If you are new to the markets, it is imperative that you work hard to educate yourself before risking any money.  Most people are attracted to the markets because they hear of person X making 50% this year, person Y doubled their money on a trade and on and on.  People are not apt to share in the major disasters they have had, and often exaggerate the profits and underestimate the losses when speaking about what they have done.  It is human nature to avoid pain, even in casual conversation with others.  Once you have decided you wish to participate in the markets, you need to really focus on what you are looking to accomplish

There are two 3 types of trading that can be done:  short term (minutes to days), swing trade (days to weeks) and long term investing (weeks to years).  Just identifying which one is appropriate for you can seem easy, but in reality it is probably one of the most important decisions you will make.  You have to match up the trading style with your personality and your level of risk

Short term trading is also synonymous with day trading, although positions can be held overnight and still be considered a day trade for the most part.  This is probably the riskiest type of trading for most people and requires the most amount of time.  For those who have a full time job when the markets are open, this type of trading is not appropriate other than in rare circumstances.   While some people do day trading manually, others prefer the help of a day trading robot to automate things.

As opposed to trying to learn day trading, swing trading is a great alternative for most people.  With swing trading the amount of time and concentration required is far less than with day trading, but it will still require you to monitor your positions each evening, and if something is close to a price target or stop area, monitor during the day as well.  The goal of swing trading is to capture a much larger move than with day trading, often targeting a 5%, 10% or even higher move in price.  Since swing trading entails holding for bigger gains and for longer periods of time, the actual trading activity of buys and sells is far less than with day trading.  One should keep in mind that while it is less risky than trying to day trade, it is still betting on the short term direction of a stock and by nature is risky in itself.

Long term investing is what a majority of the population is comfortable with – buying stocks and holding them.  The only thing that has changed in recent years is the economic climate has changed so that you no longer can just hold something indefinitely and figure you have very little risk.  Countless people have made this mistake only to have stocks with significant gains turn into a major loss.  Every investor these days needs a fixed plan to exit a position rather than hold and hope.

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Index Options and ETF Options both provide you with an opportunity to use options strategies on a group of underlying stocks. However, there are some major difference between the Index Options and the ETF Options.

The most important difference is that Index Options are cash settled on expiry while the ETF Options are settled with the underlying instruments that is shares of that ETF. Since with an ETF Options, you can also own the underlying security, you can use various combination strategies.

Stocks have dividends that are paid out periodically to the stock holders. Dividends are an important part of the return that a stock gives over a certain period of time. Now when you are trading index options or ETF options both of them get affected by the dividend payments on the underlying stocks. You need to take this fact into account when calculating the values of puts and calls with an Options Calculator otherwise your investment returns may not be what you have been anticipating.

If you have traded stock options before, trading ETF Options should not be difficult for you. As said before, since ETF Options get settled with ETF shares, you can use the different options trading strategies on them unlike the Index Options that get settled in cash. This makes ETF Options a much superior instrument as compared to Index Options.

Now when trading ETF Options, you can use the famous Protective Put Strategy by combining long ETF with a long put. This way you can hedge against the downside risk with a small increased cost to the ETF. A Protective Put will limit the downside risk to the put strike price.

Similarly, you can use a Covered Call on ETF. A Covered Call is formed by taking combining long ETF with a short call on that ETF. The short call will give you some income in the shape of a premium and reduce the cost of the position. This will also slightly reduce the risk of the position. But on the other hand, a covered call will limit the upside profit potential. Your max profit now will only be limited to the call strike price.

Now, you can also use a Collared Position as well by combining a long ETF with a long put and a short call. This combination limits the downside risk to the put strike price with a slight increase in the cost of the ETF. This net increase in cost by taking a long put is offset with the premium brought in by the short call. On the other hand, the limited but high risk is turned into limited risk only.

What you need to do is first paper trade these strategies and master them. This way you will learn how to deal with unexpected risk. Options trading is risky in the sense that it has both time volatility as well as price volatility. Now, many traders trade options without getting good options trading education.

ETF options are always American Style meaning you can exercise them any time before the expiry. You can even use LEAP Options on ETFs. LEAP Options are long term options having expiry ranging from nine months to 21/2 years. Now just like stocks, not all ETF have options available for trading.

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There are many types of financial instruments that traders and investors trade. Futures is one of them just like stocks and bonds. A stock gives you ownership of one part of a company. If you own 10,000 stocks of a company, you own 10,000 parts of that company. On the other hand a bond is an IOU that governments and companies issue to finance their operations.

Futures market is a highly regulated market with the CFTC responsible for its regulation. Buyers and sellers don’t come in direct contact with each other. In between is the Central Clearing House that enforces the contract reducing the risk of party default! Futures contract as the name implies is a binding contract between two parties for the delivery of a commodity or an asset or even a financial instrument at some future date between the buyer and seller of that contract.

Futures market is the backbone of the whole sale and retail commodity market ranging from oil, wheat, corn, heating oil, meat, cattle, soybeans and other foodstuff. So you can well imagine the importance of the futures market. Futures market serves the purpose of hedging and speculation.

These contracts get regulated through a central clearing hours so the risk of one party backing out of the contract is minimal. This limits the time and risk exposure experienced by hedgers and speculators. Now, futures contracts are by design time bound and expire at a fixed date.

In the last decades, electronic trading has become highly popular among the traders. This includes futures as well. So, now you can easily trade these contracts by opening an account with a FCM brokerage and deposit an amount to start trading these contracts on margin. The minimum amount with most of the brokers is something like $5,000 but it can less too! Brokers allow leverage upto 10:1 when you trade on margin. Compare this to the leverage of 2:1 allowed by stock brokers.

In US, open outcry trading still takes place during the official hours at the different futures exchanges. However, most of these futures contracts also get traded electronically. GLOBEX allows electronic trading of most of these futures contracts 23 hours each day. Electronic trading provides a more level playing field, more price transparency and lower transaction costs.

The popular contracts that get traded on GLOBEX are the E-minis like the S&P 500, NASDAQ 100 and Dow. You can also trade E-mini gold futures as well as crude oil futures on GLOBEX. CME, NYMEX and CBOT are the three most important Futures Exchanges. GLOBEX allows you to trade most of the contracts that get traded on these exchanges.

Now, GLOBEX trading continues during the night after the official close of CME, CBOT and NYMEX at 4:15 PM EST. However, overnight trading can be thin and highly volatile as compared to the official hours. You can find GLOBEX quotes on CNBC and Bloomberg!

These quotes are real time. Futures trading can be highly profitable but risky as well. Before you dabble in them, you should paper trade these contracts for at least a month just to get a feel of how to do it. There are many contracts that you can trade and the possibilities of making money in futures trading are immense. Imagine the prices of crude oil going up again just like what happened in the summer of 2008!

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As you are currently well aware – the economy and markets are cyclic. In the past decade the value of metal based commodities have soared. The price increase for gold has been phenomenal.

Precious metals have gained tremendous value over the last few decades – but it has not been in a straight line.

The cost of living coupled with low inflation over the same time period has resulted in gold being a poor investment. The investment would have been like treading water. The investment in gold would have essentially stagnated over the past 30 years compared to your average stock gains. Precious metals investing over the past 30 years has not yielded returns anywhere near those returned by the stock market.

Over the centuries gold and silver have served as a basis of exchange because they have intrinsic value. Gold and silver represent commodities whose value can stand the test of time.

People tend to fall back into gold and silver investments during times of economic crisis.For example, from 1972 to 1980, when inflation peaked in the double-digit range stocks and bonds plummeted while gold and silver prices exploded by more than 500 percent. As you may have well noticed gold has skyrocketed again during this latest economic crisis.But with the economic collapse the recently surging prices seem to be driven fear, not inflation, which is not a good basis for investment.

Investing in gold and silver, over the long term, has not produced any significant benefit.Over the decades, gold and silver investments hardly match the cost of living increases.On the other hand, investing in precious metals is better than keeping cash under a mattress. The best returns come not from gold and silver but stocks, bonds and real estate. If you truly want to invest in gold and silver, then you can earn a better long-term return by investing in a mutual fund of stocks of gold and precious metals companies.

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Lots of traders think you should set your stop based on how much money you are willing to suffer the loss of. This is a whopping mistake institutional traders wish you continue to make. Stop placement requires greater talent than that. A stop must not be placed too close to the current market price or too far away. You will notice that in stock market trading, numerous things that appear easy on the surface in fact are much more challenging and involve extra learning to master.

Someplace You Must Never Put A Stop

Precisely above past highs or just below former lows is a dangerous place for stops. An equally risky place for stops is at the 50 and 200 day MAs. This is for the reason that a lot of stops are repeatedly lodged together at these prices, welcoming institutional stop-runners to snipe the stops. Previous intraday highs and lows are also areas where stops will mount up.

The Major Error You Have To Avoid When Placing A Trailing Stop

When placing a trailing stop, you have got to move the stop in a positive direction only. If the market is moving higher and you are long, your trailing sell stop must be moved higher. On the other hand, if you are short and the market is moving lower, you must move your buy stop down-never higher-as the position gains profits.

How To Bring Into Play Fibonacci Retracement Levels As Places To Situate Your Stops

The greatest amount you want the market to retrace is .618 (61.8%) of the initial move. You don’t want the stop placed exactly at the .618 point, but slightly underneath or higher than that level, depending upon whether you are buying or selling. The wisdom is, institutional stop-runners will often target the stops at that level. As soon as the market has retraced more than .618, chances are the market is going to continue to trend in its present direction.

How You Can Identify If Institutional and Professional Traders Are Stop-Running

Stop-running is characterized by what is known as price rejection. The market in the blink of an eye moves lower, only to put on a swift recovery. This chart pattern typically appears as a ‘v’ bottom. At highs, the market will often rise up on short covering, go dead at the top, and rapidly go lower. This chart pattern usually appears as a ‘v’ top. As soon as the stops are run, the market usually moves in the opposite direction.

How Market Volatility Can Help You Place Your Stops

As market volatility increases, the stops have to be moved further away from the existing market price. Keep an eyeball on the Volatility Index ($VIX). The higher the $VIX, the further away from the present market price you ought to set your stops. This only makes sense, as otherwise random moves will cause the stops to be hit. Try to stay away from placing your stop where other traders have placed theirs. An abundance of stops at one price will trigger panic buying or selling and you will receive a appalling fill as a result.

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There is something astonishing about two days of the week that can make you a good amount of capital day trading provided you identify it.

The pattern is so difficult to compute that most traders need never heard about Mondays and Thursdays. In truth, the only way I was able to spot this pattern was by going over 10 years worth of historic data.

To determine a pattern like this, you have to gauge the standard deviation from the mean to notice if any pattern or anomaly whatsoever emerges. You then need to do this in both bull and bear markets.

The outcome of analyzing 10 years worth of numbers reveals a small pattern on Mondays and Thursdays that you can make use of to make a lot of cash day trading.

Excellent Monday Tactic For Making Big Profit

If you had to pick just one day to buy, Monday should be that day if you are in a bull market.

Not every Mondays present fantastic buying opportunities, so you ought to be careful when looking to buy on a Monday. First, it helps if you are already in a bull market. This is not challenging to decide. Second, you would like the latest market action, as measured by the one- and five-day strength index, to be robust, with a percentage over 50. Third, you want the market to reveal strength at the close of trading on the preceding trading day, commonly a Friday. If the previous day closes on or near the low, odds are the market will go on lower on Monday rather than going higher. The one-day strength index will provide you a good interpretation on how bullish the market was on the previous day. Last, you want a steady-to-higher open to take place on the Monday buying day. A sharply higher or sharply lower open on Monday presents actual troubles. With a sharply higher open, the marketplace may possibly spend the rest of the day trading down to more realistic levels. With a sharply lower open, the market may go on to sell off the rest of the day. A higher open is always good for buyers.

Superb Thursday Tactic For Making Big Profit

Thursdays tend to be the weakest day of the week in bull markets. Through bear markets, Thursdays have a tendency to rally as the countertrend day.

The ideal pattern for selling on Thursday is after two or three days of rising prices-the classic 3-day pattern. The ultimate pattern for buying on Thursday is after two or three days of declining prices.

I think you found valuable this piece of writing on day trading and timing the stock market through days of the week. Nearly all traders do not realize how to precisely use the MACD. To discover more go to how to use MACD and for more useful stock trading secrets go to see how to make money in the stock market

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