What is a Futures Contract? "A futures contract is a legal agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. Futures contracts are standardized to facilitate trading on a futures exchange and, … [Read more...] about Futures Contracts: A Few Fun Facts
Trading on margin is similar to a loan from a bank; only you are borrowing funds from your brokerage firm to purchase stock. Trading on margin allows a trader to purchase stock with less funds than with a regular trading account. It is necessary to obtain approval to open a margin trading account, and there is usually a minimum balance … [Read more...] about Trading Stocks With Margin: A Few Things to Keep in Mind
You have heard the saying "Slow and steady wins the race." Today we will discuss how low annual volatility in your trading returns can allow your profits to accrue without large swings in your overall portfolio. For many traders, low annual volatility of returns creates a less stressful trading environment. Low stress can lead to … [Read more...] about The Importance of Low Annual Volatility in Your Returns
Being fallible as a trader has been discussed in many publications. Today I will discuss some elements of being fallible that may help you improve your overall trading results. The definition of fallible, according to Miriam Webster, is "to be capable of making a mistake." Why is it important to be fallible as a trader? It is very … [Read more...] about Learn to be Fallible in Your Trading
One of the numerous strategies available to traders are vertical spreads. Credit spreads come in two varieties: the Bear Call spread and the Bull Put spread. This article will cover the Bear Call Spread …how they are constructed, how much can be gained, as well as how much capital can be lost. We will talk about Bull Put spreads in a … [Read more...] about Vertical Spreads: Introducing the Bear Call Spread
Time decay in options, also called "Theta", is the measurement of how much the value of an option will lose or gain each day as it gets closer to expiration. Time decay is not linear - the theoretical rate of decay accelerates as the option gets closer to expiration. The best way to explain time decay is using an example. The example … [Read more...] about How Time Decay in Options Works
Are you using oscillators such as fast and slow Stochastics, Williams % R, and MACD? Have your results been less than you had hoped? Then you may want to take a look at the Choppiness Index. The Choppiness Index can be used as an indicator which could give hints as to the extent of a trend, and when a trend may be getting ready to end. … [Read more...] about What is the Choppiness Index and How Can You Use It?
Today we will talk about another technical indicator, the Relative Strength Index (RSI). The RSI is considered to be a leading indicator similar to Stochastics and Williams %R, and generally, precedes price movement in the underlying. RSI is a popular indicator used by many traders to identify potential buy and sell signals, confirming … [Read more...] about Technical Indicators 101: Relative Strength Index (RSI)
SPX and SPY are two very similar instruments from which a trader can choose. Today we will talk a bit about the similarities and differences between the two. What is SPX? SPX is the nickname for the Standard and Poor's 500 Index. It is based on the 500 largest companies whose stock trades on the NYSE or NASDAQ. A list of the 500 … [Read more...] about What’s the difference between SPX and SPY Options?
I've written over recent weeks about a few of the numerous technical indicators available to traders. This week I will touch on the Williams %R oscillator. This oscillator was developed by well-known technical analyst Larry Williams. It is similar to the Stochastic oscillator, as it is also a momentum indicator. Like the Stochastic … [Read more...] about Technical Indicators 101: The William %R Oscillator