Option Science

  Why do we need to Trade Using Multiple Timeframes?   To improve the efficiency of our trading strategy. We see the major Trend using a higher time frame than what we intend to use & a lower Time frame to enter a trade. Say we want to trade using the Daily Charts. We take the Weekly charts to see the major trend. Suppose its an uptrend in a Weekly chart.  We will tend to trade only long positions. We will use entries in the daily charts to enter long positions only. When sell signals are generated we will just exit our long positions. I.e. we dont short sell. Suppose its a downtrend in a Weekly chart. We will tend to trade only short positions. We will use a entries in the daily charts to enter short positions only.  When buy signals are generated we will just exit our short positions. I.e. we dont enter long positions. Now that we are using two timeframes.  Now coming to timing the entry of trades or adding additional positions. (Pyramiding) We can further...

  Consider this: For most consumers, home payments (or rent payments), along with automobile payments are usually the two most expensive debts that a consumer carries.  These two payments alone can often…Using your credit cards wisely might be the most important and beneficial decision you can make towards financial health. The reason for this is simple: high interest rates on credit cards can cost you more than money if you find yourself unable to make your payments on time.Consider this: For most consumers, home payments (or rent payments), along with automobile payments are usually the two most expensive debts that a consumer carries. These two payments alone can often account for over 30% of a consumer’s take home pay per month. When high-interest rate credit cards are added to this, the overall cost per month can easily reach 60% or more of take home pay.  That does not leave much for other expenses such as food, clothing, car insurance, personal loans, etc. For many...

Watch the footprints let behind, you will know the important support and resistances which will help for trading Step 1: A move begins with the sponsors (smart traders) who have insider knowledge as it relates to a particular stock or market. This information will move a market up or down depending on the insiders’ information. These buyers are smart, very smart, and recognize trading/investment opportunities very early in the markup cycle. Step 2: Days, weeks, or sometimes months after a move has started, there is a brief mention in the electronic media (radio, cable, TV) or on one of the internet chat boards that a market has moved. The public hears for the first time and begins to get interested, but does not buy. Step 3: Some information appears in print media. The move also begins getting more exposure on blogs and internet message boards. The public starts paying a little more attention, and will buy a little bit. Step 4: Hype is created in the market and the public begins buying...

Greed and fear are the major players in the stock market. These two emotions are the driving force behind almost all market participants – Institutional mangers, stockbrokers, Investors, traders and yourself. You might be saying to yourself that greed and fear will never get in the way of my trading, but believe it or not they will be. It is not something to be ashamed of. It is something you have to admit to, come face to face with, If you are to become a successful stock trader or investor. What do greed and fear look like in the stock market trading arena? You have been watching a particular stock for some time now. It has set up perfectly, so you pull the trigger. You bought it at the perfect price and now it is moving higher just as you thought it would. Now greed steps up to the plate and says to you, this is going to be a rocket ship. So you buy some more shares. Or your stock moves a few points and goes passed the price that you decided to get out. Greed tells you this baby is ...

Trading in stock isn’t everyones cup of tea. Some people can do it and some can’t. Even among the some who can, not everybody can be successful at it. While there are no hard and fast rules on what makes or doesn’t make a successful stock trader, those Wall street Wizards that you hear about who made the most in the least amount of time, all appear to have certain characteristics in common. 1. Successful stock traders are able to go against their natural instincts. 2. Successful traders have a simple system. No matter which technique you use as long as you stick to it. A Successful trader knows their technique and makes trades based ONLY on their system. “The secret to being a winner is consistency of purpose”. You want to improve a separate strategy for getting into a position and for exiting one. 3. Successful traders are risk Adverse. Successful traders don’t like losing money and prohibit themselves before losing too much, even if it means admitting they made a mistake. 4. Successf...

  We often hear that 95% of people who try trading for a living fail within the first year. These are not very good odds and it is natural for new traders to wonder if they have what it takes. In this issue, I give you a list of 20 characteristics I believe could be found in most winners. I also included some Truths about trading. The methods employed by winning traders are extraordinarily diverse. Despite the broad spectrum of traders, certain characteristics are found in most winning traders (in no specific order): – Winners have a trading plan with a strategy that incorporates effective money management. They have the discipline to execute their plan relatively flawlessly and the self esteem to accept the money the market gives them. – They use their head and stay calm they dont get excited or depressed because of their trades. They dont act on emotions. They can handle success and failure without self-destructing. – They dont trade to feel good or to get high. – They handle tra...

  Master Your Trading Psychology Skills in 7 Steps Everyone wants to know how to master trading psychology. These seven tips can help… Practice With a Paper Trading Account Learning trading is as much about experience and practice as it is about skill and knowledge. Maybe you don’t feel ready to throw in your hard-earned cash just yet. Set up a paper trading account. You can practice real-time trades without all the stress and emotion that comes when real money’s involved. Paper trading can help you build confidence. If you’re new to trading, a paper trading account can help you learn the trading software and the process of reviewing and executing trades. Use it to practice using limit orders and stop losses. Learn how to manage your risk. Practice paper trading for a few weeks or months. Keep detailed records of your trading performance over time. You’ll need to account for other factors, too. Are you in a bull market or a bear market? When and if the market changes, your str...

whiCH STOP LOSS ORDER IS BEST FOR YOUR STRATEGY? Any trader will tell you, having your stops run is not a pleasant experience. However, it doesn’t need to be a financial disaster. While the connotation surrounding the word loss is ominous, do not be fooled ― the stop loss order is often a trader’s best friend. Types of Stop Loss Orders A stop loss is an order designed to force the closure of an open position at market. If it’s a long position, a sell order is used; if it’s a short position, a buy order is warranted. The functionality of a strong stop loss order should promote  by minimizing slippage and facilitating a timely market exit. However, optimizing these two key elements of trade depends largely upon which type of stop traders incorporate into their trading strategy. Not all stop losses are created equal. Each offers the user a unique collection of attributes. Here  are four of the most common and the trade-related areas in which they excel: Market Orders A tried...