If you’re trading stocks or bonds, there are a whole range of strategies you can follow, which range from the long term buy and hold, right through to day trading using technical analysis. Options trading is very similar.

Understanding exactly what an option is one of the trickiest things to understand when you’re starting out.

Basically, an option is a contract that gives you the right to buy (a call option) or sell (a put option) a stock or bond at a set price (the strike price) on or prior to a set date (the expiration date). You might need to read that a few times to get the hang of it!

There are different types of options available in the marketplace, with ‘American’ options able to be exercised anytime between purchase and expiration, and ‘European’ options only able to be exercised on the expiry date. Although the terms are geographical, nowadays the location where you buy options doesn’t automatically mean you’ve bought one type or the other. As a general rule of them, American-style options are mostly used for stocks and bonds, whereas European-style options are for indexes.

Officially, options expire on the Saturday after the third Friday of the expiry month of the contract. However as US markets are shut on Saturdays, that makes the Friday the effective expiry day. Talk about confusing!

Now that you have a basic understanding of what an option is and how it works, let’s take a look at some basic strategies. I’ll just focus on American-style options for stocks.

When you buy or sell an option, you basically have two choices - you can hold it to maturity, or you can choose to exercise it prior to expiry. A large proportion of investors do hold their options until maturity before exercising it to trade the underlying asset. Let’s look at an example.

You’ve purchased a call option for $1, with a strike price of $25. As options contracts are generally for 100 share lots, your purchase (ignoring commissions) would cost you $100, and you’d have the right to purchase $2500 of stock through the option. Now, if the expiry date arrives and the stock is worth $27, it makes sense to go ahead of buy the stock, because you only have to pay $25. That means you’ve made an immediate profit of $2 per share if you sell them again immediately on the stock market. However you still have to factor in what you paid to buy the option, which was $1 a share. So after your purchase costs are deducted, your overall profit is $1 a share. Well done!

But what happens if the share price doesn’t hit $27 - or even $26, which is your breakeven point for this option. Well, if there is still time to expiry and the share price is above $26 but appears to be dropping, it may be a good idea to exercise the option immediately so you can get out of the contract without loss. If the share price is under $26, you might still be able to sell the options for a smaller amount than you paid, for example 20c a share, and recoup some of your losses. If the option is now worthless, you basically just let the contract run in the hope that the price might jump up again, but accept that you’ve lost your $100. One of the good things about options is that you’ve only bought the option to purchase or sell - you’re not under any obligation to do either upon expiry. So your risk is limited to the amount you spend buying the option in the beginning.

One thing to be aware of is that option prices aren’t just influenced by the price movements of the underlying assets - they’re also affected by their time to expiry. As the expiry date approaches, option prices tend to drop rapidly. So if you have an option that you don’t want to hold until expiry, it may be worth selling out early to avoid being too badly hurt by the price dropping as expiry approaches.

Buying on margin can be an extremely powerful method that can help you leverage your money when trading in the stock market. Let me ask you a simple question. You want to make $100. Would it be easier to make $100 from $500 or $1000? Definitely $1000.

If you make $100 from $500 that would be a 20% increase. That will be a little hard to pull off in just a month of trading. But if you make $100 from $1000 that is only a 10% increase in a month.


That cuts the difficulty level in half. Now I’m sure you all realize that the more money you have to put in the market the more you can pull out. Here is a simple example on how margin can let you do just that.

Bill wants to buy stock ABC. It is a strong stock; he believes it is going to go up. The stock is currently trading at $90. He buys 100 shares of ABC for $9000. 2 years go by and ABC is now trading at $180. Bill is excited and sells his stock for $18000. This gives him a 100% increase in just 2 years.

In this example Bill made a pretty good profit from his investment. But there is a way in which Bill could have made even more. Here’s how.

What if he not only bought 100 shares of ABC, for $9000, but also borrowed an additional $9000 to buy another 100 shares. Now he would own 200 shares. Well when the stock went up to $180 and his 200 shares would have been worth $36,000. After the $9000 he borrowed back Bill would have had $27,000. This would have given him a 200% return on his money just by borrowing some extra money.

How can Bill do this? Well Bill’s broker has money. They don’t mind loaning him some to make a few trades. In fact Bill’s broker will loan him up to 100% of his account value.

Now there are some bad things that can happen when you borrow money. Because when you buy on margin it is a loan you will have to pay some sort of interest on the $9000. Bill borrowed $9000 and might have paid back $10000.

Bill paid back so much because he held the stock for a long time. If he had only held the stock for a few months he might have only paid back $9200. Every broker has a different interest rate. To find out what your broker charges you can simply call them up and ask them.

Worst than the fee’s you pay for buying on margin are margin calls. If Bill’s stock had gone from $90 to $50 his broker would have started to worry and for a good reason. If Bill doesn’t have any money than he can’t possibly afford to pay back the loan.

At this point your broker may call you up and tell you to sell your stock within a couple might pay for days. Bill would have had to sell his stock for $50, took a loss, and most of what was left he would have had to give to the broker, Owe.

There are a few things you can do to prevent margin calls from happening to you.

1. You can set a stop. If you don’t let your stock go from $90 to $50 you can’t get a margin call. If Bill set a stop for maybe $85 you would have lost only $5. It is better to get out of it for a small loss than to accumulate a bigger one, this is especially true if you bought the stock with margin.

2. Put more money into your account. If your stock starts to fall and you still like the long term picture. You can always put more money into your account to pay your broker if he starts to get nervous.

3. Don’t buy on margin. If you want to invest in the long term and don’t want to take the chance that you might get a margin call, don’t borrow money. You can still make money without it.

Buying on margin can be a powerful way to leverage your money in the stock market.

I still borrow money every time I make a stock trade. It can help make small profits turn into bigger profits. If you don’t know if this technique is right for you maybe paper trade with it for a while. Get used to it. You never know if it works well for you until you try.

Someone has rightly said you have to “deal with what you fear, and then you put an end to this fear.”
Fear is a part of life. Different people have different kinds of fears. Some have minor fears, others have very deep concerns. Many people have fears when they start doing day trades.
There is no rational need to fear the market place, since it can be a great source of income for you.

With this, you have to find ways to overcome obstacles, we need technology for the success of the day.

1. Learn

What better means are there to get over your obstacles than education itself? Once you familiarize yourself with the work systems of day trading, then that in itself is half your battles won.

You need comprehend the market of the day. You need to understand why a trend is going up or going down, why the markets seem to fluctuate with every second…

2. Plan ahead

Given that most people look at the markets as gamble, it is suggested to develop a plan for the negotiation to fully equip yourself for what lies ahead.

A plan for the negotiation will be a guide to help move forward from the point you start trading to the end of your goals for the day. It serves as a card to show that the roads are good for walking on those paths, and which to avoid. No doubt it will help you minimize loss.

3. Manage your money

Many who fail at day trading do so because they do not manage their money well. Very often, traders are bound to go a little over their spending limit so as to make a quick gamble and that is where they usually end up making even bigger losses that they just couldn’t afford in the first place.

Day trading is not about giving out your money, it is about winning with rational thinking and planning. If you do not work according to a strategy, get one soon.

4. Don’t hold on to short term stocks

It comes highly recommended - if you have stocks in the short term suffering uninterrupted for ten trading days, it is better to get rid of them. This helps remove weak stocks from your total capital, giving it more solidarity.

If you own stocks that are likely to rise more than 25% on the first 3 days of trade, it is good to sell about 50% of them. According to studies of trends, if you sell a stock that hurls 25% or more during the first 3 days, you are most likely to achieve profits.

Look for trading techniques all around you. All you have to do is patiently compile your limits. Once you have done this, take a good comparison of available technology that you have. Keeping your strategy in mind, use the equipment that is best suited to it.

Remember, learning is a never ending curve, so never stop and feel you know enough about day trading.

If you are new to trading on a daily basis on the Foreign Exchange Market it can prove very intimidating indeed. You need to be aware that day trading Forex currency can be very complex if you haven’t had the right sort of training. However it does offer you the opportunity to be flexible and produce a quick turnaround in your trading.
However, if you want to make a profit from Forex trading you need to keep up the markets ups and downs.

Certainly the more research you do into this particular market then the much more profitable you will be. So if you think that watching how the markets are going one day and then avoiding them the next will help then you should think again. It is important that you carefully monitor the markets each and every day.

When it comes to monitoring the markets today there are plenty of online services that can assist you. Many of these once you sign up to their service will send you through each day an email showing how the currencies from around the world are doing against each other, such as Universal Currency Converter.

Also you need to be aware that when you start trading in Foreign currencies there is a high amount of risk involved. So being diligent will help you to avoid making the same kinds of mistakes that others have made previously when they are day trading Forex currency.

Another thing you can do which will help to improve your chances of making a profit rather than a loss on this market is to do a Forex trading course. There are plenty of these available online and some may require payment, but there are a few which offer advice and assistance for free. Again you need to check each of the courses out fully to find out exactly what they offer to ensure that they provide you with what you need.

Something else you have to be aware of when you are considering trading in Forex currency on a daily basis is that this is not a part time job. You need to remember that the Forex trading markets operate 24 hours a day 7 days a week and so you need to be tracking any fluctuations in the market. If you can find a service that provides you with messages informing you of such changes in the markets and so you are better prepared to sell or buy the currency you are interested in.


Above we have shown you what you need to do should you wish to be someone who makes a profit rather than a loss from day trading Forex currency. Certainly the more you know about how the market is working then the much easier you will find it to work out when is the best time to invest in it.

Are you a day trader? Then you must read this article and see the benefits it gives you.

You can make a lot of money with day trading. However, like all types of businesses, it comes with certain risks. While the risks are on a vast scale, so are the returns though.
Before you start your day, you must first consider a number of things.

Day trading can cause you a lot of stress. Because you must monitor and seek market trends, you’ll end up sitting all day looking at the terminal look at the various movements of the market iso as to pinpoint the stock you may take advantage of’.

You will probably lose money at day trading in the first month. That’s why you need to have back up funds . You will need enough financial support to cope with losses you will initially incur.

When you do day trading, you do not invest. You just ride with the stock and get off the wagon before it starts falling. The whole deal needs to be closed the same day. Always remember that you do not become a long term investor.

This advice will definitely help you get better at trading. You must have experience, knowledge, skills and financial support so that you may can be the best day trader

An excellent way to get expert advice for the day trade is to reach commercial enterprises. These companies have broker experts who can provide information on markets, trends and otherinfo that may help you make the right choices when you trade .

Getting the apt training is important in your career as a day trader. To reduce chances of losses, ask the firm you join in the negotiation, how many customers of theirs lost money and how many made profits in the past. If they hesitate to talk abou tthis, look elsewhere.

There is a lot of market information available on the net. Some sites even give advice, guidance and earnings. But dont take everything that you read as the gospel truth. Check it out, but make your own decisions finally.

Day trading is a great way to earn money. But remember it is not an easy way. It is quite difficult to predict markets and if you are inexperienced to be on the market, you can lose a lot of money

Observe the movement of the stocks that interest you. Once you start planning your moves, you will begin enjoying it.

The day trade forces you to concentrate on market trends and to detect movement of a stock. It can be stressful.

To get better at this, try to do drill runs with mock negotiation. These simulations will allow you to trade with a computer generated simulated market with the no real money.

So day trading is not everybody’s cup of tea. You need experience and you need the ability to bear losses.

A golden rule is, don’t invest money that you cannot afford to lose.

The marked downward trend of the stock markets after reaching its peak, due to various reasons, has definitely set the investors thinking. Under the given circumstances, the investor is looking for investments that would not eat into his savings. In times of such crisis the only safe place to park your money would be ‘gold’. Gold is a real, tangible asset whose value does not go down like that of paper money.

On the contrary, its value increases in tandem with the inflationary trend. In fact, the gold reserves of a country are an indicator of the country’s economic strength. According to finance gurus gold has and will always remain a safe investment option not only as a hedging instrument but as a highly appreciating asset as well. So is this the right time to invest in gold?

• The recession in the US, the strengthening of the rupee and the increase in oil prices set the stage for the gold rates to increase in the coming months. Coupled with this is the Indians ongoing love affair with gold which only helps in pushing up the ever increasing demand for gold. Incidentally, India is the largest consumer of gold. The return of 18% that gold has yielded in the first two months of 2008 only goes to prove that this is the right and opportune time to invest in gold.
• Under the current market conditions gold provides good capital appreciation. Although the sensex has taken a deep dip, the gold Exchange Traded Funds have done very well, yielding a return of more than 25% in the last three months. Investing in ETF’s is a safe long term bet as you have the added advantage of no wealth tax being attracted and no concerns of the purity of gold as well.
• This is also a good time to invest in mutual funds that invest in shares of mining companies of precious metals. Due to the growth and profit factor of companies the shares will yield you much higher returns in a short period itself.
• Major players in the world gold market like investment banks, bullion traders and gold funds only buy gold of a guaranteed quality. For this reason it is advisable to invest in gold coins and biscuits rather than jewellery.
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So, this seems to be the opportune time to invest in the glittering metal. However the entry time is important. Some analysts feel that there may be a correction by 7 to 8%, and ultimately the value of pure gold may stabilize at a higher rate in next few months. That may be the right time to start investing in the yellow metal.