Best Articles by The Crowd

Straddles and Global Macro Trading

What is a straddle?  In the context of trading it is an option strategy where you buy a put and a call on an at the money option.  For instance if you have a commodity at $20 you would buy some $20 calls and $20 puts.  Why would you do this?  Well it is a volatility trade that you place when you are expecting a lot of volatility one way or the other.

For instance in front of a central bank announcement you might do some fixed income option or currency option trades.  This way no matter what the bank says you can make money on the direction of the subsequent move.  The main risk is that the move is not big enough to pay for the put and the call.

A global macro trader will put these on when they see a big move coming but are unsure of the direction.  Typically you will want to buy a lot of time along with the options to that you are not fighting time value so much. For instance by buying a 1 year option you will pay a bit more due to the time but now you have an entire year for the index to trade to a profitable exit.

When done right you an generate very consistent returns by trading straddles and will be long volatility.  That means that you will be positioned to profit from any huge calamity.

September 3, 2009   Comments Off

When Looking for a Stock Broker…

A number of investors, especially the more experienced ones, tend to deal with the stock market by themselves with ease.  However, a stock broker can also be an available option.  This option is welcome especially for those who (1) do not have the time to research, select, and deal with everything that needs to be dealt with in the stock market; (2) are not comfortable with their own decision-making skills yet; and (3) are just starting with the stock market, who need guidance.

In choosing a stock broker, you need to know what kind of stock broker you are looking for.  Are you looking for a full-service broker who will provide all the assistance you need for a fee, or a discount broker, who will have commissions for every stock purchase?  Make sure that the broker you have chosen is easy to reach.  Also, remember that you do not need to sign up with the first broker you meet.  Look around first and get to know potential brokers by meeting them.  Lastly, a good referral is always better.  Having an experienced trader refer you to a broker will be a plus factor, as the broker has come fully recommended and some brokers will even give you free stock option trading software.

August 30, 2009   Comments Off

The Convenience Of A Stock Picker System

Trying to research, analyze and figure out the best stocks to invest in can surely cost someone a whole day. Poring over the financial pages is no guarantee that you can get the desired results. Instead of seemingly looking for a needle in a haystack just to get your money moving in the market, why not learn how to choose the most profitable stock trend analysis software? This will surely save you from trouble since a reliable stock picker can give you forecast and recommendations which will enable you to make good decisions concerning your investment.

Getting a stock picker system is ideal for those busy people who lack the luxury of time to do research and forecasting. In fact, with a stock picker system, you are actually getting ahead of the crowd because you are armed with a valuable tips and information which the others do not have. If you want to make good of your money and time, a stock picker system is simply the best way to do it.

August 30, 2009   Comments Off

Using ETFs While the Bull is Out

During a bear market, opportunities abound in the area of investing.  Lots of investments are down and those who know where to look can get great deals with high earning potential.  Depending on your investment personality and your investment goals, you can take advantage of several of these investment opportunities. Looking at inverse ETFs or exchange traded funds to make future gains when the market moves to the opposite direction would be a good place to start if you are looking to make money in a bear market. For value investors, looking for underpriced stocks could yield a host of investment options. Those who are using market timing as their investment strategy, on the other hand, would look at the direction the market is moving as indicated in charts and historical figures. Both strategies applied to ETFs require basic understanding of the investment environment, financial figures, and trading indicators.  Arming yourself with the right information and tools, like the top stock trading software, about all these basics could help you in coming up with your own strategy to make money with inverse ETFs.

ETFs are very much similar to mutual funds in that you are looking at a pool of stocks from which to buy or sell. ETF shares could be traded by brokers and thus come with broker’s fees.  There are also tax implications to EFT trading income. You have to know what the financial implications of these fees and taxes are to your investment so you can design your portfolio and strategy appropriately. Trading inverse ETFs should be done with a fixed strategy that you will be faithful to. Most investors lose even when using a proven strategy simply because they choose to implement another opposing strategy at the same time. Mastery of your investment strategy, whether it is value investing or market timing investing, is your key to making profits in inverse ETFs. Watching the values regularly and catching your indicators at just the right time will enable you to grab the opportunity to buy or to sell your ETFs to make big profits even in a bear market.

August 16, 2009   Comments Off