Logical Steps for Developing Short-Term Trade Strategies
When creating short-term trade strategies, the first task is to understand what upcoming fundamental events are likely to have the biggest impact. In the financial markets at this point, employment and inflation data have the most impact on stocks, ETFs, bonds, foreign exchange, precious metals and even energies. On the first Friday each month the […]
Implied Volatility – How Traders Can Benefit From It
Implied volatility is the forecast of a likely movement in the underlying. Keeping it simple, implied volatility is how options are priced. When IV is higher, option prices are higher and vice versa. Generally, when the market moves lower, option prices and IV increase as demand goes higher for protection or a hedge. When the […]
Trade Setups Using Candlesticks and Average True Range
All technical tools perform at times, but none pay off all the time. The trick to technical trading is to identify when an indicator is likely to detect a high percentage winning trade. I have researched many charting techniques, indicators and tools in my 30-plus years in the commodity and stock markets. Whenever I come […]
Option Vega – How It’s Different From Other Option Greeks
Option vega, like option gamma, is one of those option greeks that often confuse option traders. But it does not have to be that way. Below we will break down the dynamics of vega so that even the most basic of option traders will have a clearer picture of this mystery greek. What Is Option […]
How to Choose Option Strategies Using Technics and Logic
There are no trading tools, indicators or patterns that pay off every time. However, they all have their moments. Good traders know when probabilities have shifted to favor a trend style trading strategy or a mean reversion (counter trade) approach. There are two essential technical indicators traders utilize to create strategy. One measures range (height) […]
Top Option Trading Strategies in Any Market
Today we’re going to look at some of the top option trading strategies for any market condition. As I’m sure you have noticed, the market can be a very unpredictable beast. At times it can leave you scratching your head and crying. However, one thing is for certain: There is a strategy for anything the […]
Lessons From the Trading Pits
Spend time with a broker or pit trader from the era when all trades were executed in a trading pit at an exchange and you will learn about the open outcry and the information it provides. Pits were created to facilitate trade. To an untrained eye a trading pit looks like a mess of mad […]
Support and Resistance Trading Techniques
Support and resistance are levels on a chart that tend to keep the underlying from moving through those levels. Support keeps the underlying from moving lower and resistance keeps the underlying from moving higher. Generally, two or more levels can be potential support and resistance but sometimes once is enough like a recent pivot high […]
How to Spot Market Extremes
One of the more difficult tasks traders face is choosing areas where market extremes (high or low) are likely to form. Pinpointing ideal entry and exit levels is possibly the hardest but most desired task we face. In the industry, buy areas are known as support and sell zones are called resistance areas. To enhance […]
Selling Naked Calls and Puts – All You Need to Know
There are only four things to do as an option trader that do not involve a spread. Most option traders know that they can buy a call option as a bullish strategy and buy a put option as a bearish strategy. But many option traders have never looked at selling naked calls and puts. Of […]
Market Sensitivity and Commodity Chains – How to Check
Market sensitivity is often discovered through commodity chains. In the MTM Daily Edge sessions, we examine many markets for patterns that typically precede the start of trends, as well as the setups that often occur when a trend is near exhaustion. Pattern recognition and technical analysis are a big part of many traders’ decisions. The […]
Why Market Analysis Is Critical When Option Trading
It goes without saying that understanding options and various option strategies is crucial for an option trader, but market analysis is also critical in option trading. Smart traders and investors use diligent market research to get a better grasp of the market, which can give them an additional edge as an option trader. In group […]
How Employment Data Report Affects Stock Market
On the first Friday of each month, we get a look at the recent employment data and how the report affects the stock market. These numbers are frequently the catalysts that start trends and even end them. Job creation is an essential sign of a healthy economy. The Federal Reserve has a dual mandate. One […]
What Is a Collar Option Strategy and How Does It Work?
When I think of collars as an option trader, I think of sleeping better at night. Option collars can potentially protect a stock position in case the position declines. Like everything that involves options, there are trade-offs too. Collars cannot work miracles, but they do have their benefits as well as their limitations. Let’s take […]
How to Improve Your Analysis of Market Sentiment
Fundamentals move markets; technicals record history and illuminate patterns. Great traders incorporate both schools to improve analysis of market sentiment. Professional traders refer to the economic calendar for events/reports that have the potential to alter a trend or start a new one. Recognizing the immediate reaction following an unexpected event is essential to understanding the […]
Calendar Spread and Long Calendar Option Strategies
I make no bones about it: The calendar spread is one of my favorite option trades. Like many option strategies, it can be used short term and long term as well as for a bullish, bearish or neutral outlook on the underlying. That is hard to beat in my opinion, but let’s take a closer […]
Tips on How to Improve Your Trade Entry and Exit
Traders strive to sell at the extreme high and buy near the low of a move. Setting precise entry and exit levels is a difficult task, but it is a skill that can be honed. In this business a long position or buy level is recognized as support and a short position or selling price […]
How to Use Option Theta in Your Trading
Trading options can be a long and frustrating journey without discipline and solid understanding of the option greeks, including option theta, and how to use them in your trading. Most option traders know there is a time component to options. But surprisingly, many do not have a firm grasp of what that really means. Below […]
Build Traders Toolbox with Right Technical Tools
As an educator I make it a point to help students develop a solid fundamental and technical foundation. Years ago, I started my own “traders toolbox” that is now filled with facts, axioms, statistics and technical indicators. I refer to my toolbox when trading and creating strategies. My first experience in the markets was on […]
Best Iron Condor Strategies to Win as an Option Trader
Iron condor strategies involve combining two credit spreads or two debit spreads. While the strategies themselves are not complicated, managing the positions can be for option traders without the proper education. Iron condor strategies can be modeled out to be neutral or directional trades depending on the outlook. Trading iron condors can utilize your fundamental […]
Using Average True Range (ATR) to Boost Your Trade
Professional traders use logic and math to design strategies, and Average True Range (ATR) is a critical component. Traders often use ATR to boost profit projection as well as define risk. It is imperative to identify benchmark ranges (ATRs). This vertical indicator (high minus low) may reveal when a market has reached overbought or oversold […]
