Option Trading ? Thinking ?Outside The Box?
Wouldn’t it be great if we could buy an option with five months left until expiration and sell an option with 2 months left until expiration for the same price? You couldn’t lose. Well we can’t. I love options spreads so much I realized something very important.

We can buy a spread that has a lot of time value left at almost the same price as we can sell one with less time value left. The reason really opened my eyes and gave me new insight into options. Here is what I came to realize.

I started comparing how expensive options were in relation to the other strike prices in the same month and to the other months. I wanted to know based on the price per day which options were more expensive.

The first 1 or 2 option months, as everyone knows loses time value quickly. The at the money strike prices are very expensive compared to the out of the money strike prices. Since there is not that much time left, how much can they charge for an out of the money option? Not much.

The next several months, the opposite is true. Compared to each other, the strikes that are closer to the money are cheaper in terms of price per day than the options further out of the money. Let me explain it another way using the S&P market.

6 days left at the money option cost 12 points
6 days left out of the money option cost 2 points

70 days left at the money option cost 43 points
70 days left out of the money option cost 29 points

There is more than 10X the time left but the 70 day at the money option (43 points) is only less than 4X the price than the 6 day at the money option (12 points).

The 70 day out of the money option (29 points) is almost 15X the cost of the 6 day out of the money option (2 points) but only has 10X the time value. We will buy the cheaper per day options and sell the more expensive per day ones.

Sell 6 day at the money and sell 70 day out of the money. Buy 6 day out of the money and buy 70 day at the money. This will be done for a 4 point debit. We are now buying a spread that has 10X more time value than the one we are selling and are only paying 4 points for it.

When the 6 day options expire we can sell the next month to take in more premium, still keeping the 70 day option spread.

What goes up, must come down! We have all heard this before in reference to the laws of Gravity. We have laws in the commodity markets as well. What comes down, must go up! The greatest traders of our time like Warren Buffet know this. He is perhaps the greatest Stock trader ever. He had never traded commodities until a few years ago. He bought silver in the futures market. When the market went even lower he bought more.

The ?smart money?, commercials will not be scared into selling when a market they have purchased drops even further. They know better than anyone that a commodity has real value and will always be worth something.

There is a famous book, ?You Can’t Lose Trading Commodities?. The author buys commodities and then just waits for the market to go higher. He would purchase more as the market fell.

You need a big bankroll for this. Personally I know corn won’t go to $1.00 but what if it did? I want to minimize the risk in case I want to end the trade.

I started trading the Soy Complex this way several years ago. Not with options. Strictly futures. I bought what was similar to a crush spread. I increased the contracts as the market went against me until the spread rebounded a little. Since I increased the contracts I didn’t need the market to come back to where I started. It only had to rebound to the next level.

Black Jack players did this until Casinos caught on and put limits on bets. It is a known fact that futures traders make good gamblers and professional gamblers make good futures traders. I am against gambling but even gambling done with a system is not really gambling.

These card players would bet something like this: $5 lose, $10 lose, $20 lose, $40 lose, $80 win. The losses add up to $75. They would win $80, so the profit is $5. Not a lot, but they would do this all day. Black Jack is just under 50% probability for the player.

The problem is there is a slight chance that you could lose 40 times in a row. Now with Commodities we have a 50% probability and we won’t lose 50 times in a row because the market can’t go below zero.

Now before I go any further, I need to tell you that I am not recommending you double down on your trades. What you can find are markets that are near their lows where you can do a small scale trade. Spreads offer even better opportunities. They have a closer range (high to low).

By now you can see we only use this to go long a market since we can never be sure how much a market can go higher. First we need to find a market that is low already so we won’t have to wait that long and also so there will be less capital needed.

I prefer to trade this using options. There are many ways to do this. You could buy an option in a market like soybeans and choose how many cents the market will drop before you buy more. The problem is, an option is a wasting asset. The Theta (time decay) would cause you to lose money.

I use spreads so I am not paying for time decay. I will probably sell more Theta than I buy, so if the market does nothing I will make money just on time decay.

David Rivera has traded commodities and options for one of the largest cash trading firms in the world. He has written a course on futures options which contains 2 specific trading techniques. You can find the above 2 techniques in depth at: <a href="http://www.deltaneutraltrading.com" target="_blank">http://www.deltaneutraltrading.com</a>

Forex Trading System: Calculating Profit and Loss in Forex Trading
The foreign exchange market, or Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from economic and political events. Using a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading. To understand how the exchange rate can affect the value of your Forex investment, you need to learn how to read a Forex quote. Forex quotes are always expressed in pairs. In the following example, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, means that one U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the “/” (USD in this example) is referred to as base currency and its value is always 1. The currency to the right of the “/” (CAD in this example) is referred to as the counter currency. In this example, one USD can buy 170.50 CAD, because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex market, and it is always treated as the base currency in any Forex quote where it is one of the pairs. Let’s go now to our hypothetical Forex investment to show how you can profit or come up short in Forex trading. In this example, your pair of currencies are the U.S. Dollar and the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which means that one U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had bought 1,000 Euros on that date, you would have paid $1,085.70. One year later, the Forex rate of EUR/USD was 1.2083, which means that the value of the Euro increased in relation to the USD. If you had sold the 1,000 Euros one year later, you would have received $1,208.30, which is $122.60 more than what you had started with one year earlier. Conversely, if the Forex rate one year later had been EUR/USD = 1.0576, the value of the Euro would have weakened in relation to the U.S. Dollar. If you had sold the 1,000 Euros at this Forex rate, you would have received $1,057.60, which is $28.10 less than what you had started out with one year earlier. As with stocks and mutual funds, there is risk in Forex trading. The risk results from fluctuations in the currency exchange market. Investments with a low level of risk (for example, long-term government bonds) often have a low return. Investments with a higher level of risk (for example, Forex trading) can have a higher return. To achieve your short-term and long-term financial goals, you need to balance security and risk to the comfort level that works best for you.

Gregory DeVictor is a consultant who has been developing and marketing web sites since 1999. You can learn more about how to develop your own Forex trading system at: http://www.Forex-Trading-System.name

Choose Your Forex Broker Carefully
Choosing the person or company who literally gets to “hold” your money is a big deal. This article will show you how to make a smart, profitable decision when choosing your forex broker.

The Lazy Trader Guide to Forex Riches
Learn 3 steps necessary to achieve financial freedom through forex trading.

Forex Glossary
Here are some of the most common terms used in FOREX trading.

Ask Price ? Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote ? e.g. EUR/USD 1.1965 / 68 ? means that one euro can be bought for 1.1968 UD dollars.

Bar Chart ? A type of chart used in Technical Analysis. Each time division on the chart is displayed as a vertical bar which show the following information ? the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.

Base Currency ? is the first currency in a currency pair. A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote - USD/JPY 112.13 ? US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.

Bid Price ? is the price a trader can sell currencies. The Bid Price is shown on the left side of a quote - e.g. EUR/USD 1.1965 / 68 ? means that one euro can be sold for 1.1965 UD dollars.

Bid/Ask Spread ? is the difference between the bid price and the ask price in any currency quotation. The spread represents the broker’s fee, and varies from broker to broker.

Broker ? the intermediary between buyer and seller. Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.

Candlestick Chart - A type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick ? a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.

Cross Currency ? A currency pair that does not include US dollars ? e.g. EUR/GBP.

Currency Pair ? Two currencies involved in a FOREX transaction ? e.g. EUR/USD.

Economic Indicator ? A statistical report issued by governments or academic institutions indicating economic conditions within a country.

First In First Out (FIFO) ? refers to the order open orders are liquidated. The first orders to be liquidated are the first that were opened.

Foreign Exchange (FOREX, FX) ? Simultaneously buying one currency and selling another.

Fundamental Analysis ? Analysis of political and economic conditions that can affect currency prices.

Leverage or Margin ? The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 ? you can trade currency worth 100 times the amount of your deposit.

Limit Order ? An order to buy or sell when the price reaches a specified level.

Lot ? The size of a FOREX transaction. Standard lots are worth about 100,000 US dollars.

Major Currency ? The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.

Minor Currency ? The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.

One Cancels the Other (OCO) ? Two orders placed simultaneously with instructions to cancel the second order on execution of the first.

Open Position ? An active trade that has not been closed.

Pips or Points ? The smallest unit a currency can be traded in.

Quote Currency ? The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.

Rollover ? Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.

Technical Analysis ? Analysis of historical market data to predict future movements in the market.

Tick ? The minimum change in price.

Transaction Cost ? The cost of a FOREX transaction ? typically the spread between bid and ask prices.

Volatility ? A statistical measure indicating the tendency of sharp price movements within a period of time.

This article provided courtesy of <a href="http://www.daytraderfutures.net" target="_blank">http://www.daytraderfutures.net</a>

The Importance of a Trading Plan
Trying to win in the stock market without a trading plan is like trying to build a house without blueprints - costly mistakes are inevitable. Why do you need a Trading Plan? 1 - During trading hours, emotions will turn smart people into idiots. Therefore, you have to avoid having to make decisions during those hours. For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline. 2 - Consistent results require consistent actions - consistent actions can only be achieved through a detailed plan. What should be in your trading plan? 1 - Your strategy to enter and exit trades You have to describe the conditions that have to be met before you enter a trade. You also have to describe the conditions under which you will close a position. These conditions may include technical analysis, fundamental analysis, or a combination of both. They may also include market conditions, public sentiment, etc… 2 - Your Money management rules to keep losses small - the goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following: - Maximum amount at risk for each trade. - Maximum amount at risk for all your opened positions. - Maximum daily and weekly amount lost before you stop trading 3 - Your daily routine - after the market closes, before it opens, etc… 4 - Activities you carry out during the weekend. 5 - I also like to include reminders that I read every day I will follow a trading plan to guide my trading - therefore my job will be one of patience and discipline. - I will always keep my trading plan simple. - I will take actions according to my trading plan, not because of greed, fear, or hope. - I will not deceive myself when I deviate from my trading plan. Instead I will admit the error and correct it. I will have a winning attitude. - Take responsibility for all your actions ” don t blame the market or world events. - Trade to trade well and for the love of trading, not to trade often and not for the money. - Don t be influenced by the opinions of others. - Never think that taking money from the market is easy. - Don t try to guess the future ” trading is a game of probabilities. - Use your head and stay calm ” don t get excited or depressed. - Handle trading as a serious intellectual pursuit. - Don t count how much money you have made or lost while you are in a trade - focus on trading well. A trading plan will not guarantee you success in the stock market but not having one will pretty much guarantee failure. For an example of a trading plan, visit http://www.TradingFramework.com/tradingplan.htm

Yves Mailhot A Disciplined and Organized Approach to Trading http://www.TradingFramework.com

Why A Negative Forex Feedback Attracts More Attention Then Positive Ones
Why would customers give feedback at all? There’s got to be a strong motive behind it, because no one wants to waste their time for nothing. In forex business, for example, when a customer posts a feedback about a service or product they experienced, it’s usually because he/she was frustrated about the experience and posting a negative feedback would be the only way to vent it. By common sense, nobody (or rarely anybody) would love a forex product or service so much that they spend all the time to post a nice feedback about it, unless of course, somebody pays them to do so.

With that in mind, you can speculate that most positive feedback messages are not much of value, as they probably carry some kind of agenda in the dark. Wait a minute, but that doesn’t mean all negative feedback are candid. Think about it… suppose you have a forex product that you make some money out of it. Suddenly there’s another site that also sells a similar product. You can see that part of your sales are lost to that competitor. So naturally, you may try your best to persuade potential customers to buy from you instead of your competitor. The most effective way is to launch a smear campaign, like faking negative feedback and reviews about your competitor. Smear campaigns, although dirty and humiliating, are proven to be very effective in politics. Marketing is no exception. Most people back away from purchases after they read negative feedback about the merchant or product.

But why are negative feedback still considered more helpful? Well, it’s sort of like an exam, where a multiple-choice question is a lot more easier to do then an open question. In a multiple-choice question, you can try to eliminate the less likely answers to pick the most likely one. Whereas in an open question, you may not know exactly where to start. Similarly, if all reviews and feedback about a product were positive, then you would have to think very hard to figure out any possible cons among the given pros. As the matter of fact, all merchants already do a good job of listing out all the pros about their products. So you don’t really need others to tell you all good things about those. But rather, you need the negative ones. You need to read a lot of them and eliminate whatever that don’t make sense to narrow them down to the mostly likely negative sides of the product.

Many people are perfectionists. They either have the correct information or nothing at all. But in real life there’s hardly anything perfect. Perhaps life is pretty much a process of eliminating the unwanted in search of what you want, and that’s what happening at ForexCop.com!

Lily DeLaire wasted lots of money on junk forex products and services. Now she wants to prevent others and herself from wasting more money. Visit <a href="http://www.forexcop.com">Forex Cop</a> for details.