Archive for category Day Trading Options

Why Options Trading Is the MO of the Black Swan Trader

I have loved options trading from the very first time I tried it. While I didn’t exactly know why I liked it so much, I knew there was something particularly special about it but I couldn’t quite put my finger on it. That changed last week when I read a book called The Black Swan by Nassim Taleb.

Exposure to Serendipity – a Television Interview that Became a Black Swan for Me

I had never heard of Nassim prior to this past month when he appeared on television and gave a short interview about the Greek debt crisis and how it related to his description of Black Swan phenomena. I did not catch all of the interview, but I did catch one extremely important comment by him – a comment that resolutely cemented in my mind the investment strategy I had been tinkering with lately. What he said that there was unknown uncertainty in the world, and in particular the stock market – and while that may not seem like the boldest statement ever made what he next said forever changed the way I think about investing. What he said next was that what made those unknowns particularly important was that the returns (positive or negative) on those unknowns were large enough to impact the overall performance of an asset portfolio. In other words, sudden events can produce such large (usually unfavorable) swings in the market that single market or asset events can obliterate decades of returns in a matter of hours. I am sure that if he ever has the mis-fortune of reading this post that he will be horrified that I have referred to watching the television (and in particular a financial news channel) a “black swan” event.

For those of you not familiar with modern portfolio theory, this is equivalent to standing the classic investment portfolio theory (and all of its academics) on its collective ignorant head.

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An Options Trading Strategy Suddenly Makes Sense

As I had mentioned before, I had been tinkering with my own investment strategy, attempting to maximize my exposure to positive returns using the minimal amount of capital, all the while keeping the remaining cash in highly liquid/low risk assets. Oddly enough my options trading strategy was working quite well before I read the Black Swan… and now I have some appreciation for why.

If you have read The Black Swan already and haven’t given options trading a try, I highly recommend learning more about it. If capital is a problem, then perhaps binary options are for you.

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1 Comment updated August 8, 2011

Fast Times in Forex Trading and Binary Markets

So we’ve had a lot of movement in forex trading and binary option trading in the last week. The Dow Industrials Index settled over 9000 for the first time in months and the dollar remains relatively weak against the euro and Yen but holds fairly steady against the pound.

It looks like the 2009 recovery is well along the way as the markets reacted favorably to positive earnings results from a number of companies (although Microsoft took a pretty big hit on theirs). For my own part I continue to day trade. I know the long-term investors out there think it’s best to buy and hold but for heaven’s sake! We live in a short term world where short term results are vastly more preferably to long term results. I very much doubt anything will change until someone decides to radically alter the tax code against day trading again.

I mean even with the substantial tax penalty for day trading there still is a huge incentive to cash out your short term gains because the long-term downside risk is too large (mainly due to mismanagament and corporate malfeasance). Why Boards of Directors haven’t caught on to this is beyond me but frankly they’ve shown themselves to be in cahoots with executives who steal from shareholders so there isn’t any incentive for them to crack down on bad executives is there?

At any rate – the message is clear – keep day trading: don’t buy and hold.
Day Trade Binary Options Here
Day Trade Forex Here (with Software)

Other Articles on Day Trading Forex and Binary Options:
Easy Forex Option Trading
High Turnover Options Trading System Makes Money Fast for the Bold Trader
Forex Trading Software – Java Based Program Works for Mac or PC
Binary Option Trade with Call and Put – Straddle Your Way to a Double Up in Binary Options Trading

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1 Comment updated January 12, 2012

The Basics of Foreign Currency Lingo

Editorial Comment:  I frequently write about topics about which I assume the reader has a reasonable amount of knowledge however I do tend to leap ahead from time to time.  My recent forex trading articles definitely fall into that category.  I went looking for an article that I thought would cover the basics for me and found this one which covers at least some of the basic terminology of forex trading similar to what I talk about in my forex trading tutorial. You’ll note that when Harold starts talking about the spread and what you pay in terms of commissions to your broker you’ll see why I typically opt to trade binary options (which at my binary options broker are commission free).

Currency Trading Tutorial – Forex For Beginners
By Harold Hsu

What Is A Currency Pair?

A currency pair refers to the two currencies that are involved in a foreign exchange trade. For example, if you want to buy the Japanese Yen using U.S. Dollars, you would look at the quoted price for the USD/JPY currency pair (USD = U.S. Dollar; JPY = Japanese Yen).

Basically, the currency pair you should be looking at depends on the currencies you wish to trade in.

What Is A Base Currency?

A base currency is the currency that is first mentioned in a currency pair. In the USD/JPY currency pair for example, the base currency is the USD. In the EUR/USD currency pair (EUR = Euros), the base currency is EUR.

The base currency is the currency with which the quoted price refers to. For example, the quote USD/JPY 110.00 means that one unit of the base currency (i.e. USD) is worth 110.00 JPY.

To clarify, here’s another example: EUR/USD 1.4600.

This means that 1 unit of EUR is worth 1.4600 units of USD. To buy 1 EUR, you’ll need to trade in 1.4600 USD (i.e. sell 1.4600 USD).

What Are Bid And Ask Prices?

The base currency is traded at 2 different prices at any one time, depending on whether you want to buy or sell it. For example, if you want to sell the USD/JPY currency pair (i.e. sell the USD and buy JPY), you’ll receive 110.00 JPY. However, if you want to buy the USD/JPY pair, you may need to pay 110.03 JPY.

Notice how the buying price is higher than the selling price. This difference between the buy and sell price is known as the ‘spread’. If you first buy a currency pair and then immediately sell it, you’ll incur a loss equal to the spread.

The spread is what you pay to your broker as transaction fees.

To learn more, Click Here to download my free 26-page guide, Forex Trading Traps!

Harold Hsu is the owner of where he provides premium Forex trading tips and resources.

Article Source:—Forex-For-Beginners&id=1067111

Ed (con’t): After reading this article by Harold I hope you have a better understanding of what I’ve been trying to teach you about making money trading foreign currency.  There is plenty of opportunity with the right software and broker.

Previous Post: Learning to Trade Foreign Currency Made All the Difference

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1 Comment updated July 26, 2013

Learning to Trade Foreign Currency Made All The Difference

When I was learning to trade foreign currency I was being trained not just to understand the movements of the currencies back and forth between countries but also learning about the human condition and psyche. I have long enjoyed the benefits of a superior financial education than most of the people around me, and having this knowledge has always allowed me to have a deeper understanding of how individual human decision making impacts economics and global finance.

Forex Trading Plays on Inequities in the Market
It wasn’t until I learned to trade foreign currency that I began to understand how people with real money take advantage of the basic needs and desires of individuals and use forex trading to take advantage of the opportunities in the market. It used to take large amounts of capital and small teams of traders to take advantage of the movement of money around the world but now many automated trading programs have sprung up allowing individuals with smaller amounts of capital to play and succeed in the market where only the big fish once played.

Now I Trade Forex Too
Now instead of watching all the highly capitalized players in the market play – I get to play and make my money too. With the cool robot programs I use (linked to my broker), I don’t have the stress of constantly monitoring results either.

Is The Stress of a Margin Account Too Much For You?
Many people who try to learn to trade foreign currency end up quitting before they ever make their first trade. The number one reason for this (other than pure lack of capital reasons) is the stress and high risk of using a margin account. While the leverage of a forex margin account is awesome (try upwards of 100:1 leverage), the downside is that losses can mount quickly and in many cases are not limited to the amount of initial investment. Fortunately one alternative to direct forex trading is the advent of binary options. Binary options offer exposure to the high returns of forex trading without the unlimited downside. A binary options trade offers the high yield but losses are limited to the amount of the investment – an important protection for traders afraid of the exposure to margin calls. Better still trades typically are commission and spread free, greatly reducing the amount of capital required to effectively trade. In many cases as little as $100 is required to open an account and place a trade. Try that with a forex trading account, no?

Anyway, I hope you’ve learned a little about how to trade foreign currency and are committing yourself to learn more or to give other forms of investing a try. The fastest way to make money is trading online. Other people are doing it, no reason you can’t.

More on Foreign Currency Trading:
Learn to Trade Foreign Currency – Examples of Forex Trading Opportunities to Exploit
Learn to Trade Options – The Basic Put and Call Options Explained
Learn to Trade Binary Options – The Fastest Way to Make Big Money in the Market

Prior Post: Forex Trading Systems That Work 24/7 Good Times and Bad Times

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1 Comment updated July 26, 2013

Forex Trading Systems That Work – 24/7 Good Times and Bad Times

I’ve really been hooked into forex trading and I had been looking for forex trading systems that work and I have to tell you there are a couple of pretty cool systems on the market. Automated forex trading is making some smart people some big bucks with very little to start out with.

The problem most people have with investing is that it usually takes a significant amount of capital to overcome the transaction costs associated with high frequency trading. The way for a small player to get around this initial capital hurdle is to use the power of leverage to amp up gains. Margin accounts are more risky, but when paired with an automated trading software platform the software combined with the margin leverage can level the playing field for the small investor. An investor who sets up forex trading systems that work for him while he’s away doing other things can reap considerable extra monthly income from those trades.

One thing that is required of this type of automated forex trading system is the connection between your brokerage account and your software. If you have your software stored on your local computer then you’ll need to have you computer hooked up to the web 24/7 to make money all the time. A Java, or web based software system is hosted remotely on a server. Users access their accounts via the web. The advantage of this type of link up is that users can shut down their computer or web connection whenever they want but the software continues to run because it is hosted on a web server (this software is available either as web-based or local based and works with most brokers… what? no broker? Find one here and get the bonus cash for new deposits).

See Other Day Trading Articles:
Good Stock Options to Buy: Learning Strategies That Work
Binary Option Payoff: Breaking the Bank When Your Hand is Best
Binary Option Strategies: Staying Active While Waiting for Your Set

Prior Post: Forex Binary Options Broker Cheap to Start and Commission Free

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1 Comment updated July 26, 2013