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Trading account is a relatively new concept in India. Trading account helps an investor to continue trading even while sitting at home or any other place that has a computer with an Internet connection. By possessing a Trading account, you can purchase as well as sell stocks in real time. You will not even deprived of the most useful online quotes no matter where you are.
For opening a trading account of your own, you need to first find the most suitable broker that suits your personal needs and who will be responsible for maintaining your trading account. Roping in a broker that suits your needs best holds critical importance as this would help you in making more profitable trades in the Indian stock markets. While searching for brokers for the opening of trading account, there are many things you need to look for in your potential brokers. Few of these things are the kind of support your broker would be willing to offer, the quality of their services, and the software by taking its demo, and presence of any hidden costs. § Read the rest of this entry…
They gap down because there is more willing supply at the open than willing demand at the prior day’s close. Stock market prices are almost always at price levels where there is a supply and demand imbalance at the open or because a stock has had news after the closing bell. Traders need to remember the profitable market investor simply finds markets where price is at levels where supply and demand are out of balance and trades the stock back to price levels where supply and demand is in relative balance.
Watching that order flow can help to see where prices were going to turn. Traders need to learn to read their level II and where market makers are sitting. When you have twelve buyers and six sellers at a certain price, all equal size, as soon as the sixth seller sold, price had to rise. Watching the orders in your level II makes this easy to see. Knowing exactly what this picture looks like on a price chart makes it even easier. The key is to not look at candles on your screen as red and green pictures and patterns. You must understand what is happening behind the scenes. Whether you’re trading Stocks, Futures, Options, or Forex, the logic and rules never change. Traders can combine volume with the candles themselves. Volume charts are created in the same way as normal candles. A new candle is created only when a certain number of shares are traded. Time is not an issue. Until enough shares are created to complete the current candle, it will not close and a new one will not be formed. § Read the rest of this entry…
You may have heard of FOREX. It’s the largest financial market in the world, handling $1.5 trillion every day. The combined American stock exchanges only handle about $100 billion.
Anyone may have heard of FOREX. It’s considered as the largest financial market in the world, handling about $1.5 trillion every day. The combined American stock exchanges handle only about $100 billion. Every day, people can make money by trading forex (buying and selling foreign currencies). Let us see the advantages of the Forex Market compared to the Stock Market.
1. Liquidity: As told above, there is always a chance to buy and to sell currencies. The forex market is handling about 1.5 Trillion dollars every day and this is a huge number. What is meant by liquidity is that there are always buyers and sellers. When you want to buy, there will be a seller and when you want to sell there is always a buyer. Therefore the forex is seen as an active market and this is a first advantage. § Read the rest of this entry…
So you’ve decided you want to use options in trading, but should you take the safe route of buying them, and only having a position in the underlying security if the market moves the direction you hoped? Or should you take the riskier route and be an option seller?
Selling options, sometimes also called writing options, is indeed riskier than buying them. An option buyer will only ever have a market position if it’s profitable. An option seller will only ever be assigned a market position if it’s a loss … and they can sometimes be quite a loss. The best thing that can happen to an option seller is that the option never moves in-the-money and it never gets exercised and it expires worthless.
Perhaps the easiest way to think about writing options is to compare it to writing an insurance policy. An insurance company accepts a premium from his customer, and if a certain condition happens (the customer’s car gets wrecked or the customer’s house burns down), the insurance company must honor its policy and pay for the damage. The insurance company surely hopes those conditions never happen, because then it could keep that customer’s premium along with the premiums of all its other customers. § Read the rest of this entry…
When you use options in trading, you will need to figure out what the instruments are worth to you. Ultimately the prices will be decided in the marketplace, which is essentially an open auction where you will have to out-bid any other buyers or match any other offers if you want the right to buy or sell the security at the strike price you have in mind. So what should the option be worth to you? It’s important you think about all the factors involved in options pricing, because you can bet everyone else will be, and you don’t want to lose money on your position without understanding why. In a nutshell, there are six major factors which influence options premiums:
1. Changes in the price of the underlying security.
An option is just a derivative, just a nebulous sort of possibility of what may happen… that is, until it’s in-the-money. Then it can be exercised and effectively redeemed for the security itself, and therefore it gains intrinsic value. So a call has intrinsic value if the underlying security is currently priced higher than the call’s own strike price (it’s in-the-money), and that intrinsic value is equal to the positive difference between the underlying security’s price and the strike price of the call. A put option is the opposite: it is in-the-money and has intrinsic value when the market is lower than the strike price. When these options are in-the-money, their value will change penny for penny as the underlying security changes. When they’re still out-of-the-money, however, their premiums will change at only a fraction of the pace of the underlying security’s changes. § Read the rest of this entry…
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