What Companies Should I Trade?

I’m asked all the time by traders, “Rob, what companies should I trade? Today, let’s discuss the process for you to find candidates for you to trade.

The second one, the ask is this is how much money we’re asking you to pay to buy it for us. If you look at an option and, let’s say, the option has a price of $2 by $2.10, so that’s the bid is $2 the ask is $2.10. Which one would you rather sell it for?

Now, part of that will be predicated on what you can afford to trade, and what you’re comfortable to trade. You may say, “Rob, you know, I’ve done this for a little bit now, I’ve traded a few stocks, and when they get up above $50 or $70, yeah, I get a little bit worried about that,” then you know you need a range lower than that. Trade Navigator has a great scanning feature to do that just that.

Those three pieces are going to be critical to choosing your options and your stocks and your components for what you’re looking to trade in your positions. Instead of just plucking from air a stock and saying, “Ooh, I’m going to trade this one because my buddy said it’s a good stock to trade you,” need to make sure you make an educated decision.

The first thing I want to say about it is you can’t trade everything. You’re not going to find the average person trading in Amazon at almost $2000 a share and trailing Sprint at $10 a share. You’re going to have a range of stocks that you’re comfortable with that you can afford to trade.

Volume tells us how many shares a day are traded on this stock. Ideally, in a perfect and great world I would not want to see anything under 1 million shares, and that’s my personal, bottom of volume is a million. I am okay for newer traders if they find stocks they like to go down and to maybe 750,000, but for me it’s a million, so that’s number two.

Number three is the options price. You see, I may look at the stock and a stock is trading at, let’s say, $35, but I see the option is trading at $14, $15– that price may be too way too expensive for me, so that stock may work, but it may not be the right one for you. Their options are a little expensive for the average person that wants to trade because they get up into that $15, $18, $20 range, and that might be more than the average individual, especially if you’re newer, is willing to put in the trade.

I want you to look at whatever the price is and ask yourself, those two prices $2 by $2.10, which one do I want? Ask yourself the question, which one do I want? The difference of that bid ask is what the market maker keeps for their fee, their VIG for the putting the seller and the buyer together in that trade.

Now, part of that will be predicated on what you can afford to trade, and what you’re comfortable to trade. You may say, “Rob, you know, I’ve done this for a little bit now, I’ve traded a few stocks, and when they get up above $50 or $70, yeah, I get a little bit worried about that,” then you know you need a range lower than that. You see, I may look at the stock and a stock is trading at, let’s say, $35, but I see the option is trading at $14, $15– that price may be too way too expensive for me, so that stock may work, but it may not be the right one for you. Their options are a little expensive for the average person that wants to trade because they get up into that $15, $18, $20 range, and that might be more than the average individual, especially if you’re newer, is willing to put in the trade. Instead of just plucking from air a stock and saying, “Ooh, I’m going to trade this one because my buddy said it’s a good stock to trade you,” need to make sure you make an educated decision.

Identifying a Falling Stock

Once it has started its rapid decline, don’t try to catch a falling knife or a falling stock. If you can not have some risk and resist capital to use, there are retracements along the way that can provide entry points. Remember, the further the fall, the greater the risk in the trade due to retracements and recovery.

The news is usually the culprit for “Falling Knife” events. Once the news has run its course, the market will adjust and then the serious traders come back to the market.

News events that cause large movements whether stock related or industry overall or related market related are perfect times to

* Research for stocks on sale

* Review education

* Trade a different market such as Futures or Forex

* Take time to review your trading business plan

Perfecting a good entry is critical for any trade. Being able to capture that perfect entry requires good technical chart reading skills.

Rob Roy, the founder of WealthBuildersHQ, is a Master of technical analysis and provides education that can be extremely useful for the “Falling Knife” moment and all of the other moments in the different financial markets, including when you trade eminis.

Keeping your trading plan in mind, use your time and money wisely.

Once the fall has stopped and retracement has started, Technical analysis is extremely helpful. Fibonacci Support and Resistance lines work beautifully as do moving averages and Bollinger Bands.

If you try to catch them incorrectly, falling Knives can hurt.

Don’t try to catch a falling knife or a falling stock once it has started its rapid decline. There are retracements along the way that can provide entry points if you can not have some risk and resist capital to use. Remember, the further the fall, the greater the risk in the trade due to retracements and recovery.

The chart is a roadmap of where a stock or Futures instrument or Forex pair have been. Understanding how to read the signals of these charts can greatly improve trading skills.

Starting out with options.

Trading, as a whole, is a highly technical field that does not only require would-be participants to have some understanding on what a specific trade is or exactly how it functions however additionally comprehensive expertise of exactly what goes within a certain profession. In short, basic expertise is not as valuable as the majority of assume it is. Specialized trading types, such as that of options trading, could compel its participants to get even more knowledge.

Below are some ideas that could help power you up when beginning with options trading:

Know the terminology. Alternative trading has its own jargon that may appear gobbledygook to people that do unknown a feature of the profession. To them, the terminologies generally utilized in trading, despite the type, appear so complicated that they would certainly weary on the profession also before they start. Well the lingo of options trading is downright complicated, probably contributing to why too couple of individuals involve themselves to it. As soon as a trader handles to choose up some fundamental terms and also has actually discovered quite a little bit about the trade, it would certainly be much easier to understand how the entire point works. Most likely not all the ins and outs of the profession yet the basic concept would be well-understood. So do yourself a favor, research the terms commonly used in options trading as well as possibly afterwards, read a few things about it.

Go to trading options workshops, online or off line. If you desire the faster way to learning the trade, you might want to take into consideration attending seminars or signing up for on-line workshops as well as tutorials. Workshops cover all degrees of understanding regarding the profession. So for newbies, it would be best to begin with the essentials of the profession as well as constantly boost your expertise by finishing a collection of workshops.

Subscribe to on the internet tutorials. There are a number of websites and also companies that supply on the internet tutorials which might contain interactive modules, possibly among the best discovering device there is. Interactive components enable you to learn by practice.

Indulge yourself to some options trading books. Web might supply the fundamental points you should get going with options trading yet you must realize that web can only provide you so much. If you have actually started looking into online about this profession, you will learn that the web sites dedicated on options trading and various other kinds of trades only cover the exact same points- fundamentals of the profession, common terminologies, some threats involved and others. If you desire comprehensive conversations on the trade, you need to rely on books written by well-recognized authors. Remember the operating word- well acknowledged. There may be a number of publications written on this subject yet you need to try to select the most effective book readily available so you don’t have to squander your time on repetitive info that you can commonly locate online and rubbish talk that may not aid you whatsoever.

As soon as you have reviewed a comprehensive book that reviews on different locations of trading options, it would be much easier to comprehend technological evaluation. Now, you will certainly need to analyze what the charts recommend, understand the kinds of options that you may wish to profession (there are great deals of them so make sure to pick the one that matches you finest), use the options methods that work well with you, and also show expertise on numerous market analysis tools.

Trading, in basic, is an extremely technological area that does not only call for potential individuals to have some understanding on just what a certain trade is or exactly how it works however likewise thorough knowledge of exactly what goes within a particular profession. Specialized trading types, such as that of options trading, might force its individuals to gain more understanding.

Alternative trading has its own lingo that may seem gibberish to people that do not understand a point regarding the trade. Participate in options trading seminars, online or off line. If you have started researching on-line concerning this trade, you will find out that the sites dedicated on options trading and various other kinds of trades only cover the same points- essentials of the profession, usual terms, some threats entailed and also others.