Stop Order is an order (buy/sell) to close a position that only executes when the current market price of an option/stock hit or pass through a predetermined price (i.e. Stop Price).Once the Stop Price is passed, the Stop Order would convert into a Market Order, and will be filled at the best available price in the market at that time.Stop Order is also known as Stop Loss Order or Stop Market Order.Stop Order is commonly used to limit / reduce losses on a position when the price moves sharply against the trader/investor, or to lock in profit from...
Saturday, April 25, 2009
Sunday, April 19, 2009
How To Effectively Use Stop Loss To Protect Your Capital And Lock In Profits
As mentioned in the earlier post, a Trading System should be able to answer the following questions:a) What stock to enter.b) When to enter (Entry strategy).c) How much to enter per position d) When to exit (Exit strategy).While many people place too much emphasis on the entry, they don’t really know when to exit. Actually, a trader should focus more on exit strategy than on entry strategy. Exit strategy is much more important than Entry strategy.There are 2 types of exits a trader must consider to be parts of his trading system:* When to exit...
Saturday, April 18, 2009
Understanding Option's TIME VALUE
Click the following links to read each of the articles:
1) More Understanding about Options Time Value
2) Main Factors that Affect Option’s Time Value
3) Option’s TIME VALUE – Putting It Together:
a) Part 1: Understanding What It Is
b) Part 2: Main Factors – Degree of Options Moneyness
c) Part 3: Main Factors – Implied Volatility & Time to Expiration
d) Part 4: Behavior
Related Topics:
* FREE Trading Educational Videos You Should Not Miss
* Options Trading Basic – Part 1
* Options Trading Basic – Part 2
* Understanding Implied Volatility...
Sunday, April 12, 2009
Trading Video: Double Tops and Pivot Points Explained
A number of readers asked me if I’m going to write about reversal patterns (such as Double Tops / Bottoms, Triple Tops / Bottoms, Head & Shoulders Tops / Bottoms, etc.), as so far I only have posts on continuation patterns.The answer is yes, it’s on my plan. While the articles on reversal patterns are still under preparation (coming soon, I promise), I found a cool trading video, which shares about Double Tops pattern.Double Tops is one of the most frequently seen and common patterns, which can be traded in different time frames.This video...
Saturday, April 11, 2009
Happy Easter 2009
"He himself bore our sins in His body on the tree, so that we might die to sins and live for righteousness; by His wounds you have been healed." (1 Peter 2: 24)HAVE A HAPPY & BLESSED EASTER 2009!May this Easter reminds us of His love in our life. GOD bless y...
Monday, April 6, 2009
Option’s TIME VALUE – Putting It Together – Part 4: Behavior
The Behavior of Time Value
As mentioned in Part 3, the Time Value component of an option price will decline or “erode” as expiration is nearing (i.e. Time Decay).
The rate of decline of option’s time-value resulting from the passage of time (i.e. rate of Time Decay) is known as THETA, which is one of the Options Greeks.
Comparing Theta at a certain point of time between ATM (At-The-Money), ITM (In-The-Money) & OTM (Out-of-The-Money) options,...
