired.

Online stock trading can be carried out from the comfort of your home. You do not need any office, infrastructure, employees and can start trading within five minutes of opening the account and with as little as the cost of a cup of coffee.

Pricing and Features for Sogotrade Investment Packages: online investment Sogotrade Interest Rates and Fees: trading stock options Article Source:http://EzineArticles.com/?expert=Micheal_James

Don’t you just like how delta neutral sounds? It just sounds so secretive and classy. (Or maybe it’s just me.) But really it sounds like an exclusive club. And in a way it is. Once you learn how to trade delta neutral, you are guaranteed money no matter what market prices do. Yes you read right. I know it sounds like hype. And there is a catch.

It’s not as easy as it sounds. If it was, everyone would trade “delta neutral” and just rake in the money, right? Okay, now it isn’t just as easy as it sounds, but it can be done. However, you need to know that you will be trading stock options to do this.

When you are delta neutral it means that you will make money no matter what happens to the stock price. However, delta is fluid and constantly moving. So while you might be delta neutral at one moment, you can be exposed to market risk the next moment.

Make sense?

Prices don’t hold still. Delta is tied to the price. So delta never holds still either. Which means, what’s the point? Well, we fight time with time. Delta is a moving target. So we add a time element of our own and we come straight at it… we use a protected buy/right over time.

What??

Basically it’s a covered call (repeated over several months) with a long term (cheap) protective put. I’ll explain in greater detail in the next article. Out of time for now.

See me in part 2 and I’ll explain exactly how I do this…

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