Active Trading Articles

  1. The Four Most Commonly-Used Indicators In Trend Trading

    Here are the top indicators and tools trend traders use to establish when trends exist and to find entry/exit points.
  2. Use Knock-Out Options To Lower The Cost of Hedging

    Unlike a plain-vanilla call or put option where the only price defined is the strike price, a knock-out option has to specify two prices – the strike price and the knock-out barrier price.
  3. How To Profit From The "Night and Day" Aroon Oscillator

    “Aroon” is a Sanskrit word loosely translated as the transition from night to day, appropriate for a measure that attempts to determine when a trend is about to develop into something of substance.
  4. The Odd Lot Theory: Betting That Small Investors Are Wrong

    The odd lot theory is a largely discredited proposition that small investors are usually wrong and that doing the exact opposite will yield above-average returns.
  5. The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate

    The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that can rise or fall in value over time.
  6. A Simple Overview Of Quantitative Analysis

    All of the potential highs, lows, and sentiments associated with investing can overshadow the ultimate goal—making money. The “quantitative” approach to investing seeks to pay attention to the numbers instead of the intangibles.
  7. Understanding the "Hanging Man": The Optimistic Candlestick Pattern

    A hanging man is a candlestick pattern that hints at the reversal of an uptrend. The candlestick is recognizable by a small box atop a long, narrow "shadow."
  8. Give Yourself More Options With Weekly and Quarterly Options

    Weekly and quarterly options were introduced to give a greater choice of option expirations to investors, and enable them to trade more efficiently.
  9. Use The McClellan Oscillator To Measure Market "Breadth"

    How broad is the market? And, once we answer that question, how can we use that answer to our advantage?
  10. Tweezers Provide Precision For Trend Traders

    How to use candlestick tweezer patterns for analyzing and trading financial markets.
  11. How Credit Event Binary Options Can Protect You In A Credit Crisis

    CEBOs are designed to offer protection from “Credit Events” like bankruptcy or a global economic crisis, and thus are quite different from standard call and put options.
  12. Which Vertical Option Spread Should You Use?

    Knowing which option spread strategy to use in different market conditions can significantly improve your odds of success in options trading.
  13. How To Use The Chaikin Oscillator To Your Advantage

    How best to reconcile increasing or decreasing volume with price fluctuations? No one has a definitive answer, but Marc Chaikin has come as close as anyone. Enter the Chaikin Oscillator.
  14. How Traders Can Utilize CCI (Commodity Channel Index) To Trade Stock Trends

    Use the Commodity Channel Index (CCI) to enter and exit price trends.
  15. Using the Coppock Curve to Generate Stock Trade Signals

    How the Coppock Curve momentum indicator can help you isolate buying opportunities and exit points in the stock market.
  16. Mini Options: A Useful Tool For Trading High-Priced Securities

    Mini options are option contracts wherein the underlying security is 10 shares of a stock or exchange-traded fund (ETF). This is the main difference between mini options and standard options, which have 100 shares as the underlying security.
  17. What is a Bear Call Spread?

    A bear call spread is an option strategy that involves the sale of a call option, and the simultaneous purchase of a call option (on the same underlying asset) with the same expiration date but a higher strike price. A bear call spread is one of the four basic types of vertical spreads.
  18. What is a Bear Put Spread?

    A bear put spread entails the purchase of a put option and the simultaneous sale of another put with the same expiration but a lower strike price.
  19. What is an Iron Butterfly Option Strategy?

    This relatively simple strategy is designed to provide a profit for investors who believe that there will be minimal price movement in the underlying security until expiration.
  20. What is a Bull Call Spread?

    A bull call spread is an option strategy that involves the purchase of a call option, and the simultaneous sale of another option (on the same underlying asset) with the same expiration date but a higher strike price. A bull call spread is one of the four basic types of vertical spreads.
  21. Creative Ways to Protect Your Stock Portfolio

    Protecting your stock portfolio is an extremely important part of portfolio management.
  22. Four Breakout Stocks To Watch

    These biotechnology and pharmaceutical stocks continue to put in new highs, but indicators are diverging.
  23. An Overview of Weather Derivatives

    Investopedia explains: Weather derivatives allow businesses to safeguard against unusual temperatures or levels of precipitation that may adversely affect financial performance.
  24. What Is A Bull Put Spread?

    Investopedia explains: A bull put spread is a variation of the popular put writing strategy, in which an options investor writes a put on a stock to collect premium income and perhaps buy the stock at a bargain price.
  25. Options Basics: How to Pick the Right Strike Price

    The strike price has an enormous bearing on how your option trade will play out. Read on to learn about some basic principles that should be followed when selecting the strike price for an option.
  26. What The Market Open Tells You

    The first few moments of trading provide a lot of information. If a trader analyzes this information, it can give a lot of insight into the market's moves for the day.
  27. Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  28. Are You Investing Or Gambling?

    We look at ways in which gambling creeps into trading, and what may drive an individual to trade - or gamble - in the first place.
  29. What You Need To Know About Binary Options Outside The U.S.

    Binary or digital options are a simple way to trade price fluctuations in multiple global markets.
  30. A Fresh Look At The Financial Markets

    Different markets provide unique opportunities and risks for investors. Find out more here.
  31. Trailing-Stop/Stop-Loss Combo Leads To Winning Trades

    Combine trailing stops with stop-loss orders to reduce risk and protect portfolio value.
  32. Introduction to SPOT Options

    Single-payment options trading (SPOT) allows investors to have full control over their investments.
  33. Introduction To Put Writing

    Learn about a strategy that may be appropriate if you have a positive outlook on a stock.
  34. Financial Markets: Random, Cyclical Or Both?

    Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument.
  35. Enhance Your Portfolio With Active Equity

    This strategy provides the potential for larger returns while using less capital.
  36. Exotic Options: A Getaway From Ordinary Trading

    Exotic options are like regular options, except that they have unique features that make them complex. These unusual investment vehicles can reignite your interest in trading.
  37. Getting A Handle On The Options Premium

    The price of an option, otherwise known as the premium, has two basic components: the intrinsic value and the time value. Understanding these factors better can help the trader discern which contracts represent a good value for the money.
  38. Reducing Risk With Options

    If you want to use leverage to your advantage, you must know how many contracts to buy.
  39. The Basics Of Option Price

    Options can be an excellent addition to a portfolio. Find out how to get started.
  40. The Optimal Use Of Financial Leverage In A Corporate Capital Structure

    The amount of debt and equity that makes up a company's capital structure has many risk and return implications.
  41. Logic: The Antidote To Emotional Investing

    Playing follow-the-leader in investing can quickly become a dangerous game. Learn how to invest independently and still come out on top.
  42. Get The Most Out Of Employee Stock Options

    These plans can be lucrative for employees - if they know how to avoid unnecessary taxes.
  43. Advanced Game Theory Strategies For Decision-Making

    The importance of game theory to modern analysis and decision-making can be gauged by the fact that since 1970, as many as 12 leading economists and scientists have been awarded the Nobel Prize in Economic Sciences for their contributions to game theory.
  44. Is Your Personality Preventing Profitable Trades?

    Different personality types will trade differently. Where do you fit in?
  45. How To Avoid Closing Options Below Intrinsic Value

    To get the best return possible on your options trading, it is important to understand how options work and the markets in which they trade.
  46. Breaking Down The Binomial Model To Value An Option

    Find out how to carve your way into this valuation model niche.
  47. Utilizing Prisoner’s Dilemma In Business And The Economy

    The Prisoner’s Dilemma, one of the most famous game theories, provides a framework for understanding how to strike a balance between cooperation and competition, and is a very useful tool for strategic decision-making. As a result, it finds application in diverse areas ranging from business, finance, economics and political science to philosophy, psychology, biology and sociology.
  48. Introduction To Momentum Trading

    This trading style offers major profit potential thanks to the powerful way in which momentum can drive a stock.
  49. Adapt To A Bear Market

    Learn how your portfolio should evolve to suit bear market conditions.
  50. Technical Vs. Fundamental Investing - Friends Or Foes?

    Making money in the stock market has been likened to gambling by some, but experienced investors who do their homework usually profit by doing market analysis. However, even experienced investors debate which type of analysis - fundamental or technical - provides higher returns.
  51. Market Volatility Strategy: Collars

    Find out which protective or bullish collar will result in your optimal risk/return level.
  52. Top Reasons Forex Traders Fail

    This market can be treacherous for unprepared investors. Find out how to avoid the mistakes that keep FX traders from succeeding.
  53. An Introduction To Structured Products

    Learn a simple way to bring the benefits of derivatives into your portfolio.
  54. Financial Analysis: Solvency Vs. Liquidity Ratios

    Solvency and liquidity are equally important for a company's financial health. A number of financial ratios are used to measure a company’s liquidity and solvency, and an investor should use both sets to get the complete picture of a company’s financial position.
  55. Introduction to Margin Accounts

    Find out what your broker is doing with your securities when you invest on margin.
  56. Understanding The Consumer Confidence Index

    We look at this closely watched economic indicator to see what it means and how it's calculated.
  57. Which Order To Use? Stop-Loss Or Stop-Limit Orders

    Stop-loss and stop-limit orders can provide different types of protection for investors seeking to lock in profits or limit losses. Investors need to know how each type of order works to know when to use one versus the other.
  58. A Primer On The MACD

    Learn to trade in the direction of short-term momentum.
  59. Loving Your Stocks? Don't Take This Cliché To Heart

    The advice not to fall in love with one's stocks is common, even a cliché. However, the prevalence of this phenomenon is probably overstated by financial journalists. More common is that investors hang on to poorly performing assets, but for a wide range of reasons.
  60. American Vs. European Options

    These two options have many similar characteristics, but it's the differences that are important.
  61. Top 4 Most Scandalous Insider Trading Debacles

    Here we look at some of the landmark incidents of insider trading.
  62. An Introduction To Gamma-Delta Neutral Option Spreads

    Find the middle ground between conservative and high-risk option strategies.
  63. Profiting In Bear And Bull Markets

    There are many ways to profit in both bear and bull markets. The key to success is using the tools for each market to their full advantage.
  64. How Leverage Is Used In Forex Trading

    Forex trading by retail investors has grown by leaps and bounds in recent years, thanks to the proliferation of online trading platforms and the availability of cheap credit. The use of leverage in trading is often likened to a double-edged sword, since it magnifies gains and losses.
  65. The Iron Condor

    This market-neutral strategy isn't for everyone. Read on to find out if it is for you.
  66. What Is Spread Betting?

    The temptation and perils of being over leveraged is a major pitfall of spread betting. However, the low capital outlay necessary, risk management tools available and tax benefits make spread betting a compelling opportunity for speculators.
  67. Pitfalls Of Copycat Investing

    While it may sound good in theory to attempt to mimic the investment style and profile of a successful institution, it is often much harder (if not impossible) to do so in practice.
  68. The Basics Of The Bid-Ask Spread

    The bid-ask spread is essentially a negotiation in progress. To be successful, traders must be willing to take a stand and walk away in the bid-ask process through limit orders.
  69. The Art Of Cutting Your Losses

    Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run.
  70. Master Your Trading Mindtraps

    Traders are only human; therefore, they are subject to psychological traps when they trade. Read how you can manage your emotions so that you can profit from your trading.
  71. Leverage: What It Is And How It Works

    Leverage is an investment strategy of using borrowed money to generate outsized investment returns. Before getting into greater detail on how leverage works in an investment context, it is useful to have a broad understanding of the general topic.
  72. The Basics of Forex Leveraging

    A closer look at the controversial topic of leverage in forex trading.
  73. Should You Borrow Money To Make Investments?

    It's high time investors heed the yellow caution flags waving in front of their margin accounts. Much like the NASCAR driver who pumps his brakes to avoid disaster when he sees the caution flag, it's time for us to slow down.
  74. 7 Controversial Investing Theories

    We take a closer look at the theories that attempt to explain and influence the market.
  75. The Downward Spiral Of Trading Addiction

    Trading in the financial markets is stimulating, exciting and engrossing. But one can become addicted, just like with actual casino gambling or illegal drugs. Like any severe addiction, this can cost you your job, relationships and, of course, your financial resources.
  76. Quit Your Job To Trade Stocks?

    Ready to quit your day job and become a full-time trader? These tips will help you determine your area of expertise.
  77. A Day In The Life Of A System Trader

    Systems traders divide their time between trading, developing, backtesting, optimizing and forward testing, to create viable and high-probability trading systems.
  78. Trading GDP Like A Currency Trader

    Investors that understand and utilize the U.S. GDP report have a significant advantage over those that don't.
  79. Consumer Confidence: A Killer Statistic

    The consumer confidence is key to any market economy, so investors need to learn the measures and how to analyze them.
  80. Follow The Herd In Trading The Capital Market

    If you have ever heard "the trend is your friend" and believed it, you may be a fan of herd instinct mentality. This is an environment where, just like with fashion, masses of people follow a pattern that the majority of people around them are following … sometimes for no sensible reason.
  81. Avoid These Common Investing Psychology Traps

    There are a number of very common psychological traps or errors that investors typically make. You can save a lot of money and misery by avoiding them.
  82. Arbitrage Squeezes Profit From Market Inefficiency

    This influential strategy capitalizes on the relationship between price and liquidity.
  83. What Type Of Trader Are You?

    There are different ways stock traders attempt to profit from market movements. Which of the strategies do you use?
  84. A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  85. Behavioral Bias - Cognitive Vs. Emotional Bias In Investing

    We all have biases. The key to better investing is to identify those biases and create rules to minimize their effect.
  86. Sell In May – Yay Or Nay?

    Seasonal timing in the market, best personified by the adage, “Sell in May – Go away,” has long been the subject of debate among investors. The question remains: Is there anything to it?
  87. 4 Behavioral Biases And How To Avoid Them

    Here are four common common behavioral biases for traders and how to minimize their effects on your portoflio.
  88. Trading Is Timing

    Learn how to make gains even if you don't get in at the right time.
  89. Invest Like Buffett: Building A Baby Berkshire

    Get a piece of Warren Buffett's profit by using Form 13F to coattail his picks.
  90. Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.
  91. Trading Forex Trends With MACD And Moving Averages

    Although based on short-term trading, keeping the long-term picture in mind will help investors trade with the trend.
  92. Cash: A Call Option With No Expiration Date

    Cash is generally regarded as a drag on investment returns, but sometimes it may be preferable to hold a substantial cash amount instead of investing it in other assets. This is because having cash on hand gives an investor the flexibility to acquire an asset or assets at bargain prices when the opportunity arises, such as during periods of uncertainty when cash is king.
  93. 10 Golf Tips To Help Investors Tee Off

    There are a lot of similarities between golf and investing. Find out how to keep your game out of the rough.
  94. Becoming A Chartered Market Technician

    The CMT certification involves three tough exams. Find out what you need to do in order to pass.
  95. Modern Portfolio Theory vs. Behavioral Finance

    Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions is to think of modern portfolio theory as how the financial markets would work in the ideal world, and behavioral finance as how financial markets work in the real world.
  96. Business Grads, Land Your Dream Job

    Companies are in need of strategic candidates, not walking resumes. Find out how to set yourself apart from the pack and land the business career you've always wanted.
  97. How To Adjust Your Portfolio In A Bear Or Bull Market

    While investors shouldn’t feel compelled to change their portfolios radically overnight in reaction to the market's daily moves, small adjustments in the face of a bull or bear market could be a prudent move.
  98. Exploring Non-Dollar Currencies For Forex Trading

    Learn how investments in foreign currencies can diversify your portfolio.
  99. Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  100. Guide To Embedded Options In Bonds

    Investors should be aware of embedded options that may be available in certain securities as these options may affect the value of the security.
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