Kiss Your Stock Broker Good-bye And Say Hello To Controlling Your Own Financial Destiny!
Posted by MyChoices on 03/12/08 in Finance
Robert Kiyosaki made personal financial planning extremely popular amongst common folks. He taught the investment strategy of well-informed investors in real estate and stock option trading in his famous books and audio tapes.
What is option trading?
Stock option trading is tool for creation of wealth as well as protection of wealth. It’s essential that an investor should master stock option trading strategy to make money from bull or bear market otherwise small investor has to struggle with small stock market returns and suffers the devastation of market declines.
What’s the challenge in stock option investing?
The biggest obstacle for new investors is to understand how stock options work. In this article, we will explain day, future or option trading using ‘golden ratio’ of Fibonacci sequence.
Successful traders need to follow a set of rules consistently. These set of rules formed a trading system for an option trader. It’s advisable to take some option trading course to know it in more detail.
Here are some of my favorite stock option trading strategy and system
Option trading is nothing but leverage trading. It’s a strategy of high risk and high gain if not done properly. Biggest lesson in option trading is to follow your own trading rules that are based by your research. You should not be victim of your greed and emotion.
You need to record all your success and failures. Your stock option trading system and strategies needs to be back tested with lots of samples to ensure you have positive expectancy. Positive expectancy means you have have net profit after several trades on a same stock.
Now a day, you can do future and option trading online and you can also do market research on line. Your dependency on option broker is much less.
Let us look at a stock option trading system, which we are testing in our investment club:
1. May 18th (Friday) was the expiration date; we bought three strangles of Google on 14 May, (Monday) that are 2 strikes out of the money for that expiration i.e. $380 and $420 where spot price of google was $400.
2. We watched the price quote most of the day for Tuesday, Wednesday, Thursday, and even Friday.
3. We sold one strangle because price of the total strangle is profitable by $110.
4. We squared open position during intra day rally of google stock due to some news event.
You can do future and option trading online or through some option broker.
You can use Fibonacci ratios with a few simple indicators to help determine probable price turning points, optimum entry, exit and stop-loss levels. To know how you can use natural golden ratio in option trading read our post on Fibonacci sequence.
The task may seem to be challenging, but learning this option trading using chart is not that difficult. It is not necessary for you to be able to calculate option prices by hand. You simply need to build an understanding of how option prices will respond to changes in stock price, volatility within the marketplace, the lapse of time, etc. We use
Profinacci tool based on Fibonacci ratio.
So, once you make yourself familiar with Profinacci software, you can start internet trading from home without any help from investment consultant and option broker.
Tags: course, option, stock, trading
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