Do you have the base of knowledge you need for the investments you've chosen?
Before you begin trading, you must have the basic knowledge of the types of investments you have opted to trade. The stock market overall has a language that is foreign to those of us who are not familiar with the everyday jargon.
Be sure you have a solid understanding of the instruments that you will be trading and that you take advantage of reading our 'client education' series where you will find topics such as:
What is an Option?
An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.
How are Options used within the Stock Market?
When you buy an option, you have a right but not an obligation to do something. You can always let the expiration date go by, at which point the option becomes worthless. If this happens, you lose 100% of your investment, which is the money you used to pay for the option. Second, an option is merely a contract that deals with an underlying asset. For this reason, options are called derivatives, which means an option derives its value from something else.
Stock Vs Options
Many traders think of a position in stock options as a stock substitute that has a higher leverage and less required capital. After all, options can be used to bet on the direction of the stock price, just like the stock itself. But options have very different characteristics than stocks, and there is also a lot of terminology the beginning option trader must learn.
Call Options
A call gives the holder the right to buy an asset at a certain price within a specific period of time. Calls are similar to having a long position on a stock. Buyers of calls hope that the stock will increase substantially before the option expires.
Put Options
A put gives the holder the right to sell an asset at a certain price within a specific period of time. Puts are very similar to having a short position on a stock. Buyers of puts hope that the price of the stock will fall before the option expires.
What are Candlesticks?
Defining Put Options
The above excerpts were pulled from investopedia
As we progress we will discuss things as annuities, bonds, bear markets, bull markets, etc... In the meantime, you should feel free to review this material:
http://www.sec.gov/investor.shtml - Securities & Exchange Commission Investor Information
The SEC's Office of Investor Education and Advocacy provides a variety of services to address the problems and questions you may face as an investor
http://www.cboe.com/LearnCenter/RCTools.aspx - Chicago Board of Options Exchange Investor Information
The Definitive Source for Options Trading Information™
http://www.nasdaq.com/aspx/ResearchAndToolsHub.aspx - NASDAQ Investor Information
NASDAQ is the primary market for trading NASDAQ-listed stocks
The better informed you are as an investor; the more likely you will be to structure your trade plan in the way that is most beneficial to you. If you have specific questions we are here to help you develop your plan and work with you to ensure its success.
You can view more about Trade Plans at my blog @ http://www.michaelglass.com You can view and example of our Video Trade Plans @ http://www.youtube.com/accendotraders You can view more about our product and services @ http://www.accendotraders.com Tell Me and I'll Forget Effective Trade Plans Delivered Daily from AccendoTraders.com Article Source: http://EzineArticles.com/?expert=Michael_Glass |  |
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