New Trader looking for answers

...or a website with a photo of them sitting on the beach with a laptop, or indeed on a boat. Perfect example below.

Flag-Trader System, Guy Cohen

dont forget the :-

Sunset beach walk
Thoughtful old guy with grey hair pointing at a laptop to his impressed wife
Cars - varied pictures of sporty and grand
Cruiseliner in Carribean port
children looking wellfed and wealthy
lots of people in suits and glasses pointing at charts
pictures of money

c'mon whos got more ! :p
N
 
You decided to make a comment about something you clearly no nothing about and referred to my post negatively. I did not provide said strategy...why would I? I stated risk-neutral strategies assure no loses can be structured in Options. This sir is Options 101. You can guarantee ..protect...assure any options authorized stock from loses. There are transactional cost, but if you own a stock you certainly can protect it's value.

Per your other ridiculous comment....my example compared buying a stock to protecting said stock. If said purchaser wanted to buy XYZ, then a provided how via the Options scenario one would acquire it.

And to further add to the point....if as you suggest, the company of said stock bought at 40.00, went bankrupt.....and Options writer would have not only already held a protective position, to limit their risk, but would have sold it to someone who was bullish on the company.

I don't know you. You choose to criticize my response....and clearly have no idea what you are talking about as it pertains to Equity Options.

"None of what you posted is a risk-neutral strategy". Of course not....but you get an "E" for Effort.

I am an options trader and the idea that you can trade them risk free is laughable and moronic.

Hedging the value of a share with an option is also not cost free. You pay a premium for an option which will expire at zero if the option does not move into the money. Your loss is that premium which is the cost of hedging your share to the downside.
 
I've said it before and I'll say it again. You should only be allowed to trade if you pass a set test and receive some sort of accreditation.. it's far too easy for people just to plow straight into it with real money and blow their entire account.. but then i guess that's what the big dogs in the market want.. adds more liquidity.
 
I've said it before and I'll say it again. You should only be allowed to trade if you pass a set test and receive some sort of accreditation.. it's far too easy for people just to plow straight into it with real money and blow their entire account.. but then i guess that's what the big dogs in the market want.. adds more liquidity.

How would you fair if those rules were applied to you?

I know myself and a lot of successful traders would not be trading today if that were the case!
 
Hi, I appreciate the civility. However, I'm not clear why I would do that? ... give anyone a trading strategy or strategies to help them make money?

My partial interest in the New Comer thread, was for someone like the person whose post I replied to. A novice looking for investment "options" for lack of a better word.

I have always been amazed at the misinformation surrounding this market. Options are available for all areas, stocks, commodities, currencies...

For a new person who probably has been told by a broker, this or that companies' stock is worth buying ...but if it starts to lose value..."...hold it..." because it's a good company, has good fundamentals blah blah blah...it will recover it's losses and make you a profit. Without going into the basis of any buy recommendation, or again discussing how it is impossible to recover a loss, why should a client hold a stock that is losing value?? They should not. If it was a good buy at $50 for example, then it's a better buy at a lower price..protect your customer, at the least sell it and buy it back...but don't just take the loss as it slides.. ...again not going into the basis of the buy recommendation in the first place.

Thats a different subject(...listen...if having the biggest company in your market had anything to do with the price of a stock, McDonalds, Walmart etc,. would have the highest priced stocks. The fact that they don't....even to a novice..should make you do a double-take...and see that their is something else that drives valuations. )

My suggestion to a novice is simply get an education on Options especially if you are risk averse, i.e. want to protect your principal. This the area where fixed income investors (risk averse) can still benefit from trading gains. Options are like insurance, car, life,...you pay a premium for protection. In it's simplest form you can 'GUARANTEE' the value of your stock portfolio by buying insurance in the form of Options. If you buy XYZ at $50 you can guarantee that price or a lower price...at a cost, just like insurance. If you are willing to take a $5 loss, then buy insurance at $45 etc . The fun comes in lowering the cost if that insurance, and then earning a profit. Yes their are risky areas, (Naked..i.e. selling shares you don't own), but that is not intent of the Options Market per se...

Options are the management of risk. Instead of being exposed to unlimited losses, option provide a way to limit that exposure. Guaranteed! It provides a mechanism for generating cashflow....guaranteed...how much depends on what you are doing....Options will limit your upside potential...but thats part of the give and take...you can prevent losses and make some profit. It's a way to be the "house" at the casino that is the markets.

I've raised institutional sized capital for movie guys, who where hell bent on not taking advantage of ways to protect/recoup the negative cost by doing presales...especially foreign. They would say if we presell then we won't get all of the money when the movie makes $100M...I would ask....can you guarantee that this film will make $100M(not going into whether that amount is an accurate breakeven figure), they would say no.....then do the presale! If the film cost $50M and you can get $25M now..take it.

This is similar to the Options market, you buy a stock then you can pre-sell that stock if it falls below your pricepoint. I'm sorry...but that pre-sell is Guaranteed. There is no renege or default....you buy at $50 and pre-sell it at $45...if it drops to $45 pr lower.....it's sold! Your losses can be capped. Guaranteed!

That's all I have to say on the subject.

Best of Luck!

This is no way indicates my personal opinion about owning any stock. (I would not and do not...no experienced Options trader would own a share of anything??)

But simply, for new investor, take the time to learn about the subject and if it fits your investment risk profile, ( I mean the market is full of gamblers..if you are a cowboy...then by all means come out shooting ), then take advantage of the protection and cash-flow opportunities Options accords.

If you are a new investor, and are risk averse, segregate your capital. Do not give it to a broker. They know they don't have to maintain custody of your funds to 'manage' your account. Make them agree to a "Non-Depletion Clause", in your investment mandate so you are not taking losses. Only Options can provide that kind of protection. There is no way to remove market risk by investing directly in the stock market. You need to buy insurance....how much that insurance cost...or if it cost anything at all.....well....thats a different matter....

If you broker says he knows options but doesn't want to guarantee your principal...move on. If your broker wants you to open a account at his firm, move on....you can open a Trust Account with a major bank and your account can be managed remotely. Give them trading authority...but that's it.

In addition,once you become proficient enough to actively trade your account, then you will entitled to, (in the US), tremendous tax advantages..e.g. no limits on losses, etc. should you have them. Options enhance those tax benefits as well.

Let me make clear references to Guarantees. If you own a share of Options authorized stock....yes, you can guarantee/protect the value of those shares. Their is a cost, like insurance, you pay a premium for it. However, it is the structural management of those cost that separate a experienced Options Trader from a novice and create cash-flow opportunities.

For someone to arbitrarily dismiss the Options market as a compliment to market risk, is reckless to say the least. There is obvious risk in buying a stock...Options provide a way to hedge/eliminate that risk.


fair do's :cool:

so - to the humbly uninitiated of us here at T2W

please illuminate us with some education on options with some charts and comments and live calls .....

N
 
Who said that Options are risk-free? I did not get into cost.

My comment, again for a new trader was to investigate that market and that Options allow you to protect your investment and generate cash-flow.

I am an options trader and the idea that you can trade them risk free is laughable and moronic.

Hedging the value of a share with an option is also not cost free. You pay a premium for an option which will expire at zero if the option does not move into the money. Your loss is that premium which is the cost of hedging your share to the downside.
 
Man the best advice that I can give you is, even though you have £30k to trade, for the first 2 months at least, use the smallest stake that you can trade with. A minilot if you can and that's it. It's EXTREMELY likely that you will lose in the beginning, so do it with little money. I say this based on personal experience.
 
Who said that Options are risk-free? I did not get into cost.

My comment, again for a new trader was to investigate that market and that Options allow you to protect your investment and generate cash-flow.

backpeddling.gif
 
Lol, options are probably an easy way to lose your money faster, if anything. It is a 100x leveraged instrument after all. Most anyone starting out is far undercapitalized for options anyway given that premiums are not cheap despite what spinsters would have you believe, and time decay works against both sides of the trade.

The only winner in options is the broker with his bloated commissions. I lost $4k last year on them (a substantial chunk for a Uni student, btw), $1k of that was pure commissions. Yes, 1/4 of my losses were commissions!

(Not to say that options can't be useful, just that you really have to know what you're doing!)

Anyway, best you can do as a newbie is send PMs to anyone you think knows anything. Research, acquire knowledge, and get into demo trading to have an idea of what's what. Do not put on anything resembling meaningful stakes until you have something that generates positive cash flows. You will lose otherwise!!
 
There is a secret about trading I will let you in on right now so you can save this part of the learning curve...:eek:

When you get good at trading...:|

It gets really boring!:sleep:


That's right all you new people (to trading) if you're all hyped up about the trading and your heart starts a-pumping when you're about to pull the trigger...

You're not good at it yet.

If you have to keep changing things about your trading to feel "the jazz" (sorry old A-Team fan) Then you're not good yet.

If doing the right thing to a trade, that is making money or losing it, is not 1st nature and automatic then you just aren't good yet.

Are you still second guessing your self?
Then you're not...well you get the idea.

Funny thing I used to do to help myself out with the above was trade 2 accounts.
The larger was my "boring" account, and the smaller was my "jazzy" account.
I found it much easier to be good and do what I was supposed to (stick to my rules) Knowing I could do what I was "iching" to do in the other account. You know prove to myself that the rules were stupid and I could shoot from the hip better.:rolleyes:
Turns out my ego was almost always wrong and that's what the rules protected me from.

The point is you won't be good at trading, where you can make consistant money, unless you are trading, the right way, on auto pilot. Where your gut is telling you to follow the rules instead of holding that loss a little longer cause it will turn around.
Your gut tells you to follow the rules and wait for a setup, not jump in the market cause you are just itching to get into a trade.
Your gut tells you to follow the rules and let the market get to your target, not close the trade cause you finally got one that has green numbers next to it.

And just in case you are wondering, you need to work for those rules to. Don't expect some one to hand them to you.
Test, Test, Test and then test some more.
When you get bored and want to stop testing but keep testing anyway...
then you know you are on the right track.

Hmm, this post is way to long already so there you go.
 
Any website with the words forex, secrets and millionaire is a guaranteed scam.

Hang on while I change a few things on my site...:innocent:


Lol, options are probably an easy way to lose your money faster, if anything. It is a 100x leveraged instrument after all. Most anyone starting out is far undercapitalized for options anyway given that premiums are not cheap despite what spinsters would have you believe, and time decay works against both sides of the trade.

The only winner in options is the broker with his bloated commissions. I lost $4k last year on them (a substantial chunk for a Uni student, btw), $1k of that was pure commissions. Yes, 1/4 of my losses were commissions!

(Not to say that options can't be useful, just that you really have to know what you're doing!)

Anyway, best you can do as a newbie is send PMs to anyone you think knows anything. Research, acquire knowledge, and get into demo trading to have an idea of what's what. Do not put on anything resembling meaningful stakes until you have something that generates positive cash flows. You will lose otherwise!!


I like options.
Cash index options are the best!
By using the option's premium as your stop loss you can wait for a bad trade to recover. Not all do, but some do and as a result you can take a few break evens or wins from what would have been losses.

You really do have to know what you're doing when trading options. Gotta learn about those greeks.

Not putting you down but how do you blow 1000 smackers on commissions to lose 3000?
That would be like 35 round trips with my broker.

Any way, options are great, but like every thing else about trading you have to learn about them first.
 
There is a secret about trading I will let you in on right now so you can save this part of the learning curve...:eek:

When you get good at trading...:|

It gets really boring!:sleep:

I'd agree with that definitely, not because it's the case for me :rolleyes: but i've traded with people like that in the past who actually ended up wondering if they should get another (fun) job just to pass some time haha.
 
"Any way, options are great, but like every thing else about trading you have to learn about them first."

Indeed.

Hang on while I change a few things on my site...:innocent:





I like options.
Cash index options are the best!
By using the option's premium as your stop loss you can wait for a bad trade to recover. Not all do, but some do and as a result you can take a few break evens or wins from what would have been losses.

You really do have to know what you're doing when trading options. Gotta learn about those greeks.

Not putting you down but how do you blow 1000 smackers on commissions to lose 3000?
That would be like 35 round trips with my broker.

Any way, options are great, but like every thing else about trading you have to learn about them first.
 
Not sure what you traded to get 100x leverage and Options themselves are not marginable, i.e. your firm my give it to you, but the contracts themselves are not marginable and like someone else posted...your fees require looking into. Your post doesn't clarify If your broker executed strategies on your behalf or just executed your trades. Premiums .some are cheap some are expensive...you came to the right conclusion


"...(Not to say that options can't be useful, just that you really have to know what you're doing!)..."



Lol, options are probably an easy way to lose your money faster, if anything. It is a 100x leveraged instrument after all. Most anyone starting out is far undercapitalized for options anyway given that premiums are not cheap despite what spinsters would have you believe, and time decay works against both sides of the trade.

The only winner in options is the broker with his bloated commissions. I lost $4k last year on them (a substantial chunk for a Uni student, btw), $1k of that was pure commissions. Yes, 1/4 of my losses were commissions!

(Not to say that options can't be useful, just that you really have to know what you're doing!)

Anyway, best you can do as a newbie is send PMs to anyone you think knows anything. Research, acquire knowledge, and get into demo trading to have an idea of what's what. Do not put on anything resembling meaningful stakes until you have something that generates positive cash flows. You will lose otherwise!!
 
Not putting you down but how do you blow 1000 smackers on commissions to lose 3000?
That would be like 35 round trips with my broker.

Any way, options are great, but like every thing else about trading you have to learn about them first.

To be fair, I was being stupid last year and experimenting with live money.

Still, my broker's commissions were $15 for the first 10 contracts + $1.5 for every contract thereafter. Since I was mostly doing 1 contract trades, this bloated commissions quite a bit and made it hard to just break even. So then I increased risk like an idiot just to cover the commission/spread hit.

So even a Butterfly trade was $60 for just 1 contract per leg... total rip-off! My fault for going with them, but I didn't know any better back then. Now I always look for the cheapest commissions possible.

Not sure what you traded to get 100x leverage and Options themselves are not marginable, i.e. your firm my give it to you, but the contracts themselves are not marginable and like someone else posted...your fees require looking into. [...]

Options are still 1 contract = 100 shares.

Let's say you have a $20 stock with ATM options listed at $1 ($100 premium), which would normally be considered cheap. 100 shares of that is $2000, but the options are 1/10th the cost. Now let's assume our risk on a trade is 1%, and that (per what HWSteele mentioned) our stop loss for options is the premium.

For the shares, 1% would = $20.

But for the options, $100 = 1% of $10,000.

... Not the same deal at all. They all say that options are cheaper than shares, but in reality they come with a cost.

You could say I'm splitting hairs here, but I don't think I am. In reality, you need a lot of money to get into options. I would easily say $10k is the bare minimum to not lose your shirt being undercapitalized. Options are also quite illiquid outside of the most heavily traded assets such as SPY, so the premium = stop loss assumption is not unfair. You see figures like 4 billion contracts traded every year or something, though reality is that most of e'm are done through SPY. The spreads are otherwise horrendous in my experience.
 
t2w guys.... please get on the ball with this stuff.
this forum is so infested with cr@p scammers/spammers/vendors it's almost a waste of time tryign to read through the latest posts...they're all new posts with this same sh1t. It's beyond frustrating. It makes you want to say why bother?

Peter
 
How would you fair if those rules were applied to you?

I know myself and a lot of successful traders would not be trading today if that were the case!

Well I can't say because I have no idea what the test would be in place! But if you and a lot of other traders are successful then you'd have no problem passing some sort of accreditation would you?

It's not meant to be a punishment, more to stop the poor souls who see Forex as a get rich scheme and blow a few K in a matter of weeks either through trading or scams because they haven't properly learnt how to trade and taken the time to learn all the potential pitfalls etc. I'm sure a lot of people quite enjoy having the cannon fodder pouring money into the markets, and you could say it's their own fault, but then you could also say it's far too unregulated. A bit of education never hurt anyone :smart:
 
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