How to Make Trading Profitable?
If you have read: "10 Simple Rules to Make You Serious Money in Sharemarket and Keep it!" you will have read about options.
Here is a free excerpt of Trading Ebook: (This is a short version)
http://www.southwest.com.au/~tutor/js1dload.html
You don't necessarily want to buy any stock, but you do want to control, by outlaying a little money. Does this sound like something you could get excited about?
Well, if so, welcome to trading options for quick returns or quick losses!
The amount you outlay is only a small part of purchase price, but you could control a large pile of stock.
When asset rises or falls your option will also rise and fall in value. Generally you can expect that options will show greater volatility and it's by trading these ups and downs that you can make superior returns, which make stock investing look foolish.
Some Key Points About Options =========================================================
Option traders use this volatility to make superior profits.
You see you can make money when value falls by purchasing a "PUT OPTION" and you can capture price rises when you buy a "CALL OPTION".
Now there are many option strategies, but I believe in keeping it simple - that way I understand what I'm doing and you should too!
People who buy stocks, also protect their holdings by using options.
You see idea of using leverage to buy is a very old one. Let's face it we may not want to spend money, but we want to control and options give us opportunity to do so.
Options can do 2 simple things:
*they give you "the right to buy"
and
*they give you "the right to sell",
at a future time and at a future price.
You are not obligated to buy or sell, but life of your option is diminishing from moment you enter contract. Soon option will expire worthless. So you must trade it!
When we are ready, we either exercise our option, we sell option and make trading profits - or we cancel our obligation, if we are option writers.
We can also cancel our obligation if we have written a "PUT" by buying it back. Likewise if we write a "CALL" we can buy it back and cancel our obligation to sell stock.
I've discovered a home study course you should take a look at if you are interested in using power of leverage.