Learn To Select Trading Window Frames (Part II)

By Ahmad Hassam

The first step is to identify the type of trade into which we will enter. It all depends on your trading strategies. What matters most to a trader or an investor is how to create a positive cash flow.

Is it a day trade? Is it a swing trade or is it a long term positions trade? Once we acknowledge what our goals and objective are than we can narrow our expectations.

Suppose I am a day trader. I will be generally be able to identify what the average range for the day is and expect that if I miss 20% of the bottom and 20% of the top then I can expect to capture 60% of the average daily range. My expectations are for X amount of a given range.

First I will have to structure my computer and charts to a format that is conducive to day trading. So how do I start? How many pips you want to make in a specific time frame like eight to six bars from entry? 30 pips or 40 pips!

In day trading you should use two time frames; 5 minutes and 15 minutes time frames to look at the market! Use the 5 minute time frame to exit a position in day trading. Use the 5 minute time frame as a shorter time frame trigger to go with the 15 minute signal. Use the 15 minute time frame for the dominant trend if you trade Euro, Yen or Pound, then for day trading.

The key to remember is when the 15 minute time period is in sell mode, take the 5 minute sell signals. Similarly when the 15 minute time period is in the buy mode, take the 5 minute buy signals.

The most important time frames for a day trader are the 5 minutes and the 15 minutes. If you are in a trade based on the 15 minute and the 5 minute time periods, these are the time frames you need to monitor for that specific trade. However as a day trader you can watch the 60 minute time period.

Keep in mind your profit targets and where you are in the range. Keeping an eye on the 60 minute time period will help you identify the current trend and a potential change in the trend if a moving average crossover occurs.

If the Euro is already down 50 pips when a sell signal is triggered, the odds are that your profit potential is in the range of suppose 30 pips or less if the average true range (ATR) is 80 pips based on the past 14 trading days. How do you calculate these things?

You will have to subscribe to a good forex charting service. Free forex charts do not go into very fine details that you need to look into when making your trading decisions. Using good forex charting software will help you automatically calculate all the daily, weekly, monthly pivot points as well as the daily range, support and resistance, S-1, R-1 and other stuff.

Learn pivot point trading. Pivot points are the best leading indicators that tell you the market sentiment at any point of time. You should learn how to calculate pivot points. Using pivot points in day trading can give you an edge. For day trading use the 60 minute time period for calculating the monthly pivot points, 15 minutes time frame for calculating the weekly pivot points and the 5 minute time frame for calculating the daily pivot points. - 23200

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!

My Investment Research Tool

By Lilia Germann

As an active investor, I have always sought financial well-being by making sharp, calculated investment choices. At first, I just participated in my companys 401K program, and every so often I would purchase a CD. After securing my 401K, my co-worker told me to go see a financial planner; he gave me life-changing advice. My new financial planner let me know that my current investment strategy would not be able to provide for me, financially, when I retired. I could only count on earning approximately $400 per month from my investments if I were to retire at 65.

I was terribly shocked by this news. I knew I had to make changes immediately. I started working with an investment brokerage, and they began to provide me with their investment research. Their research included financial newsletters, stock market newsletters, and investing newsletters; I actively read each one. Their research didn't provide me with enough information to apply to my investment decisions.

I thought that the investment research lacked forward-thinking. I was dismayed when I realized that their research only paid attention to US economic forces; it did not recognize other elements that could have an effect. The investment research only took a look at conservative, long-term investments. Im not a risky investor, but I dont want to miss out on a great investment just because it has a slightly higher level of risk. To me, it felt as though they only recommended those conservative investments because they were afraid to go out on a limb. That fear must have been caused by their lack of knowledge; I felt it indicated they were doing a lot of guess-work.

Due to my lack of real investment research, I began looking online for alternatives. After searching for several days I found MyStrategicForecast.com while looking for reports and forecasts.

My Strategic Forecast offers investment research that is based upon facts. They take many factors into account besides economics when compiling their investment information. For example, one year meteorologists predicted a mild tropical storm season in the Atlantic. This information was taken into account by My Strategic Forecast's stock newsletter when they predicted a slight below average return for different types of home improvement companies. They also showed that historically, an active season follows a mild one. Due to this information I decided to hold onto my stocks to see what the following years storm season would bring. They ended up being right.

By using a historical perspective, My Strategic Forecast is able to provide all the necessary information to tell where the market is headed. I was able to use their forecast abilities to gain even more and build up my portfolio. - 23200

About the Author:

If you want to take a change for the better and start increasing your own profit, visit friendfeed.com/investmentresearch.

Online Currency Trading A Must Read Article

By Chris Green

As someone new to online currency trading, many may find it a difficult task to make consistent successful trades. If this problem sounds familiar, you are not the only one with this dilemma. All of us have had our successful and flop days trading, sometimes it is a good ides to leave it and clear the mind.

It isn't hard to get distracted with online currency trading with so much at your fingertips. It is an important factor to keep yourself focused and not allow things to easily distract you and your decision making on trades. Keeping yourself focused can make the difference between a profitable trade and a loss trade, so don't let yourself get distracted.

In online currency trading, you may have heard the 20/80 rule, which can be applied to many things. This rule is pretty straight forward, if you have not heard of it, it is simply that 20 percent of the traders are making 80 percent of the profits. The reason this is like this, is that most traders aren't able to focus on the whole game plan.

Many "systems" for online currency trading have came and gone, always promising to offer instant success, and to enable you to make easy consistent trades. Profitable or successful traders usually incorporate many systems into their trading tactics, enabling many back up systems in case one doesn't work out any longer. Putting all your eggs in one basket is not a good idea, it is wise to adapt many systems and never stretch yourself thin.

When reaching for success in online currency trading, don't rely on one system as it has been said. Incorporate many systems that can work together, it may enable you to use them to your advantage. One of the time consuming processes is finding out the systems that work with you. It is best to test out your new systematic approach for a few weeks to ensure you have consistent results. Don't allow yourself to drop stick in the 20/80 rule as the 80 percent making 20 percent of the profit. Take your trading seriously, and prove that you can make your own success. - 23200

About the Author:

If you want to get out of the rut and make a buck, check out the "Big Wigs" Online Currency Trading. If your fed up with the searching, and you want to make real profits for your self, stop letting the "Big Wigs" spoon feed you info, find out their secrets to Online Currency Trading.

Covered Call Strategy Part 2

By Maclin Vestor

A covered call strategy within a cycle will require people to sell options against the stock. If the stock is above the strike price, the stock will be "called" away. The seller receives the premium, but the owner of the call receives the shares at the strike price. There are various strategies involving this covered call strategy.

Some people prefer to have the covered call eventually pay back the stock owner his investment, so that he or she can reinvest that money, and upon receiving the investment back, the person will let the stock run. If this is the strategy, ideally you want to sell covered calls as the stock falls, as it stays flat, and then you want to have your cash back and let the stock run when it is on its way up again. This can allow you to buy an out of favor stock that is still in it's decline, but in the second half of the decline, reduce your cost basis to zero, and still own the stock near it's bottom. In the cycle mentioned earlier, depending on how fast the yield will allow you to recover the price of the stock, You will invest in the stock as early as the beginning of "dogs" and as late as contrarian, and recover your cost as early as contrarian, and as late as the start of estimate revision.

Another covered call strategy would be to buy a neglect, contrarian, or positive earnings surprise stock, sell out of the money covered calls, and continue to do so until the end of the growth stage of the stock, and not only stop selling the calls, but to just sell the stock.

Yet another strategy would be to write a covered call until around 20% can be gained, either through capital appreciation or collecting the option, then to convert the stock into a LEAP call as soon as selling the stock plus the premiums collected can pay for the call. This allows you to have a quicker turnover rate in terms of getting your money out, and playing with the house's money.

This would be great for anyone who intends on having the stock paid for, and expecting to own the stock option through the entire length of the option or longer if they intend on rolling over the gains by buying another LEAP. It is also a good strategy if the stock's future becomes less certain, and the investor wants to protect his or her initial investment. Now if someone rolls a stock into a stock option that doesn't necessarily mean they are done collecting income from covered calls. There is far more to be learned about covered calls, so make sure to do your research before considering if its right for you. - 23200

About the Author:

Maclin Vestor teaches about varioustrading systems and has a course coming soon on finding futures trading systems that may work for you.

The Difference Between Stock and Option Trading

By Donald Scott

In today's issue of Talk Wall St. by San Jose Options we are going to discuss the differences between trading stocks and options. First, let's talk about stocks. As most investors know, stocks are directional vehicles. If the price of our asset goes up, we make money. If the price falls, we lose money. Well, that is true if we are long the stock. If we are short the stock, then we can make money when it drops. Anyway, whatever your position is on a stock, it's directional. One direction we make a profit and the other direction we lose. With stocks, we don't focus on time or volatility in the markets, we just worry about the way the price is moving, up or down.

So we all know that stocks are simple, directional investments, but what about options? Well, trading options is actually trading 3 Dimensions...time, volatility and direction. I guess this makes options three times more complex than stocks. Now, let's look at a trading example to compare the difference. Look at this scenario:

A stock takes a full year to move up 10%. The stock trader who bought and held on to his stock has just made 10% on this particular trade. However, the option trader might have made nothing at all or even lost money if he just bought an option.

We know why the stock holder made money, but why would the option buyer lose money? Everyone thinks there is leverage in options, and it's true, but in this case, the leverage didn't work out for 2 reasons. One, the asset took too long to move, so the option time value decayed. Secondly, the asset moved up, causing its volatility level to fall, and this also helped the option price to move down.

This is why we need to be educated in order to trade options. Simply buying Calls and Puts makes option trading very difficult because of the elements of time and volatility. Remember, options are three-dimensional vehicles, and if we don't understand how to manage these 3 complexities, we shouldn't trade them. After we understand options more in depth, these investment vehicles can make money in any type of market. Options are very adaptable and allow investors to be very creative once the understanding is there. - 23200

About the Author:

Want to learn a Stress-Free Method of trading options? Get our at www.sjoptions.com and learn the strategies that are changing the lives of other investors each day.