The Pros and Cons of Penny Stock Trading
Trading penny stocks can be quick and easy for experienced investors, but those who are new to the game may want to pick their penny stocks list carefully. Investing in penny shares has a lot of different pros and cons. Risk and reward go hand in hand, but no more so than the world of the volatile penny stock market. When choosing which stocks to go with, keep these pros and cons in mind so that you can make the right investment call.
Free Stock Picks: A Proper PerspectiveRemember the good old days of investing? Days when you would call your stockbroker, ask his advice and then invest accordingly? Those days are long gone thanks to the Internet and self-directed investing apps.
Stock Market Investing Is Not TradingInvesting is not the same as Trading. When you look for stock market education and training for beginners, make sure they are teaching you investing and not trading. There is a huge difference between the two. Investing is long-term owning of stocks for retirement. Trading is short-term holding of stock.
Applying Strategies to the Stock MarketYet every strategy, beginner or advanced, can be applied to the stock market as well. Technical analysis is the same no matter the market. Unfortunately, many stock investors look at futures and forex trading and assume that there is some magical force working behind the scenes that makes trading more difficult than stock investing.
Stocks and Single Stock FuturesStocks represent ownership in a corporation. The history of stock ownership has been dated as far back as ancient Mesopotamia. Today, the trading of shares in corporations occurs in various parts around the world.
CFDs and Stock Options – Tools to Get Optimum ResultsCFDs developed in the 1990s in London, they are unique from single stock futures and stock options. They are an over-the-counter form of stock derivatives. CFDs have no set expiration date, unlike stock options and single stock futures.
Limitations of Selling OptionsOption selling should be a straightforward endeavor. See an option you want to sell, sell it, wait until expiration, and collect the premium. You would think that it was as easy as pie, but for some reason it isn’t.
Two Advanced Covered Option StrategiesWe use a protective option to protect the cash, futures, or stock position. The protective option is put in place to protect against any sudden drops or jumps, but with a little more imagination an option can be sold on either type of position to generate income to add to the overall profit of the position. Selling an Option against a Synthetic Option – This strategy is slightly advanced because there are three moving parts, but it is another way to initiate a covered option position, and thus it’s important to…
Straddle – Strategy to Know the Rhythm of the MarketTechnically, a straddle is considered the purchase or sale of an equal number of puts and calls, with the same strike price and expiration dates. Realistically speaking, a straddle is a way to give yourself a choice. The most difficult part of trading is choosing whether you are going to be long or short; the second most difficult part is giving up that choice once it has been made.
Straddle, Strangle, and ExecutionBeing long and short the market at the same time is practically a revolutionary concept for retail traders, while professional traders have been doing it since the futures market’s inception. Somehow the concept has either been lost or is considered a form of trading blasphemy when it is suggested that retail traders incorporate this strategy into their trading. Retail traders often confuse being long and short in the market simultaneously with being delta neutral.
