Advantages of Options over day trading.

I was thinking of high probability trades.

1. The first thing to do when using options is to fine a pattern graph like a wave formation on the upside or the downside.

2. the good thing about options is that when you do it on high probability trades, then I can be very profitable with minimum upfront money.

3. When Netflix was around 300 dollars I knew it would fall down. That is how the graph pattern was indicating. Since it was above the 30 day moving average on the peak, I did not take any action to short the stock. But If the stock has been showing consistent repetitive pattern, then it was worth a try to short the stock. But to short requires a lot of money.

4. So with mininum risk, buying 1 or 2 contracts and waiting for stock to fall down 20-30 percent would have been like 50-60  or more profit on the puts side.

5. With options one has to buy Stock that trade in high volume. Those are the only ones one should enter and also buy AT THE MONEY options, NEVER out of money  and NEVER NEVER far out of money options.

6. It is a very good strategy. Day trading is not suitable for me because of the time consumed and also the day to day stress to take the right decision. I cannot take the right decision always on that time scale. It is easier for me to take the right decision from the 1 year graph, on the long side or the short side. Buying calls or puts, once or twice a month depending on the graph is a high probability trade.

7. Its good to read about day trading but if you are experimenting it is better to do it with less money. The same also goes with Options. But options are a better way to make money and there is a time from after which you have to sell it off. There is the time decay. So the rule in the book TREND TRADING  are good for OPTION trading.

8. If one can make a only make those high probability trades once a week may be and just wait for the rest to enfold  in a month or two months time, then that is the best way to do it. Because on day to day basis the stock market is fluctuation on a number of factor but on a monthly basis, tit is based on Macro economic situation and also individual stock performance. So giving time for the stock to fluctuate for a couple of days and then the stock moves the way it should.

9. But in day to day trading that is not possible. Also there are chances of taking too much risk. What I am using for a trading system is not enough for day trading. There are too many things to learn to perform well in day trading according to the book MASTERING THE TRADE. It has it own indicators one has to first of all have a plan and understand of the market is going to be choppy or it is going to be in one direction. Without that one can mess up. And there are too many trades involved rising the cost of trades too much.

10. That is the reason why Stock Brokers promote these software so that you can do many trades and make money for them. But the more number of trades you do them more probability of mistakes. And that time frame of one hour or less than that it is high probable to make mistakes. It is not for everyone it is only for a minority.

11. I would still give a big appreciation for SECRETS OF PROFITING IN BULL AND BEAR MARKETS.  Using the 30 day moving average and finding patterns to either short or long is the best way to deal with market trend. Day trading is too risky and time consuming and not worth it, even if one puts the effort to learn the trading system and indicator to show how the day is going to be.


12. I  would just buy it and leave if for a couple of weeks. But again Options can be dangerous if one takes risk and does low probability trades. One should remember that if one does that I money is lost with out a question. there is no arguing about it or turning around of luck. 


13. One should accept what one cannot do and capitalize on stuff one can do well. Trying to do things that one is cannot do if fine with less money but not with a lot of money. Its not worth the time and also the money loss and everything. I have wasted time on day trading and also all my profits. I have realized its not for me. 


14. i am deleting all the day trading software from my computer. the google graph should be enough for making the purchases. 

Over all financial analysis

1. I find that there are two days of safe investments for passive income. Passive income comes from other sources other than our regular job. One is rental money and the other is investments in dividend and growth stocks for a long term. These are the two no stress investments.

2. The more risky stocks which are not dividend stocks and volatile are more stress stocks. From my experience, no matter how good one is analysis, day trading is difficult. Because under stress, one does not take the right decision until one takes decision on technical indicators. Not guess work. Until then day trading is not worth wasting time or energy. One has to learn and experiment before taking big bets.

3. there is no loss or gain situation. So I am getting out now. Lots of entertainment for the year. As I had decided. I should just relax for sometime and just read some books.

4. One's aim should be to think of passive income coming from low risk investments like rental and stable dividend stocks. One should invest most of the money into that.

5. One should invest may be 20 percent money in high risk stocks. Either one is long or short does not matter. One can do whatever one wants to do but most of the money should be in stable investments.

6. It is not worth the stress. Learning how to manage life without stress is the intelligent way in life. Having a good quality life is more important and pursuing other intellectual or spiritual pursuits.

7. Day trading takes a lot of time and is time consuming. The other medium term investment like monthly investment is better even for the 20 percent invested in volatile stocks. Like following the 30 day moving average over 1 month time frame is the best way to invest money.

8. Following the lesson from the book Secrets of Profiting in Bull and Bear markets, one needs to have patience. When you purchase in a bull market one has to wait till the uptrend stock comes near to the 30 day moving average during correction then buy.

9. When you short wait till the down trend stock comes near to the 30 day moving average then short.

10. This is the only way to make maximum profit for less risk. THIS THE ONLY WAY. Day trading consumes too much time and quality of life comes down. One could be reading a book or other recreational activities instead watching the Stock market score board all the time. That is not worth it.

11. Again one needs patience. Just like one needs to have patience for the uptrend stock to move closer to the 30 moving average, one should also have patience to short a stock in downtrend to move closer to the 30 day moving average. If one does not have patience to follow this rule which is always true from all the graph and study, then one is not fit for stocks on a medium term strategy.

12. There is no use to say to oneself that one can do it next time when after all these months of stock watching one did not gain or lose. One reason is patience and following the rules.

13. If one is changing strategies everyday, then it is a problem too. One has to choose and only act when it is the right time.

14. Look at the market sectors graph in GOOGLE finance. When it is the bull market look at what sector has most most. Those are the stocks to short, when those stocks come near their 30 day moving average.

15. One can follow the IBD newspaper doing the bull market, their recommendations are good for bull markets but not for bear markets.

16. For bear markets ones has to do one's own analysis like looking at Google sectors and find which sectors are doing the worst.

17. Do not short when the market or stock has fallen down rapidly. It rallies or bounces back to the 30 day moving average. So that is too much risk taking. One has to wait till the stock comes loser to the 30 day moving average during a downfall and only then short it. This especially if you are putting all your money into it. Better bet all your money at the right time than gamble everyday.

Now coming to the point of passive investments where most of the money should be invested in. Look at rental and dividend stocks.

Rental money in India is a good option. Building some small apartments and giving to rent. No risk at all but at least some money is coming in. No stress.

Investment in 401K or 401 k like investment in Sharebuilder. Investing by automatic way is the best way to do it. Perhaps investing in 500 to 1000 dollars is good enough. One the long term there is no loss in this strategy. I have tested it several times

It is time to put money where it works. Enough of Experimentation now. Experiment is minimum money.

Day trading that I am experimenting should be with minimum money. Now it bull market not a market that is easy to make money. One has to short and one has to be patient till the stock moves to the 30 moving average. One has to decide if one can do that or not.

I should not be putting too much money in day trading when I am not good at it now. What ever it is I am exactly at no loss or gain situation. So that good.

I will follow this plan I like it. If I want to experiment I will do it with 5k especially in this crazy bull market. When it turns around many in a couple of years I will buy again later and hold good stocks from IBD list.

Best ways to take advantage to the situation

1. Until the market is falling buy puts of the best companies that have good put volume. Do not buy calls .

2. buy CALLS when the market reaches the equilibrim stage when the market starts to show the up and down waves for a couple of times. That is when the bottom has reached. That is the time to buy CALLS on companies like Apple.

3. Today some of the puts when up 200 percent. SIMPLY AMAZING.

4. Also the option volume is high in BAC.

5. Advantage of having a long term account with SHARE BUILDER is that the stable stocks do not decline much. Also it give some cushion to use buying options with margin money.  When portfolio is declining because of massive selling, hedge it with options on stocks like Apple or any high volume decline option sector. Right now it is the banking sector like Bank of america or Citibank.

6. This give good hedging and also protects the capital.

Try to buy IN THE MONEY or AT THE MONEY options. DO NOT BUY OUT OF THE MONEY OPTIONS. They are the most dangerous.

7. Buy Walmart stocks for 48 dollars. That is a good price to buy. It is a very stable stock. Then with them margin money you can buy options. Either you can buy puts or calls depending on the trend of the market.

8. This is the time to invest wisely use all the knowledge you have. Its a challenge.

volatile markets are back

Day trading is the best thing to do to manage these volatile markets. there will be some major moves up or down. It is not worth holding stocks for the next day at this time.

Time to be extremely careful also time of great opportunity.

1. DO NOT AVERAGE DOWN. short stocks going down. If stock below day Moving Average do not cover it till the day end. Today BAC and URI fell the most. They were good opputunities. shorted BAC at 7.10. Should have held it till the day end since the graph showed there was still heavy selling. It closed at
6.40. Would have made 2-3K on it. Any way made some money on it but it was bad execution.

2. Market is down from 12600 to 10,800. that is a 1800 drop. Market may go up again for 300 point any day. It is better to just day trade. need to be very careful. If holding stock overnight DO NOT DO IT WITH MORE THAN 15k. One can day trade the next day with the extra money.

DO NOT USE GOOGLE FINANCE FOR PORFOLIOS

Google finance does not give graph picture in the porfolio section. This is a big negative for technical studies. This is not the first time, this mistake caused great loss yet I have been using it for no reason. Use google finance for looking up stocks never for porfolio. I changed it to yahoo finance today. 

Time to short

Market is uncertain and there are good shorting opportunities. Short 2-3 stocks and diversify so that there is no stress. Do not short just on stock. That is a mistake and can cause unnecessary stress and losses and getting out of position prematurely.

I will select 2-3 stocks and short them on money. Stocks are moving below the 30 moving average. One is NETL. Need to find 2 more and short them. The stocks should be fundamentally weak and the P/e should be negative if possible. Does not matter even if the P/e is positive. Tech or solar or other volatile or recreation sectors are preferable. These are the stocks that go down real fast and are the first to move down.

No active trading from now for sometime

No active trading for some time. I made no money in july. It was lossing money month. So better to go long on AAPL.

Finding 1-2 dollar stocks that move 100 percent is rare looks like on Yahoo. It only happens once in a while.

I am completely into AAPL and it moves up 10 percent to around 440, i will get back to where I was. nothing to worry. This the best stock out there. it moved 20 percent last month. Should have noticed it when it breaked the equilibrium at 340. Any way going long, not trading day. Reducing trading costs. Its not worth it.

I realize that day trading is too time consuming and not worth it. It is better to buy at old way. Just sit on good stocks. Buy them when there is a correction and sit on it. the 10-20 percent on makes is better than making money and losing money game in day trading. 

Bye bye day trading