Random Advice From One Trader to Another

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How to Read Options Quotes

How To Trade Options

Your broker will have all the quotes you’ll need to trade listed online. If you’re an active trader, you’ll have all the free, real-time quotes you need through their online service.

The Chicago Board Options Exchange (CBOE) is another source for option quotes. At CBOE.com, you’ll find a free 20-minute delayed screen. For different fee levels, you can get real-time quotes and even real-time streaming quotes.

HOW TO TRADE OPTIONS:
– What Are Options?
– What Are Options Contracts?
– Price of Options
– How to Read Options Symbols
– How to Price Options
– How to Read Options Quotes
– Understanding Options Risk
– Common Mistakes to Avoid
– Options Trading Strategies
– Choosing an Options Broker

Open Interest and Volume

Option volume and open interest are two pieces of options information that are related but markedly different. Volume is a daily record of the session’s trading activity at a particular option call or put strike. Whether a trader is buying or selling an option contract, it counts as part of the day’s option volume. Volume starts every session with a clean slate at zero and increases throughout the day.

Open interest, however, is a rolling tally of the total number of option contracts open and active at each strike, representing all options that have not been closed or exercised. The number does not change throughout the day but rather adjusts overnight once trades are tallied, exited positions are closed, and new positions are added.

Let’s look at a simple example. Open interest on the Target (TGT) October 60 call is at 1,000 on Monday morning. That day, Trader A buys to open 10 contracts at this strike and Trader B sells to close 30 contracts at this same strike. Volume would be 40 at Monday’s close but when open interest is adjusted early Tuesday, it slips to 980, due to the addition of A’s 10 new contracts but the subtraction of B’s 30. Open interest dropped by a net value of 20 contracts.

One complexity with open interest is that it may not change at all (or change only very slightly) despite notable volume. While some chalk this up to day traders, who are entering and exiting positions over the course of the same day, others point out it is likely caused by options changing hands from one trader to another.

For example, if Trader B had sold her options directly to a new market participant (Trader C), rather than selling them to close, open interest would have moved to 1,010, as the same option contracts remain on the books, just in different hands. So while B may have exited her position, C came in as a new buyer to buy these same positions, and Trader A still adds his 10 contracts.

This can be a confusing process, but a trader (whether beginning or advanced) can learn a lot by watching the daily volume and open interest patterns shift each day.

Expiration Cycles

When you’re looking at securities that have options traded on them, you’ll notice the expiration dates and how they change from stock to stock. When a security begins to trade options, it’s randomly assigned one of three expiration cycles. That’s because there are so many stocks and securities trading options that it would be very difficult for the option market makers to keep track of every single call and put, at each strike price, for each month of the year.

So they created three common cycles to which the stocks are assigned:

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• January, April, July and October
• February, May, August and November
• March, June, September and December

The easiest thing to remember is this rule: There will always be current-month options (the “front-month”), and there always will be options for the very next month. The only exceptions are if a security is delisted.

For example, if it’s early May and you want to trade a Netflix (NFLX) option, you’d find May options available (called current, or front-month) as well as options in the June series.

One easy way to find out whether an option is available is to look at the options chain, which is available through your broker or on the finance pages at Yahoo! and Google. The options chain provides a list of all the months and prices that are available for a given security. At the top of the chart below you’ll see that, in May, there are options for May, June, July and October 2020, January 2020 and January 2020.

Expiration Dates

One great thing about trading options is that it’s all about making the most of volatility in a relatively short period of time. That means you hold the options only from the trade open date until their expiration date (and sometimes not even until then).

Technically, options on stocks expire on the third Saturday of every month. But because the markets aren’t open then, options actually stop trading the third Friday of each month. So if you own a July option, you have from between the day you purchased the option until the third Friday of July for it to become profitable. On a few occasions, the underlying stock or ETF trades after the market closes on Friday of expiration week, which can cause some action in your option.

During the time you own the options contract, you can exercise your right to sell the option, you can choose to buy the underlying stock at the agreed-upon price (e.g., if you purchased a GOOG March 590 call, then you can buy stock for $590 a share, even if the stock is trading at $600, as long as you do so before the third Friday in March, when the options contract expires). Lastly you can choose to do nothing and the option will expire worthless without penalty to you .

Below you’ll find charts with the expiration dates for 2020, 2020 and 2020. Remember, because the market is closed on Saturday when the options technically expire, they actually stop trading the Friday before.

Random Advice From One Trader to Another

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While walking from one town to another I end up in a lot of random encounters with caravan traders. I have been choosing to slaughter all I come across. Is this going to effect me negatively later on? Will it make it so I’m unable to take caravan jobs or anything like that?

I figured since they have slaves with em, they can’t be very good people, so I kill em and take the sweeeeet loot(can’t believe I nearly paid 3 grand for a sub machine gun, theyre so plentiful in the wasteland for the price of a couple bullets).

There are “good” and “bad” merchant caravans. The “good” caravans don’t have slaves, while the “bad” caravans do have slaves. IIRC, you actually get positive karma for killing the merchants and guards of “bad” caravans.

Beyond karma, I don’t think there are any specific consequences.

UniversalWolf: There are “good” and “bad” merchant caravans. The “good” caravans don’t have slaves, while the “bad” caravans do have slaves. IIRC, you actually get positive karma for killing the merchants and guards of “bad” caravans.

Beyond karma, I don’t think there are any specific consequences.

Seems to be FAR more random encounters whilst wandering the wasteland in Fallout 2 compared to the first. To think i nearly blew 3 grand on a submachine gun in a shop when all i had to do was go for a short walk and mow down some caravanners. So easy getting money, goods, and guns in Fallout 2.

Is it possible to learn how to trade starting from scratch?

“A person who can play the second fiddle could be a trader, but good students cannot play the second fiddle: you have to set a clear task to them” Nassim Taleb

Unfortunately, the most sincere answer to the question “is it possible to learn trading from the scratch fast” is “no”.

However, if we remove the word “fast”, we get a positive perspective. So, we continue with a positive attitude!

  • why it is impossible to learn trading fast;
  • stages of the trader’s development;
  • what advice will not help you to learn trading fast;
  • training materials in the Internet and their usefulness.

Start to use ATAS absolutely free of charge! The first two weeks of use of the platform give access to its full functionality with 7-day history limit.

Why it is impossible to learn trading fast?

Let us assume your electric stove broke. To fix it you could:

  • call a repairman;
  • repair it by yourself;
  • buy a new one.

We found more than 50 videos with various variants of an electric stove repair in YouTube. Perhaps, you might repair your stove after watching some video, but will you become an expert after that?

You need, at least, 5-10 years of training to become a professional medical doctor. The profession of a trader is not an exception. The author of the Scalping Is Fun book writes that you need 10,000 of trading hours to develop a sufficient experience.

A writer Malcolm Gladwell introduced a concept that, apart from talent, you need to spend 10 thousand hours of training to become a professional in any sphere.

For example, before the Beatles became popular, they performed in Hamburg for 10 thousand hours from 1960 until 1964. And 13-year old Bill Gates devoted 10 thousand hours to programming experiments after he got access to his senior sister’s computer in 1968.

Trading is a full-fledged labor activity , which takes even more time than average employment. When we change employment or look for a new one, we pass several job interviews, probation period, training and establish relations with our colleagues. Each trader passes similar stages in his development.

Stages of the trader’s development.

The first stage is broker selection.

It takes from several weeks to one month.

The stage is passed when you open your account with the broker, put money on your deposit and install the required software. Everything is charged for trading.

You can select another broker with less commission fees or better service support after some time. The first broker is as the first employment or first teacher – you will remember him for a long time. However, from the point of view of professional development, a trader has to compare services of different brokers from time to time, looking for the one who would suit the best for his individual trading style.

The second stage is training.

It takes from several months to infinity.

The stage is passed, when you:

  • do not struggle with the market;
  • do not say “I was right”;
  • trade in harmony with the market mood and do not experience stress;
  • realize that you do not need to outperform anyone to make profit.

If you do not know anything about the exchange, demand and supply, bids and asks , first of all, read some training and educational literature and watch The Wolf of Wall Street and The Big Short films.

If you already have a certain understanding of trading, the sequence of training could be the following:

  1. niche selection;
  2. goal setting;
  3. goal achieving exercises;
  4. immediate feedback in the form of profit or loss.

All tasks should be small and specific in terms of time and performance feasibility.

Let us consider two plans of training a successful trader .

  1. Weis Wave trading;
  2. Footprint and indicator trading.

Why these particular two options? First option, because we have already written several articles about the “Weis waves” and the same name indicator. And second option is self-evident for all the traders studying volume analysis.

Plan 1. Learn trading with the use of Weis Waves.

The goal is a profitable trading with the use of the Weis Wave Indicator in 9 weeks.

  1. theoretical training;
  2. software selection;
  3. instrument selection;
  4. paper trading;
  5. real-life trading;
  6. trading diary keeping.

Actions and time periods for task performance:

  1. Reading the David Weis book Trades About To Happen; watching the webinar ; watching video about application of the indicator – first week;
  2. Installation of the trading and analytical ATAS platform, for it has the Weis Wave Indicator and various variants of the graphical display of the price – first week;
  3. Study of the RTS index futures trading history with the use of renko charts with the period of 10. Exercises in finding a “pressure reduction” trading setup – second week;
  4. Detailed analysis of the “pressure reduction” trading setup without real-life trades during a trading session and planning possible entry and exit points. We will enter a trade in case of reduction of the wave volume on the second or third wave. We will exit a trade at the next support/resistance level – second week.
  5. Risk calculation. Trading 1 RTS index futures contract with a stop of 2 renko bar – third/nine week;
  6. A weekly analysis of all trades in the Statistics module. Comparison of the average profit with the average loss, profit factor and recovery factor for progress identification – third-ninth week. Search for errors and making corrections;
  7. Exercising entry into and exit from a trade with limit orders – fourth-ninth weeks;
  8. Trading 2 contracts with a stop of 2 renko bar – sixth-ninth weeks.

The result – a number of profitable trades is bigger than the loss-making ones and the average profit is above average loss in each trade.

Corrections – we reduce the number of contracts and increase the periods of task realization in case of losses.

Plan 2. Learn trading using delta and footprint.

The goal is profitable trading with the use of footprint and delta indicator in 9 weeks.

Tasks:

  1. theoretical training;
  2. software selection;
  3. instrument selection;
  4. paper trading;
  5. real-life trading;
  6. trading diary keeping.

Actions and time periods for task performance:

  1. Watching a webinar about footprint, reading instructions, watching video about the delta indicator – first week;
  2. Installation of the trading and analytical ATAS platform, for it has the footprint and delta – first week;
  3. Connecting the S&P mini index futures, setting 7-minute timeframe and trading setup of “changing delta at significant day levels” – first-ninth weeks;
  4. Preliminary analysis of “changing delta at significant day levels” trading setup without real-life trades within a trading session and planning entry and exit points. We will enter a trade when the delta changes color at the day’s significant levels and exit at the next support/resistance level – second week.
  5. Trading 1 S&P mini index futures contract. Stop is after the extreme point of the previous (before entry into a trade) bar – third-ninth weeks;
  6. A weekly analysis of all trades in the statistics module. Comparison of the average profit with the average loss, profit factor and recovery factor for progress assessment – third-ninth weeks;
  7. Entry into and exit from a trade with limit orders – forth-ninth weeks;
  8. Trading 2 contracts with simultaneous reduction of the stop loss size – sixth-ninth weeks;
  9. Trading the more advanced setup – “exhaustion of sells at the day’s high/low with further delta change” – sixth-ninth weeks.

Result – a number of profitable trades is bigger than the loss-making ones and the average profit in each trade is higher than the average loss.

Corrections – we reduce the number of contracts and increase time periods of task realization and trade a simple setup in case of losses. We do not start realization of a more complex setup without a stable profit at a more simple setup.

What to start the trading learning with?

The most difficult for a beginner trader is to select a niche. The markets are huge and all people are different.

Most probably, you will have to try many different variants before you find the one, which would bring you both profit and satisfaction. Do everything to reach after your competitive advantage. If you trade crossing the moving averages in the MetaTrader, you can hardly call it an advantage.

Use progressive approaches – cluster analysis and footprint – and use automation. It is important to be among the first ones in order to make profit. We discussed possible trading niches in our article about books on trading .

The third stage is a probation period on your first deposit.

It takes from several months to several years.

The stage is passed when you stopped losing money and the trading account analysis shows stable growth with small falls. The falls should not be more than 5% of your capital. You can keep the trading statistics in Excel by yourself or use functionality of modern platforms. ATAS reflects complete information about trades for the selected period in a table or chart form.

The fourth stage is perfection.

It takes lifetime.

The stage is passed not only when trading brings you enough money for living, but also brings yourself in the state of flow. Flow is the state of happiness and satisfaction. After you experience it for the first time, your only wish would be to come back to that state again.

“A person submerges into a task to such an extent that his activity becomes, practically, automatic and he stops perceiving himself separately from his actions” Mihaly Csikszentmihalyi

What advice will not help you to learn trading fast?

  • Long demo account trading – if something is good on paper, it will not necessarily be good in real life. As soon as you start losing or making money, you will experience pain, fear and greed. Emotions interfere with your trading strategy and discipline.
  • Frequent jumping from one trading niche to another – brings you success in none of them. Do you remember about 10,000 hours you need to become a professional? Exercise the set tasks with patience and discipline.
  • Blind copying a somebody else’s trading strategy – you will not be able to trade reasonably if you do not understand how somebody else’s ideas work.
  • Trading with a big credit leverage – a desire of a beginner to make quick money usually results in huge losses.
  • Paid training courses of unknown “gurus” of trading. Trust those who is ready to produce broker’s reports and do not hide their trading strategy. A profitable trading strategy is not something that expires when you share it with others.

Training materials in the Internet and their usefulness.

Let us see who publish training materials and why they do it:

Brokers and exchanges regularly conduct webinars, publish free forecasts, answer questions and give recommendations. The main goal of this group of “teachers” is to attract as many players as possible and open as many brokerage accounts as possible. Brokers and exchanges make their living from commission fees paid by traders. They always act in their own interests and they want to increase a number of trades.

  • Successful traders with famous names – for example, Larry Williams or Alexander Gerchik. These traders show profitable broker’s reports and sell their software. If the training goal is education of inexperienced traders, the training would be free. If the training is not free, a question arises – why does a successful trader all of a sudden start training others? You can make much more money on the exchange than on webinars. Actively interacting with a specific paid tutor you become dependant on his advice and approval and you are ready to pay for a growing number of training events. Make calculations to see whether training investments would be repaid by income from trading.
  • Unknown traders , who “successfully trade” on the exchange, but are reluctant to show broker’s reports. If trading cannot ensure the desired level of living, one has to look for additional income. The easiest way is to give advice to beginners in something that you already tried yourself. Before you start using paid services of these group of “teachers”, ask yourself a question: “is this person a really good specialist?”.
  • Software producers – promote their products. As a rule, they have a video channel, blog and website where they publish free materials. Software producers are also interested in a bigger number of their clients. But, unlike brokers and exchanges, they create a unique product, invest time, programming efforts, ideology and only after that they want to make money. A professional builder / dentist / musician pays for high quality instruments, which would serve him a good service and will be repaid in future. Payment for trading software is the same. It is a necessary expenditure for increasing you competitive advantage in comparison to other traders.

Conclusions.

You can learn trading from scratch by yourself , but not fast and with certain financial expenditures. Self-education requires from you to distinguish useful information from useless, develop understanding about exchange trading, technical and cluster analysis and then select a niche and realize your trading system step-by-step.

Discipline, modern software and time are the best teachers. Good luck!

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

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