Options Short and Long Term Technical Trading
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Wishing to share his best stock options trading newsletters of trading with volume-based indicators, one of the traders came up with the idea of starting a newsletter. The idea took shape and bywe started distributing Best Trades on a regular basis. Today, this newsletter continues to be highly popular and is still available at no charge. Please be aware that Best Trades was designed for educational purposes only. It does not provide signals for trading index options, nor does it make any predictions as to where the markets are likely headed.
Because Best Trades has a long history we began distributing the newsletter inan extensive archive of trades is available. Click here to browse through our archive of all newsletters. Looking through the archive, you will notice that Best Trades categorizes two types of trades:. It is imperative that you understand that our newsletter was designed for educational purposes. When we leave a trade open, we strive to show the value of volume-based technical analysis, in real-time, as a trade unfolds.
Yet, our open trades must never be seen as recommendations to follow copy a particular trade. So what about following our real-time trades, you ask? Our answer is that this might be risky business and therefore not a good idea. There are several reasons:. Below you will find a history of the real-time open trades that we published in our best stock options trading newsletters Trades" newsletter.
We do not mean to imply that you should follow our trades; rather, we suggest that you may make use of our volume analytics in order to develop your own trading style. We also urge you to paper trade before committing your money to the markets.
We receive a great number of questions dealing with our trading system. In order to help you better understand our trading system and approach, we have selected and addressed the most commonly asked questions below. We hope this will help you in your trading. The VMA refers to the volume of a security, commodity, or index averaged over a given period of time. The intervals used in calculating a particular VMA can be as short as a few minutes or as long as several years. In calculating a VMA, we use a so-called "simple" moving average, where as the newest value is added, the last variable of the series is simply dropped, and where all values are given equal weight.
For example, a 5-minute moving average consists of the last five volume bars, each representing the volume activity of one minute. In order to calculate a simple moving average, all the values are summed up and then divided by five. After best stock options trading newsletters next minute has elapsed, a new value is added to the 5-minute VMA, and the oldest value is dropped from the calculation. Simply put, this means that most of the volume activity in the spike took place as the index was moving up.
Simply put, this means that most of the volume activity in the spike best stock options trading newsletters as the index was moving down. To put the magnitude of a volume spike in perspective, it is essential to consult charts that span various time periods.
For instance, while a particular volume spike may look imposing and therefore seem critical on 1-day or 5-day chart, that same spike may not loom as large on a day chart, and it might even seem insignificant on a day chart. Volume spikes that appear noteworthy on short-term charts must therefore always be placed in the context of the best stock options trading newsletters time periods so that misinterpretations of their potential impacts on mid- or long-term trends can be avoided.
For instance, a prominent spike appearing on a 5-minute chart could well affect an index in the short- term, but it may not necessarily have much of an impact on the prevailing long-term trend.
Why do you sometimes initiate a trade only on a recent volume spike, when in fact there was already a previous spike, which seemed just as important? To answer this question, we invite you to access our historical charts and scroll back over the last 6 months of data.
You will see that the price does not always react immediately to the appearance of a significant volume spike. Rather, best stock options trading newsletters will find quite frequently that time lags exist between volume spikes and their ensuing price reactions. Price reversals often take place only on the best stock options trading newsletters or even third volume spike, and the volume surges at this stage may not necessarily be as pronounced as they were on the first spike.
In our trading, we frequently ignore the first occurring volume signal, anticipating that a later signal will provide us with a better entry point. Often, this is exactly what happens. It is for this reason that we promote our historical charts; they can best stock options trading newsletters valuable information i.
In last week's "Best Trade", you left a trade open. Why was this not the case this week? This week, we did not receive a strong volume signal that would have prompted us to leave the trade open. We would like to remind you that options best stock options trading newsletters is very risky. We believe it is often better to make fewer trades and to initiate trades only in the presence of strong, unambiguous signals. Because of the high degree of risk involved, only very experienced traders should trade options.
You can always trade index shares instead of options and still make a decent profit, although the returns will not be as large. We strongly suggest paper trading to anyone new to our trading system. Try it for a while, at least until you are comfortable with our signals. Even though month's call and put options are more expensive, they tend to react less to market swings lower volatilityand they don't devalue as quickly as options expiring in the current month.
By trading options that do not expire for at least 2 months, you can protect yourself from unforeseen, short-term market fluctuations. An added benefit of longer-term options is that if an up trend continues on a long-term basis, you can hold them for longer periods, as they will increase substantially in value. So how does this information apply to me? If you overlay a short-term chart of the two indexes, you will see that their general dynamics are identical or very similar.
Your trade horizon appears to focus only on the short-and mid-term. What about the long-term? Do your indicators work for long-term time frames? Yes, they work on longer time frames just as well. In fact, our indicators work on any time frame. In our "Best Trades" feature, we generally show short-term trades, as these trades are based on options, and it is our strong opinion that the short-term time frame is the best way to trade options.
All your trades appear to be options trades; however, since I do not trade options, what benefits I can get from your volume indicators? Even if you do not trade options, you can still benefit greatly from our volume indicators!
You can use them to trade various indexes, for example. We apply our volume indicators to the major U. Regardless of what you trade, a particular index or sub-index, stocks, options, or even futures, most trading vehicles tend to move in concert with the broad market.
As a rule, the market will dictate the direction of a particular security - it is never best stock options trading newsletters other way around. It therefore makes sense to get a good grasp on what is happening at the index or stock exchange level, and we have found volume analytics to be an excellent vehicle to make that determination.
Should I attempt to emulate a particular "Best Trade" if you have not closed out the position by the time you report and discuss it? Our "Best Trade" feature is designed primarily to teach you how to use our volume indicators.
We do not wish to suggest that you should mimic these actual trades, even if they are still open. Only follow an open trade if you are aware of the risks involved and if you have access to real-time intraday volume charts you can get these from www. Whether or not we leave a particular "Best Trade" open is always contingent on our volume indicators. For logistical reasons, we cannot always send our newsletters out the same day we close a specific trade.
Even if we could, it would often be too late for you to establish a position, since the market can reverse with very little or no notice following a significant volume signal. For these reasons, we strongly advise you against following an open best stock options trading newsletters on our "Best Trade" feature.
Should you wish to do so regardless, please assure that you have access to real-time intraday volume charts. I noticed that the amount of capital you allocate to your trades can vary quite considerably. Is this a trading tactic or perhaps a marketing strategy? There is nothing random about the varying amount of capital we allocate to each "Trade of the Week", nor is it a marketing gimmick or strategy.
The amount we invest in a particular trade correlates directly to our interpretation of a specific volume signal. The stronger a signal, the more contracts we buy. Conversely, when our volume indicators are not as strong, or when other factors come into play e.
We may hold back some cash i. Better prices may for instance result from a "delayed volume reaction", a situation where index movements do not show an immediate reaction to the appearance of a significant volume spike.
Another reason we may hold back some capital is when we are faced with a weaker than usual volume signal and think the market could turn against us - in situations, a lower capital investment has the advantage of reducing potential losses. Under normal circumstances, we exit from a trade when we see a clear, best stock options trading newsletters volume signal. Best stock options trading newsletters actual signal we best stock options trading newsletters for must not necessarily be as pronounced as the one that prompted us to enter the trade.
In other words, there are certain situations where we may ignore our volume indicators altogether. It is our belief that in options trading, it is often better to take a quick profit rather than overstaying in a best stock options trading newsletters and thereby putting the entire investment at risk.
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