Let us see the main beauty of option in the stock market which make it very valuable investment asset. Something that make share market very unique compare to other investment. Understanding this benefit of option will make you understand a lot more of other derivative product available in the market.

Explain all important and MUST-to-know understanding when dealing with “Option” in share market and other market

More and more people now embrace the day trading/e-minis trading opportunity as many professional day trader open their trading room to be piggy backed by bunch of amateur member. One of the main tools for such trading is the computer itself. Many computer shop exploits this niche market to get maximum profit from these capital rich day traders. But that’s really not necessary.

If somebody tell you in the face that certain stock or instrument will go up or down with absolute certainty, then I can safely conclude that either he/she was telling you outright lie or he/she was involved in illegal price fixing or insider trading activity. Nobody ever can predict exactly the price movement of certain instrument in the open market. Simply cannot. Here is why…

As investor, you will find out that dividend is one of income stream on your investing portfolio. The higher the dividend, the happier is the investor. But for trader, especially short term trader and call-option writer, there is more factor to be factored-in in order to maximize the profit or prevent lost. Why? That’s because of the typical behavior of the stock price during the “Ex-Dividend Date”.

These days, the brokerage fee for trading, especially for the online broker, is trending cheaper and cheaper. In U.S market, for stock it’s not unusual to trade under $10 flat fee, for stock even in order of $1 a contract or less… And with fierce competition the price is heading down. But is it really as investor or trader we will significantly reduce our trading cost ? Probably, yes.. but you still need to consider the hidden cost in your trading that is experience by anybody without exemption: the spread!

Diversification is another concept that need to be really understood by all investor. By using diversification you are certainly reducing exposure to the risk of individual item. And this is a good thing to do. But on the other side of the coin, if you are using too much diversification, not only you induce additional transaction cost, but also you are limitting your profit that you could earn. Let’s found out exactly why and how it works

Care have to be taken for those who wants to borrow money to kick start their investing journey. When people wants to borrowing money, often they only see the bright side where everything is going as planned and the profit will accelerate. But what happen if the trade is not going to the direction we want ? You may not only lose all of your money, but on top of that you still need to pay additional amount plus also the interest.

Simply put, Profit/Loss Chart (PLC) is the easiest and quickest way to understand your strategy to make profit. It can be used in any kind of trading, but it’s commonly use to illustrate option trading strategy (which can be complex, but then become easier after seeing the PLC). Just with simple glance, you can see from PLC: your break even point, where is your maximum profit, when you start losing money, when you start making money. Or in other word, what need to happen with the price for you to make profit.

In printing/word processor, you can see the similar resemblances in understanding “margin”. Margin is a vacant space left as a ‘border’ between the edge of the paper and the content. That is also somehow similar to “margin” in trading, it’s a space between the end of your account and the real profit.

Everybody wants to profit from the market. And there is only one and only secret in order to consistently profiting from the market. It’s simple and most of people know about it, but only a few really consistently doing it. The rule / secret is :
BLSH (BUY LOW SELL HIGH)
Yeah, right ! Of course we [...]

A stock trader can make profit basically by buying a company share at certain price and sell it at higher price. The problem is that no body can actually have the power to direct the price movement (go up or go down) except the market mechanism itself. So, what determine this ?

Option trading is very popular and profitable. But how actually a trader can produce profits with option trading? Find out how here….

what really move the price up and down ?