Category: finance

Preparing to Trade 

  1. tradeYou are going to open a brokerage account. These accounts are going to be where you enter in your transactions. You have the option to open an online brokerage account or going the traditional way and going and seeing an account broker face to face. In doing this, you need to understand what is involved with this account.
    1. Should you make the decision to trade online, then you are going to need to know that your brokerage account will accept the safe forms of payment. These forms would be things like a secured credit card or a third-party payment system.
    2. Make sure that you compare the commissions on your options between a variety of brokers. Some firms are not going to offer a commission when it comes to options trading.
    3. If you have a cash only account, then you are only going to be allowed to purchase options that are in an open position. Should you decide to sell an option to an open account, you are going to want to have a margin account.
    4. Do your research and read the different reviews that you can find on the brokerage companies on your list. It is better to learn from other’s mistakes so that you do not repeat them.
    5. Watch out for any trading sites or platforms that may be scams. Research any platform that you want to use thoroughly before you deposit any money into an account on that site. If the platform has a negative review or has been reported as being fraudulent, then it is best that you stay away from that site and choose a different one.
      Before you make any trades, make sure that you get approval from the broker that you are using before you begin to buy or sell your trades. Your brokerage firm may end up setting a limit on what you can buy or sell because of your experience or the amount of money that is in your account.

Every firm is going to have a different set of requirements that you will be required to follow to begin buying or selling options. The company that is handling your account is going to make their decisions based on your experience and money in your account. The more money or experience that you have, the less of a limit you will be placed under. The requirements are set to make sure that the customer knows what they are doing. You are not going to have the ability to write any covered calls without having an options account. The brokerage firm that you are using is going to want to ensure that their customers understand any risks before you get involved in trading.

  1. When you are using options, it is very typical for the trade to be short-term It is likely that you will be looking for the movement in the price to earn a healthy profit. For you to be able to predict these changes, you are going to need to be knowledgeable about the basics of technical analysis.
    1. Learn what moving averages are. It is often that the stock price is going to cross above or below a particular average of prices that were listed previously. A thirty-day moving average is more reliable than a ten-day moving
    2. Know about resistance levels and support levels. The resistance and support levels are going to be the points in which your stock is rarely going to fall below or move above. The resistance is going to be the point that it will not rise above, and the support is going to be the point that it will not fall below. The support is also the level in which an important purchase will have occurred historically. Resistance is going to be the price of the sale of the security has taken
      place in the past.
    3. Chart patterns are going to show you that history tends to repeat itself. Any patterns that you see in stock price movement may show where the prices are going to go for that particular stock.
    4. You should understand the importance of volume. As a stock moves towards a particular direction with volume behind it, then it will usually signify a strong trend and is going to be your money making opportunity.
    5. Can you sell a structured settlement to invest in the stock market? Absolutely. With the changes in the law, if you can show that you have the knowledge, experience and understanding of the stock market, options, puts and calls, the judge will approve the sale of your structured settlement. You can take the amount you receive and hit 20-28% per year with the market instead of the little return you were collecting on your settlement. Top-Companies recommends working with a reliable structured settlement company like DRB capital after they’ve researched all the companies in the financial industry.

Getting started

  1. It is best to start with paper trading. This technique is meant to help you to avoid risking the money that you have earned. Take a spreadsheet and make some pretend trades so that you can practice, or use software that is going to allow you to practice your trading strategies.

The best way to make sure that you are not going to spend all of your money is to practice for a few months and evaluate the return that you are getting before you attempt to place yourself into the real world of trading.

Looking at paper trading has is not like real trading being that there are no commissions or psychological pressures that are involved. Paper trading is the best practice for you to be able to learn the mechanics of trading. When you get into actual options trading, remember that it is a high risk and that you can end up having a large loss as the trader. Just be sure that you trade with money that you will be comfortable with losing.

  1. Try and avoid paying any market prices on your options. You will want to
    do this because the execution price may end up being higher than you expected it to be. So, to avoid paying this, you are going to name your price by using a limited order in order to maximize your return.
    Periodically make sure that you reevaluate your strategy. Look at everything that you are doing and try and see where you have some room for improvement. When you make a mistake, make sure that you learn from it so that you do not repeat it and end up hindering your success.

Many traders just focus on a few positions instead of reaching out and having many different strategies. No matter what approach that you use, you’re going to want to consider not putting more than ten percent of anything that is in your investment portfolio in options.

Once you have grown comfortable with paper trading, then you are prepared to go to the market and begin trading options. Make sure that your broker is going to have your back so that you are not spending all the money that you have placed into your account or to help you make sure that you are not making trades that are going to hurt you in the long run.

Just like with paper trading, you will be using the same concepts, except now you are required to deal with paying out actual commissions on trades along with dealing with the pressures that trading on the market is going to bring.…

How to Start Investing in Options


As we mentioned in the section above, options trading is the trader’s right to buy and sell an asset at a particular price in a certain period of time without having any obligations place on you to hold to the agreement. Different situations will cause you to either decide to continue with the option or to let the option expire.

Understanding Options

  1. In order to start your investment journey in using options, you need to know what options actually are.

When you are looking at options, you have the choice to purchase speculatively or as a hedge. The speculative investments will allow the trader to make a significant amount of money. However, this choice means that you need to be able to predict the timing, direction and the magnitude of the security’s price movement. This trade also will open
up a lot of losses, but high trade commissions.

Speculative trading is a risky move for any novice trader. When you look at it, options can be used as a strategy in order for you to protect your investments. For example, if you take out an option when trying to sell your stock, you are only going to lose the contract price should the market fall. Make sure that you understand the types of trades there are. The calls and puts are both trades where the trader will have the right to buy or sell at a predetermined price within the defined time frame.

  1. It is important that you know the terminology that you are going to need in order to make trades properly. In understanding these words, you will be able to find out when you need to hold or sell your trade.