How to Differentiate Investments from Options Trades..READ MORE
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| How to Differentiate Investments from Options Trades | | Most folks say they want to be investors—even when it comes to making options plays. But options are trades, and a great company may not be worth buying options on if it's not likely to deliver expected profits anytime soon.
So what's an investor to do? While the fundamentals matter over time, over shorter periods of time, a company's price may be determined by how it's been recently trading. Understanding how a company has trading, and how it's likely to trade in the near future, is the key to unlocking profitable options trades time after time. And it can also give you an idea of how to best make an options trades.
Generally, most stocks will do whatever they've been doing over the short-term. This can be confirmed by following what are called continuation patterns. But at times, a stock may likely trade sideways instead, so knowing when to recognize sideways patterns is key as well. Finally, a stock that's been falling may start to rise (or a rising stock may fall). That's where recognizing reversal patterns can come into play. We'll look at the basics of all these common chart patterns in this video.
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Not sure the best way to get started? Follow these simple steps to hit the ground running. | | | |
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