Options Stock Trading

The Rich Guide: How to Invest in Stock For Short Term

2015-11-16T16:44:00.001-08:00

Investing in stock for a short term has been very valuable for most of people to gain profits relatively at a short time. It's just about time. Based on my personal experience, trading in short time could be possibly very profitable if you are smart enough to find stocks with high ROI with at least 10% a year.

In this article, I will show you my ultimate guide on how to invest in stock for a short term, including my technique scanning pennies stocks and other important stuff.

First things first, let's take a look at definition of the short term investment. If we define short investment, that means we are investing our money in an increasing value of financial instrument less than one year.

Actually, people who are invest their money in a short term are not supposed to be called investor, but a trader. A stock trader gains profits from the fluctuation of stock price in stock exchange. A trader could come from any background of studies, should not be always a professional or expert at stock trading. As long as they have skills at trading stock, that's more than enough to bank up money from the market.

Referring to style on how to practice trading, we classify styles of stock traders, which are day traders, swing traders, market makers, scalpers, momentum traders, trader on the news, and arbitrageur.

Day Traders, traders who are doing buy-sell on a certain stock during the same day.

Swing Traders, this is a type of trader who seeks profit within 1 - 4 working days.

Market Makers, a broker who makes buy-sell on a certain stock at the same time, seeking profit from the margin.

Scalpers, a trader who seeks chances from fluctuation of stock price in order to open a position and close it at a very short time.

Momentum traders, a trader who only opens their position at the right time on a stock with a consistent trend (bullish or bearish). When there is a reversal signal of stock they are holding, they will close or sell before the momentum changes.

Traders on the news release, a trader who always relies on fundamental analysis from news. They don't care about using technical analysis because they believe the effect of the news is very strong towards a certain stock related to the news. Type of news that could be very effective, such as about interest rate decision (FOMC rate decision), GDP, retail sales, durable goods, inflation (consumer price index), unemployed (non-farm payrolls), industrial production, business sentiment surveys, consumer confidence surveys, trade balance, and manufacturing sector surveys.

Arbitrageur, a trader who gains profits doing arbitrage from two stock exchanges. The idea behind this, that an asset has different value in every market. Arbitrage is not only applicable in stock market but also in forex, commodities, future, mutual fund, and even CFD.

How to Be Millionaire in Option Trading

2015-11-15T23:39:00.000-08:00

In every type of trading, we always chase after a large of money and avoid losses, as well as possible. Fortunes are not made overnight and it requires hard work and discipline. To being a successful trader we have to develop a trading system and stick with it always. So, there is nothing impossible to become a millionaire in option trading. The essential key here, when you find a reliable system that can make you rich undoubtedly because you have tested it with twists, you should invest a bigger money to scale it up.

Alright, now we are ready to start talking what you need to achieve for being a millionaire. It's about time, I suppose you would be saying that. Everything needs time in order to proceed, but it all depends on you whether you can consistently learn and proceed, or maybe you are just not capable enough in this industry?

Okay, first things first. Have you ever heard about The Secret? It's a really good book that teachung you how to achieve what you want by visualizing it. So, let's take an example, suppose you want to have a car, so just pretend you are driving that car on your couch regularly. As a result, you are attracting energy of the nature to help you buy the car. Technically speaking, it's closely related to dream. How we can apply it in Option trading? Well, as a trader you have to set your goal why you are into this. Try to visualize what you want to become after having profits from Option trading, that could be your dream car, luxurious yacht, house that boasts swimming pool, and beyond.

Furthermore, you need a strong motivation to become a millionaire. Without motivation you cannot become a millionaire, but having a chance to win a lottery. Motivation is a machine to keep you working, and the fuel is your dream.

The next step is identify yourself using a method, that is what so-called SWOT (Strengths, Weaknesses, Opportunities, Threats). Generally, it's a general method to plan a business, but can also be applied in a person. Using this method, set a route to be what you want. The routes, we are going to discuss today are a short income and long term income.

1. The Short Term
In the short term, usually you are allocating money to invest in a high performing sector, such as Mining and Technology in an expectation that will give you ROI (Return of Investment) without waiting too long.

For example: You are buying 100 shares of Google (GOOG) each $500 ($50.000) to trade in Option. You decided to buy GOOG because you want to bank up $500.000 after discovering ROI of this giant tech company is relatively 10% a month.

2. The Long Term
Investing money in the long term, means you are holding a financial instrument for its increasing value for a very long time. Always remember that could be at least 10 years, and remember to hold stock that you feel comfortable only. You can learn this from a well-known long term investor, which is one of the richest persons in this planet, Warren Buffet.

By far, I believe after reading this article, you have already started a goal to become a millionaire Option trading. It is not impossible, but more than possible to achieve it. Keep yourself always motivated to make your dream come true.

Option Strategy #1 Protective Put Strategy

2015-11-13T14:04:00.002-08:00

Maybe just like you, Protective Put is one of my favorite option strategies for a long term investment in option market. That we have used Option Put to secure our position, it's a very powerful strategy gaining profits without being worried to lose a large of equity due to fluctuation of the stock price. And the good news is, we can calculate the loss that we would likely experience, and it is limited.

The idea behind this option strategy is actually very simple. When the the stock price is falling down, the investor would not lose a lot of money because Option Put they have purchased giving them RIGHT to sell their stock at strike price. In another hand, when the stock price is rocketing up, investors are even happier to see the growth. But also keep in mind, this Protective Put strategy can potentially reduce profits from the increasing price of the stock, as much as Premium investors have paid to buy Option Put as protection.

How to Use Protective Put Strategy
The important key in Protective Put Strategy is choosing a best performing stock with high volatile according to its historical data. If you want to use this strategy, I would recommend choosing stocks from high volatile sectors, such as Technology and Biotech. Just believe me the Return of Investment (ROI) could be very profitable. Another thing to consider is its consistent growth during a certain period of time.

Protective Put Strategy Example
VISA (V) is currently traded in the market for $523.00. VISA is world's largest financial company that you believe their stock price will increase for a long term. Therefore, you buy 100 shares of VISA (V), which is $52300.00. In order to protect your investment, you buy Option Put at strike price $30 with Premium price $0,20 ($0,20 x 100 shares of VISA = $20).

According to the illustration above, your Break Event Point (BEP) is $52,320, and suppose when VISA (V) price falls below $523.00 you are getting loss to the bottom $30. But with Protective Put, your investment is always safe and above $2980.00 (strike price $3000 - premium price $20).