SlingShot Options Blog |

Technical analysis of the stock market, or any other market such as Forex, futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.

You only have to think back to major stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.

So what are the secrets to technical analysis?, I’m about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings don’t mess with them.

The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying much the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

Top Dog Trading Review

A875645387

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Technorati Tags: Bonds, day trading, investment, money, options, stock market, stocks, technical analysis, trader

Each one who desires to be in industrial enterprise should gain some knowledge on the introduction of stocks and shares. This is the fundamental fact you have to learn when getting onto the business. Why take the risk if you don’t know anything about it right? In deciding about businesses, a person’s knowledge and ability is a must.  The correct introduction to trading stocks can help you reach your goal. To the newbie, it is like a seemingly difficult puzzle to solve, but to the experts, it is just another day of game play.

Let us take for example the stock options during chapter 11 bankruptcy. Chapter 11 is a restructuring plan for bankrupt businesses. An option for chapter 11 bankruptcy allows continuous while restructuring is on the process. Information are taught on the introduction to stocks and shares so you will be informed of the good and the not so good things about it.

The US bankruptcy law has chapter 7 and chapter 13 as well. Both are very important to explore and scrutinize if you are really eyeing to be in the business world. In chapter 7, the accounts are settled. Assets should be sold and the gathered will be use to pay the creditors and if something is left will go to the owner. A more reasonable option is chapter 13, because it cost less and has better terms. Understanding these aspects would definitely helpful.

Basic knowledge with trading stocks can make things work for you. Are you capable of understanding complex business matter? If you review it carefully, you will understand that company owners will have less values on their share rather than the creditors. It is still up to the individual or company to choose investing in stocks in chapter 11, or to choose some other methods.

It is important that when you get into any kind of business and when you face each aspect that you are armed with the problem knowledge. Be open-minded and never hesitate to try to learn some important business information. Your business depends always in your hands.

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Technorati Tags: bankruptcy, investing, shares, stocks, trading

There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of money fast, or can be used to grow your capital consistently month after month.

There’s also a lot of hype about how complicated it is and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their trading course on options.

Lets cover a few of the basics about options trading and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.

When trading stocks your leverage is 1:1, if you go on margin you can get get 1:2 leverage, but thats about it. With options it is not quite as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.

So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.

However the downside is that the reverse can happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk management plan is.

What I’ve just described is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much less dependance on getting the stock direction correct, but it still matters.

So should you trade options?, in my opinion you should not do directional option trades until you become an expert stock trader 1st. This is because you really need to be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.

Whereas if you want to do non directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.

Learning how to trade options is a very good skill to have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from Top Dog Trading Review.

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Technorati Tags: day trading, finance, forex, investment, money, options, stocks, trader, trading

Warren Buffett was born in 1930 in Omaha, Nebraska and has become probably the world’s most successful investor. He is the son of a stockbroker and Congressman, and of course everyone wants to learn about his trading secrets.
 
I don’t think that Warren Buffett has actually written a book about his investment principals himself, in that sense there is no Warren Buffett book, but he has from time to time given hints in his annual letters to share holders of Berkshire Hathaway, and in other short notes and reports to the media.
 
However there have been a lot of books written about Buffett by others who have tried to put together the story and ideas behind the man and his fortune.
 
In fact if you go to Amazon and do a search for “Warren Buffett” will find 2,575 books being listed, compare that to “Bill Gates”, who for a long time was also considered to be the riches man in the world, and you only find 11 listings, that should give you some idea about the public obsession with the man.
 
I have only read one of his books called “The Warren Buffett Way”, it was hard work and somewhat of a boring read. Much of the content of all these books on Warren Buffett seems to be the same basic information about value investing and being patient with your investments. I don’t think much can be gained by reading more than one of them.
 
Here is a small selection of some of the better known ones:
 
The Warren Buffett Way, Second Edition by Robert G. Hagstrom, Ken Fisher and Bill
The Snowball – Warren Buffett and the Business of Life
The essential Buffett library
Investing – the Last Liberal Art – by Robert Hagstrom
Buffett, by Roger Lowenstein
The New Buffettology, by Mary Buffet and David Clark
The Interpretation of Financial Statements, by Benjamin Graham
Value Investing, by Janet Lowe
Robert Hagstrom, The Warren Buffett Way
Buffettology by Mary Buffett and David Clark
Janet Lowe, Warren Buffett Speaks: Wit and Wisdom from the Word’s Greatest Investor
John Train, The Midas Touch: The Strategies That Have Made Warren Buffett ‘America’s Preeminent Investor’.
Andrew Kilpatrick, Of Permanent Value: The Story of Warren Buffett
Warren Buffett, Lawrence Cunningham (editor), The Essays of Warren Buffett
Janet M. Tavakoli, Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street
 
Many of these books are quite large, with many pages that would take a long time to read, and even longer to understand and make any sense of. A better way of understanding Buffett maybe to find investment articles which have summarised the Buffett principals into short concise lessons that can be quickly learnt and applied.
 
One point of caution however, and this is not investment advice, Buffett has made most of his fortune during the years of the great USA bull markets, times have changed and maybe these principals are no longer as effective as they used to be.

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Technorati Tags: bio, books, investment, stocks, warren buffett, warren buffett book

Rating: 4 out of 5 stars

Reviewing: UMOO Fantasy Trading

UMOO is a fun way to play the financial markets particularly if you  are interested in fantasy trading rather than investments. Contestants choose to compete in fantasy trading contests versus other users or the financial market on UMOO for cash prizes. There are tournaments that are free to play and those where a deposit is required. Matches requiring a funded account have higher reward. The fantasy trading match can be as little as ten minutes or as long as a market session. There are fantasy trading contests with stocks, forex, and commodities. All competitions use real-time market pricing and no software download is required.

Get started with UMOO now!

There are two kinds of fantasy tradingtournaments playable on UMOO: Trading Tournaments and PIX games. In a Trading Tournament players begin by choosing a contest of interest to them. The tournaments are assembled in reference to three popular indexes: the S&P 500, the Dow Jones Industrials, and the Straits Times index of Singapore. The Trading Tournaments require players to choose stocks from the index in an effort to generate the maximum percentage return they can with a pool of virtual money. In an S&P 500 contest for example players build a portfolio of stocks in the S&P 500. Once the competition has started players may adjust their portfolio to increase performance. All contests are day trades since none continue into the following trading session. During the competition participants may examine their fantasy trading portfolios to examine how they are doing and check their performance against the “benchmark”.

Open a UMOO account now!

The “benchmark” informs the contestant whether they are “in the money” or “out of the money”. “In the money” means that if the tournament ended at that moment they would win a prize and “out of the money” means they would lose. The “benchmark” also reports the quantity of rewards being awarded in the tournament. One critical note however is that contestants are ineligible to win rewards in the no “fee” tournaments unless they have a funded account with UMOO. Competitions that are not without a cost require “fees”. These “fees” are typically fractions of what rewards can be won such as a five dollar match will normally have a ten to twenty dollar reward.

The alternative choice of match is referred to a PIX game. PIX tournaments are just ten to thirty minutes in duration and require the trader to pick the one, two, or three best performing instruments from a brief list. For example, in a Forex PIX tournament the contestant may have to pick the best performing currency from a list of three. UMOO may list USD/CHF, EUR/USD, and AUD/USD with a starting time and ending time. The contestant can win if they select the currency pair with the highest performance in those ten minutes. In a PIX game contestants compete exclusively versus the market in contrast to a tournament where they compete against other users. All PIX games have a cost and the risk reward ratio is approximately 2 to 1.

Open a UMOO account now!

Bottom Line: If you are searching for fun with trading financial symbols and limited risk, fantasy trading on UMOO can be fun and financially rewarding.

Technorati Tags: commodities, Dow Jones, financial, forex, s&p 500, stocks, Straits Times, trading, UMOO, virtual