Understanding Online Trading Strategies

Guidelines for Successful Trading

To benefit most from online trading, there are certain guidelines you should follow to help you become successful including:

• Research company earnings and invest on cold hard facts and data only
• Ensure you have great money management skills so you do not over-invest
• Never invest more than you can afford to lose
• Implement a system and track your results; tweak accordingly to improve and track those changes as well
• Stick to your system and never trade on emotion; be disciplined

Basic Trading Options

After that basic knowledge, the first level of online trading strategies breaks down to two basic option groups:

• Call Options – Providing the buyer the right without obligation to buy a stock at an exercise price on or before the expiration date. Included in this strategy:

1. Purchasing a Call – When investors buy a call option they believe the stock will rise
2. Selling a Call – Investors may be required buy the asset and deliver it to the buyer, and is used when the seller believes the value of a stock will fall

• Put Options – Provide the buyer with the right without obligation to sell the stock on an exercise price on or before the expiration date. Included in this strategy:

1. Purchasing a Put – Buying a put is used when the investor believes the stock price will decrease
2. Selling a Put – Selling a put is used when the investor believes the stock price will increase; investors may be required to sell the stock to the buyer of the contract