OPTIONS TRADING
Welcome to the world of option trading. A major advantage of options is their versatility. They can be as conservative or as speculative as your investing strategy dictates. Options enable you to tailor your position to your own set of circumstances. Consider the following benefits of options:
* You can protect stock holdings from a decline in market price
* You can increase income against current stock holding
* You can prepare to buy a stock at a lower price
* You can position yourself for a big market move even when you don't know which way prices will move
* You can benefit from a stock price rise without incurring the cost of buying the stock outright
In cases where the markets are set to open up strongly, there will often be large gaps in the opening prices of certain stocks from the prior day's closing prices. This can provide profitable opportunities for day traders. The following sets out an easy to implement strategy or tactic that may be used to capitalize on these opportunities.
Beware of Exaggerated or Inaccurate Claims!
Novice day traders are often exposed to exaggerated or inaccurate claims by firms and organizations seeking to profit from the sale of products and services relating to day trading. It is wise to treat many such claims with a healthy dose of skepticism, and to apply common sense in this regard. Here are some things to watch out for:
- Do not expect to become an expert day trader right away. It takes considerable time, practice and effort to learn the ropes.
- Paper trade or use a simulated trading Web site to practice your trading techniques before you use your own "real" money.
- Eliminate the fear of losing because "scared" money rarely profits.
