Many option income traders think that when markets are volatile they need to stay out of the game. Not so. Enter Gamma Trading. Here is a little known option trading strategy that can provide consistent profits from markets that seem too wild and choppy to use the usual strategies like iron condors, calendars, and credit spreads.
This strategy is initially set up to profit no matter what the market winds up doing. If the stock or index being used immediately goes up or down, a gain should be realized either way. Then, using the gamma scalping adjustment technique, the trader can lock in those gains, capturing the profit, and then immediately 're set' the trade to once again make a profit no matter what the stock or index being used winds up doing.
Similar to a straddle, when using this strategy, we don't care what the market ends up doing. We are properly set up to profit either way. Up or down, it doesn't matter. The underlying just needs to move.
After a predetermined profit has been realized from a move in either direction, a quick adjustment is made to the trade to lock that profit in forever. And, this same adjustment re sets the position to kick out even more gains no matter what the stock being used ends up doing, even if it just moves right back to the same spot it started from when the trade was first put on. The best part is that this simple technique can be used over and over again on the same trade - constantly chipping out cash from the same position.
If you have ever put on a directional trade, actually started to make a profit, then watch your stock promptly turn around and head right back to where it started from erasing your gains, gamma scalping is a strategy you should look into.
Trading this way takes so much stress out of trading - and actually makes it quite enjoyable. Gamma scalping allows one to not have to be right about direction and still have the ability to be very profitable. Wether the market heads up or falls down - we don't care. Either way we can make money.
During wild crazy times, especially like the extremely volatile markets we are currently experiencing in the markets, Gamma Trading should be considered a 'must have' method for option traders to learn how to use correctly.
And last but not least - it's a really fun way to trade as well.
Want to learn more about gamma scalping ? Then visit iron condor to find the best option trading free tools and training.
Author: Ted Nino
Monday, October 31, 2011
Saturday, October 29, 2011
Double Calendar: What Goes Down Must Go Up
Even though Double Calendar Spreads can be utilized in various stock market circumstances, they function finest in low volatility situations. Increasing volatility levels help these trades, while sinking volatility winds up hurting them.
Mainly because calendar spreads churn out profit the fastest at neutral to rising volatility levels, some calendar spread traders will wait to make a trade right up until an underlyings volatility either reach the lowest level of their average range, or until they move into the lower third area of their normal volatility range.
By waiting for these lower ranges, the calendar spread trader is increasing his or her odds that the volatility levels will either remain wherever they're and not go much lower which could wind up hurting the trade, or will start to rise back up which could put their calendar trade into significant earnings pretty swiftly.
Typically volatility levels move down because the marketplace heads upward and volatility levels go up because the marketplace moves down. This is why calendar traders will usually put on calendar spreads when they have a bearish view on the stock market or on the underlying asset they are trading.
A popular method for option investors with a bearish outlook is to place a calendar spread slightly below where the market or stock is trading at, with the expectation that as the market or stock does head downward, not only with the underlying move directly into the sweet spot of their calendar position, but the volatility will also rise, super charging their calendar trade into a very good profit.
This method can also be used with double calendars, and in fact many option traders would argue that it would be preferred. Using a double calendar could increase the probability of taking profit from the trade as it could be placed with a skew that would not only create a wider sweet spot inside the profit tent for the underlying to get caught in, it could also supply an extended profit tent coverage over the area where the underlying is trading at when the trade is first initiated, providing a safety net if it turns out that the traders speculation on direction turns out to be incorrect.
To find out more about double calendar , visit Ted Nino's site on how to correctly enter, exit, manage and adjust a calendar spread trade for consistent income.
Author: Ted Nino
Mainly because calendar spreads churn out profit the fastest at neutral to rising volatility levels, some calendar spread traders will wait to make a trade right up until an underlyings volatility either reach the lowest level of their average range, or until they move into the lower third area of their normal volatility range.
By waiting for these lower ranges, the calendar spread trader is increasing his or her odds that the volatility levels will either remain wherever they're and not go much lower which could wind up hurting the trade, or will start to rise back up which could put their calendar trade into significant earnings pretty swiftly.
Typically volatility levels move down because the marketplace heads upward and volatility levels go up because the marketplace moves down. This is why calendar traders will usually put on calendar spreads when they have a bearish view on the stock market or on the underlying asset they are trading.
A popular method for option investors with a bearish outlook is to place a calendar spread slightly below where the market or stock is trading at, with the expectation that as the market or stock does head downward, not only with the underlying move directly into the sweet spot of their calendar position, but the volatility will also rise, super charging their calendar trade into a very good profit.
This method can also be used with double calendars, and in fact many option traders would argue that it would be preferred. Using a double calendar could increase the probability of taking profit from the trade as it could be placed with a skew that would not only create a wider sweet spot inside the profit tent for the underlying to get caught in, it could also supply an extended profit tent coverage over the area where the underlying is trading at when the trade is first initiated, providing a safety net if it turns out that the traders speculation on direction turns out to be incorrect.
To find out more about double calendar , visit Ted Nino's site on how to correctly enter, exit, manage and adjust a calendar spread trade for consistent income.
Author: Ted Nino
Sunday, October 23, 2011
The Basics of Stock Trading
Stock trading is something that is not everyone's cup of tea. Whoever has told you that is wrong. Let me tell you something I know for sure. I'm a journalist and I had no clue about commerce up until five years back. At that point I had heard that a friend of mine had managed to make herself a million dollars just by stock trading.
And I thought, WOW! That is some amazing source of income out there! I need to know how to do it. And guess what? I learnt how to! But I can tell you this. In order to find out how stock trading is done, and how to do it right, more importantly, you need to have a whole lot of patience.
Stock Market
The first thing you need to know about stock trading is the stock market. What really, is a stock market? It is basically a forum which allows you to facilitate exchange of security between buyers and sellers and therefore also reduces the risk of making investments. I mean think about what a hard time you would have trying to sell shares if you had to go from door to door, looking for a buyer?
Now the market is divided into two sub markets. The primary market and the secondary market. The primary market is basically where the securities are created by means of an IPO and the secondary market is where investors trade in previously issued securities - all without any involvement on the part of the issuing companies of course. It is the secondary market that we have come to understand as the stock market and it is here that all the stock trading takes place.
Methods of Stock Trading
Now the next thing you need to learn is how you can trade stocks. There are basically two methods to exchange stocks - one is on the floor and the next - a more recent development - is by electronic means.
Basically trading on the floor, in the New York Stock Exchange is what we have come to understand thanks to a million movies - there are images of hundreds of people rushing about, waving at each other and shouting figures at each other and of course looking up stuff on their computers. What trading involves is a sequence of the following steps:
* You direct your broker to buy a certain number of shares of a certain company.
* This order is sent to the floor clerk (from the broker's firm) who is at the exchange.
* The clerk then goes about looking for someone who has a hundred of the desired shares to sell.
* The two negotiate the price of the shares and then shake on it.
That's just about it!
Electronically of course things become much simpler; you just need to use electronic markets to find a buyer and seller match, rather than the via media process of using a trader. This process brings you one step closer to the stock trading process and is much more efficient. So what form of stock trading are you going to choose?
TradersLaboratory.com is the ultimate destination to find all latest forex market updates, share market and equity market in a comprehensive fashion. You can get maximum benefit through spot FX tips. Get now.
Author: Silas Reed
Tags: Stock Market, Stock Trading, Forex Market, Equity Market, FX
And I thought, WOW! That is some amazing source of income out there! I need to know how to do it. And guess what? I learnt how to! But I can tell you this. In order to find out how stock trading is done, and how to do it right, more importantly, you need to have a whole lot of patience.
Stock Market
The first thing you need to know about stock trading is the stock market. What really, is a stock market? It is basically a forum which allows you to facilitate exchange of security between buyers and sellers and therefore also reduces the risk of making investments. I mean think about what a hard time you would have trying to sell shares if you had to go from door to door, looking for a buyer?
Now the market is divided into two sub markets. The primary market and the secondary market. The primary market is basically where the securities are created by means of an IPO and the secondary market is where investors trade in previously issued securities - all without any involvement on the part of the issuing companies of course. It is the secondary market that we have come to understand as the stock market and it is here that all the stock trading takes place.
Methods of Stock Trading
Now the next thing you need to learn is how you can trade stocks. There are basically two methods to exchange stocks - one is on the floor and the next - a more recent development - is by electronic means.
Basically trading on the floor, in the New York Stock Exchange is what we have come to understand thanks to a million movies - there are images of hundreds of people rushing about, waving at each other and shouting figures at each other and of course looking up stuff on their computers. What trading involves is a sequence of the following steps:
* You direct your broker to buy a certain number of shares of a certain company.
* This order is sent to the floor clerk (from the broker's firm) who is at the exchange.
* The clerk then goes about looking for someone who has a hundred of the desired shares to sell.
* The two negotiate the price of the shares and then shake on it.
That's just about it!
Electronically of course things become much simpler; you just need to use electronic markets to find a buyer and seller match, rather than the via media process of using a trader. This process brings you one step closer to the stock trading process and is much more efficient. So what form of stock trading are you going to choose?
TradersLaboratory.com is the ultimate destination to find all latest forex market updates, share market and equity market in a comprehensive fashion. You can get maximum benefit through spot FX tips. Get now.
Author: Silas Reed
Tags: Stock Market, Stock Trading, Forex Market, Equity Market, FX
Saturday, October 22, 2011
Two Major Types of Brokers
If you have made your final decision to start your forex trading business, the next task to do will be searching for the right broker to partner with. There are two kind of brokerage service out there that is known widely by most traders. They are market makers kind of broker and Electronic Communication Networks kind of broker. The right broker will depends on your own trading strategy.
First of all, let us discuss about the market maker broker. This type of broker sets their own bid and ask prices that they got from the inter-bank or third party provider such as big hedge fund companies, banks, institutional companies etc. By being a client of market maker, it means that you are trading against the broker itself and not some other traders on the other side of that computer screen of yours. There are some advantages and disadvantages from using this type of broker. The advantages from using this brokerage service is that you are guaranteed to have your price go through and it go through with some fixed price or spread that you are getting from within your trading platform. The disadvantage is that you will not have the best spread price on each of the trades you make.
Now the ECN (Electronic Communication Networks) broker allowing you to have your trade with the best spread, meaning that you are getting the best price for each of your trade because you are trading directly from the inter-bank market where you are trading against other traders out there. The downside of this brokerage service is that there is no guarantee whatsoever of your trades will go through.
You have to be able to pick the right kind of brokerage service that is suitable with your trading style, market maker is the kind of brokerage service that is suitable for those long-term type of trader while the ECN is the kind of brokerage service that is suitable for short-term type of trader that trades intra-day trading or scalp trades.
There are many important decisions you should make if you are serious about trading the forex market. One of them is choosing the right broker that is suitable for you. You need to try to narrow down your choices from bunch of forex brokerage service you find out there and choose one from two types of brokerages that I mentioned above that is best and suitable for you based on your own trading strategy.
Should you are still new to the whole world of forex trading, you surely have to be partner with the best forex broker and use the most sophisticate forex trading software to help you get your trading better.
Author: Titiek Puspa
Keywords: Forex Trading, Trading Strategy, brokerage service, market maker broker, ECN, Electronic Communication Networks
First of all, let us discuss about the market maker broker. This type of broker sets their own bid and ask prices that they got from the inter-bank or third party provider such as big hedge fund companies, banks, institutional companies etc. By being a client of market maker, it means that you are trading against the broker itself and not some other traders on the other side of that computer screen of yours. There are some advantages and disadvantages from using this type of broker. The advantages from using this brokerage service is that you are guaranteed to have your price go through and it go through with some fixed price or spread that you are getting from within your trading platform. The disadvantage is that you will not have the best spread price on each of the trades you make.
Now the ECN (Electronic Communication Networks) broker allowing you to have your trade with the best spread, meaning that you are getting the best price for each of your trade because you are trading directly from the inter-bank market where you are trading against other traders out there. The downside of this brokerage service is that there is no guarantee whatsoever of your trades will go through.
You have to be able to pick the right kind of brokerage service that is suitable with your trading style, market maker is the kind of brokerage service that is suitable for those long-term type of trader while the ECN is the kind of brokerage service that is suitable for short-term type of trader that trades intra-day trading or scalp trades.
There are many important decisions you should make if you are serious about trading the forex market. One of them is choosing the right broker that is suitable for you. You need to try to narrow down your choices from bunch of forex brokerage service you find out there and choose one from two types of brokerages that I mentioned above that is best and suitable for you based on your own trading strategy.
Should you are still new to the whole world of forex trading, you surely have to be partner with the best forex broker and use the most sophisticate forex trading software to help you get your trading better.
Author: Titiek Puspa
Keywords: Forex Trading, Trading Strategy, brokerage service, market maker broker, ECN, Electronic Communication Networks
Friday, October 21, 2011
Iron Condor - How To Lose Your ENTIRE Trading Account Quickly
I HAD to post this. Read on and you will see why...
Author: Ted Nino
The Iron Condor is perhaps the most dangerous option strategy around.
The thing is, when rookie option traders first hear of this strategy (perhaps from a late night infomercial or free hotel seminar conducted by slick salesmen touting it as the greatest thing since sliced bread) - very few seem to able to resist the temptation to jump right into trading them head first - with actual real hard earned money on the line - and usually way too much of it.
And it seems that a good percentage of them - if not most of them - promptly wind up getting their groins kicked in, their heads ripped off, their eyes poked out, and getting hurt really, really bad.
Now wait -
Before you start to get the wrong impression, please, let me clarify something here.
I absolutely LOVE iron condors. ALOT. In fact, the iron condor is right up there as one of my favorite trading strategies.
I think the iron condor really IS a great trade.
And yes, I absolutely believe all those stories and claims you hear swirling around about iron condors generating ten percent plus monthly returns and providing trades that have the probability of winning somewhere in the range of eighty to ninety percent. In fact, I KNOW those stories are true because I see it happen all the time in my very own trading account.
The problem is - there is something big that is being left out of all those claims and stories - and this something is causing way too many fresh new doe eyed option traders to misunderstand this strategy right from the beginning and blindly jump into them with completely wrong expectations.
See, while it may be true that the iron condor and credit spread strategies can kick off yields of over ten percent monthly and that they favor the trader by offering high probabilities of winning (in some instances as high as 80 and 90 percent) - what isn't being talked about is the risk to reward ratio of these trades - which can be as high as 10 to 1.
10 to 1! That means that in order to try and make just one dollar, you need to be willing to risk ten. Or, put another way - in order to make 100 dollars, you need to risk 1,000 dollars. Or - risk $10,000.00 to hopefully make just $1,000.00!
And as my dear old mammy used to say: 'that smells a lot like an awful bad egg'. Which in fact it is. That risk to reward ratio is nothing but a low down, no good, smelly rotten deal!
Even with the ten percent monthly returns and the high probabilities - all that needs to happen is for a problem month to come along (and it WILL, believe me) - and the next thing you know you'll be staring at a gigantic loss and a zero balance account!
However...
There is still hope...
Like I said before, I LOVE the iron condor trade.
And - I consistently make money from it.
So apparently, even with that atrocious risk to reward quandary, there must be a method to generate consistent income with this trade.
And there absolutely is.
It all has to do with the management of the trade.
As long as you learn the correct way to initially place these trades, then combine that with a super simple management technique and a few easy adjustment tricks - this risk to reward issue can be completely eliminated and no longer presents a problem.
Once you possess the correct iron condor knowledge and know how - and understand how to apply a couple super easy to implement adjustment tricks - you'll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the iron condor trading strategy for all that it's 'actually' cracked up to be.
To learn these 'tricks' to trading the Iron Condor , go to this Iron Condor site and watch my free video. It will show you an extremely simple method for properly placing, managing, and ADJUSTING iron condor trades.
Author: Ted Nino
The Iron Condor is perhaps the most dangerous option strategy around.
The thing is, when rookie option traders first hear of this strategy (perhaps from a late night infomercial or free hotel seminar conducted by slick salesmen touting it as the greatest thing since sliced bread) - very few seem to able to resist the temptation to jump right into trading them head first - with actual real hard earned money on the line - and usually way too much of it.
And it seems that a good percentage of them - if not most of them - promptly wind up getting their groins kicked in, their heads ripped off, their eyes poked out, and getting hurt really, really bad.
Now wait -
Before you start to get the wrong impression, please, let me clarify something here.
I absolutely LOVE iron condors. ALOT. In fact, the iron condor is right up there as one of my favorite trading strategies.
I think the iron condor really IS a great trade.
And yes, I absolutely believe all those stories and claims you hear swirling around about iron condors generating ten percent plus monthly returns and providing trades that have the probability of winning somewhere in the range of eighty to ninety percent. In fact, I KNOW those stories are true because I see it happen all the time in my very own trading account.
The problem is - there is something big that is being left out of all those claims and stories - and this something is causing way too many fresh new doe eyed option traders to misunderstand this strategy right from the beginning and blindly jump into them with completely wrong expectations.
See, while it may be true that the iron condor and credit spread strategies can kick off yields of over ten percent monthly and that they favor the trader by offering high probabilities of winning (in some instances as high as 80 and 90 percent) - what isn't being talked about is the risk to reward ratio of these trades - which can be as high as 10 to 1.
10 to 1! That means that in order to try and make just one dollar, you need to be willing to risk ten. Or, put another way - in order to make 100 dollars, you need to risk 1,000 dollars. Or - risk $10,000.00 to hopefully make just $1,000.00!
And as my dear old mammy used to say: 'that smells a lot like an awful bad egg'. Which in fact it is. That risk to reward ratio is nothing but a low down, no good, smelly rotten deal!
Even with the ten percent monthly returns and the high probabilities - all that needs to happen is for a problem month to come along (and it WILL, believe me) - and the next thing you know you'll be staring at a gigantic loss and a zero balance account!
However...
There is still hope...
Like I said before, I LOVE the iron condor trade.
And - I consistently make money from it.
So apparently, even with that atrocious risk to reward quandary, there must be a method to generate consistent income with this trade.
And there absolutely is.
It all has to do with the management of the trade.
As long as you learn the correct way to initially place these trades, then combine that with a super simple management technique and a few easy adjustment tricks - this risk to reward issue can be completely eliminated and no longer presents a problem.
Once you possess the correct iron condor knowledge and know how - and understand how to apply a couple super easy to implement adjustment tricks - you'll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the iron condor trading strategy for all that it's 'actually' cracked up to be.
To learn these 'tricks' to trading the Iron Condor , go to this Iron Condor site and watch my free video. It will show you an extremely simple method for properly placing, managing, and ADJUSTING iron condor trades.
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