Small Business Philippines

Having been a student of the stock and option markets for 17 years and seeing new traders enter the market each year seeking there fortune only to see them wind up broke and bitter a year later I find myself wondering why this is with all the advances in trading. At the beginning of the 21st century I see more computer models, software programs, news commentary, new trading methods, etc. come into the marketplace than ever before being promoted to helping traders make millions yet aspiring online stock and option traders struggle even more than when I started out. After giving this much thought I believe now more than ever that trading success doesn’t come wrapped in a pretty box with bows on it but from implementing effective methods that stand the test of time.

For example, for spotting trend reversals, I’ll look at a stock that has been moving in a given direction, let’s say upwards, and graph that stock’s price action with a 2 period Relative Strength Index Indicator also called an RSI. I’ll draw an upward trendline on the stock and watch for distribution on higher volume in the general market. If distribution days begin to add up to more than 4 or 5 then I’ll watch the RSI on this stock for divergence and once spotted will watch for a break of that upward trendline. As soon as I have my trigger I use my method of entering the position for a short. Downward moves are twice as fast to the downside as they are to the upside so when the market sells off I am in a position to catch a rapid decline in price with a put position while limiting my risk.

Using a pullback method, I first make a list of stocks that are both strong fundamentally and technically which to me suggests that they have the potential to move higher or the opposite for short candidates. I’ll use a variety of stock option strategies to trade them but for long candidates the stocks must be above there 200 day simple moving average or 200 day SMA and must also have a Relative Strength (RS) of 90 or higher. I also watch to see if there price range has been range bound for at least 2 months in a flat price base pattern. If the stock moves up and out of that price base I will then watch its relation to it’s 10 and 20 day SMA. Once price pulls back evenly to its 10 day SMA without violating its 20 day SMA(which acts as a stop for a position once entered) I wait for price to trade over the high of the previous day’s price high to enter. This allows me to trade high-flying stocks at the beginning of a big rally with stock options while controlling my risk with an adjustable stop in place (the 20 day SMA).

Using seasonal trends in the general market helps me to determine my trading strategy at various times of the year. During the summer many traders at the exchanges go on vacation so trading is flat and volume is thin so I use credit option spreads for income. When they return from vacation trading begins to pick up going into the end of the year and I keep a close eye on the strongest stocks to ride them up on rallies with stock option trading or investing in the stock itself. I have caught incredible runs in stocks like HANS and others by taking advantage of this seasonal tendency. If you use stock option trading in taking advantage a stocks like this you could very easily capture 500% or higher returns using stock option strategies.

Price gap explosions patterns can present enormous opportunities for the stock and option trader. Price gap explosion patterns occur when a stock closes down in price one day but the following day gaps in price in the opposite direction often completely out of the price range for the previous day. This occurs because of a unexpected announcement that shifts the dynamic in the price action of the stock. This can signify the beginning of a new trend which I seek to exploit and get in early on a new price trend with stock option plays or investment positions. I have made huge gains in Goldman Sachs, Apple Computer, Chicago Mercantile Exchange, and others using a combination of stock investing and option trading with this trading method.

Having been in the trading game for a long time I have observed much of new advances being promoted in this new century of trading to both aspiring and veteran traders alike and I have come to believe that it does more harm than good. New trading systems, the latest indicators, neural networks, esoteric trading secrets, etc. do not guarantee trading profits nor trading success. Having a strong sense of the markets and stock option trading combined with the disciplined implementation of effective trading techniques will do more to produce successful trading results and consistent profits than the latest fads in the marketplace.

About the Author

For profitable stock option trading methods and trading momentum stocks  go to www.stockoptionsystem.com today for real information you can use.