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There are two main types of vertical spreads. There is the
vertical call spread and the vertical put spread. Each spread
allows you to do two things. First, you can buy it, making you
long the vertical spread. Second, you can sell it making you
short the vertical spread. Both can be employed to take
advantage of directional stock plays. When we use the term
“directional stock play,” we refer to using vertical spreads to
capitalize on anticipated stock movements either up or down.

A bull spread is used when the investor feels that a stock is
most likely to go up. As we recall, “bullish” means to have a
positive outlook on a stock’s future movement. There are two
ways to set up a bull spread. The first is with the use of
calls. In this case, a bullish investor would buy a vertical
call spread (bull call spread). This is accomplished by buying a
call with a lower strike price and selling a call with a higher
strike price.

The second way to construct a bull spread is with the use of
puts. A bullish investor could sell a vertical put spread (bull
put spread) hoping to profit from an increase in the stock’s
value. The investor would sell a put with a higher strike price
and buy a put with a lower strike price. Let’s take a look at
how the P&L chart of a Bull Spread looks below.

To recap, if you feel a stock will be increasing in value, you
may put on a bull spread by either buying a vertical call spread
(bull call spread) or selling a vertical put spread (bull put
spread)

A bear spread, however, is used when, you the investor, feels a
stock is likely to trade down. Remember, “bearish” means that
one’s outlook on the future movement of the stock is negative.
To take advantage of this expected downward movement, the
investor would put on a bear spread. This can be done in either
of two ways.

First, the investor can do it using puts. The purchase of a
vertical put spread (bear put spread) can be accomplished by
purchasing a put with a higher priced strike and selling a put
with a lower priced strike.

The second way an investor can construct a bear spread is by
using calls, specifically, by selling a vertical call spread
(bear call spread). You do this by selling a call with a lower
strike price and purchasing a call with a higher strike price.

So if you think that a stock is likely to decrease in value, you
sell a vertical call spread (bear call spread) or purchase a
vertical put spread (bear put spread). Let’s take a look at the
P&L diagram for a Bear Spread below.

Finally, there are two fundamentals that are universal to all
vertical spreads. These fundamentals are critical to
understanding the foundation of the vertical spread strategy:
(1) you can determine a vertical spread’s maximum value by
taking note of the difference between the two strikes and (2)
vertical spreads have intrinsic value.

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[tags]vertical spread,options,strategy,options education,options trading[/tags]

If you are an online article writer perhaps you have considered trading article writing for tangibles. Like what you ask? Well, recently I traded some articles for a bicycle, then I changed my order from a Mountain Bike to a Ten Speed simply by stating; Do you mind if I change my order to a Ten Speed bike instead of a Mountain Bike? Hopefully you will not mind and it might save you some money actually?

Ten speeds tend to go for less on the Internet Auctions anyway? You see if there is something you want and something someone else needs like articles, then you can choose an exchange tender and it can be anything you want.

Why you ask? Well they can simply set up a bid at eBay and find someone willing to give them the best deal and buy it online and have it shipped to you. Everyone wins and they can buy it for much less than retail. You get more bang for your buck (articles this way!). Of course you will need to set your parameters for instance;

Something decent, other than a department store bike? My parameters are simple;

• Good seat,
• Shimano shifting
• Trek low-end or comparable type bike.
• Light weight,
• Not stolen.
• Yellow or Blue in color (preference only).

Basic stuff, I am not so picky, but I know I need something that will make it the whole way you know? If you will consider writing articles and trading for what you want you will have most of those things soon. So, consider all this in 2006.

“Lance Winslow” – Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/wttbbs/

[tags]Trading Article Writing for Tangibles[/tags]

There are many free link exchange sites on the internet. Link exchange is beneficial. However, competition online is increasing. In any given industry, most of the time, the sites competing for top positions in the search engines have over 1000 links to their website. To use a free link exchange program can be very time consuming, slow and discouraging. Especially when trying to reach that 1000 mark one link at a time.

There are programs online that will provide you with hundreds or thousands of backlinks in a short period of time.

There are some things you should make note of before starting a link exchange program:

Make sure you use keywords in and around your link – You may think that your link, buried in a sea of 25 other links will never be seen by an actual visitor. But, while no one usually goes to someones link page looking for a site to visit, search engines will pick up on your keywords and sometimes rank that page with your link on it high in the search engines. This can result in direct traffic for your targeted keywords.

Site wide links do almost no good – A few years ago, having a link on every page of another website would increase your search engine rankings considerably. However, nowadays a site wide link on another website will not help you at all.

Links exchanged with relevant sites increase your ranking – Figure that the search engines are trying to determine what industry and topics your pages are related to by who is linking to you. The closer in relevance your link is, the more it helps you rank higher for those pages.

Try more than one option. Spend your time wisely by spreading out your efforts. Do a little manual link exchanging. Try a couple of automatic link exchange programs. Write good content for your website to increase natural linking.

View our recommended source for automatic link exchange
with thousands of sites, for dirt cheap.

[tags]link exchange, free, link trading[/tags]

In Part 2, of Designing a Trading System in MetaStock I covered how to code the first two of the four major components of a mechanical entry system. I had explained the coding of price and liquidity. In this article, I will cover the steps for coding the remaining two components, trend and volatility, into MetaStock. In the end, you will have the complete codes for a mechanical entry system.

Let`s begin with trend identification. Remember, `the trend is your friend` when trading. You always want to trade with the trend, not against it. Think of it this way, if you were swimming in the sea, and got yourself caught in a rip tide, is it easier to swim with the current or against it? It is the same with trading with a trend.

There are many ways to identify trends, and it`s not particularly important which method you use. You just need to use one. One of my preferred methods for identifying trending stocks is to find stocks that are trading at their current highs. You can do this by stipulating that the highest high price must have been achieved in the last `x` number of days.

Once again, the variables you use will depend on the time frame you are trading. But for this example, you want the highest high price in the last 240 days to have occurred in the last 20 days.

Using the formula reference section in the MetaStock Programming Study Guide, you can find the syntax of the highest high function, and then plug in the details. Then, using the `less than` symbol, you can specify the number of days must be less than 20. In MetaStock language that would be:

HHVBars(H,240) < 20

The final component to our entry system is the volatility measure. The aim of including this formula is to identify stocks that move enough for us to make a profit, yet aren`t so erratic that they keep you up at night. There are a few ways to measure volatility. However, my favourite is the ATR method. The ATR indicates how much a stock will move, on average, over a certain period.

For example, a one-dollar stock might move five cents on average over the last 20 days. You can divide this value by the price of the stock and you will have the average percentage movement of a stock. With these values, you can stipulate a minimum and maximum daily volatility value.

For example: You may want the ATR, divided by the average closing price, over the last 21 days, to be greater than 1.5%. Therefore, the average minimum volatility must be greater than 1.5%.

Additionally, you may want the ATR divided by the closing price, over the last 21 days, to be less than 6%. This sets the average maximum volatility at less than 6%. In MetaStock language that would be:

ATR(21)/Mov(C,21,S)*100 > 1.5 and
ATR(21)/Mov(C,21,S)*100 < 6

Putting all our code together, you see what your entry system looks like:

C>1 and
Mov(v,21,s)*C > 200000 and
HHVBars(H,240) < 20 and
ATR(21)/Mov(C,21,S)*100 > 1.5 and
ATR(21)/Mov(C,21,S)*100 < 6

You now have now a workable entry system. Not only did you construct a robust system, but it also adheres to the KISS principal (Keep It Simple Simon). This system can be cut and pasted into the Explorer within MetaStock. However, the entry is only the beginning of a successful trading system. In later parts of this series, you`ll find the rest of the components that you need to design a profitable trading system.

David Jenyns is recognized as the leading expert when it comes to MetaStock and designing profitable trading systems. His MetaStock website offers a huge free collection of trading related tips and tricks. Gain free access now.

Click Here ==> http://www.meta-formula.com/subscribe

[tags]Metastock Relative Strength Comparison (RSC) The Key Success Tool In Trading By Stock[/tags]

Employee stock options (ESOs) signify contracts between a company and its employees, which give employees the right to buy (exercise) a specific number of the company’s shares at a fixed price (the grant, strike, or exercise price) within a certain period of time (the “”exercise”" period). Both public and private companies utilize ESO schemes. Employees who purchase stock options expect to profit by exercising their options at a higher price than that at the time they were granted.

An example of a typical employee stock option plan follows: an employee is allowed the option to buy 1,000 shares of the company’s stock at the present market price of $5 (the grant price) per share. The employee can purchase the option at $5 per share; normally the exercise price (strike price) will be equal to the value when the options are granted. ESO plans permit employees to exercise their options after a certain period of time or when the stock of the company attains a certain price. If the stock’s market price increases to $20 per share, for instance, the employee is granted an opportunity to buy 1,000 shares at $5 and then sell the stock at the existing market price of $20.

Occasionally, the company revalues the grant price of the stock options, this may usually occur when its stock price has fallen below the original exercise price.

Incentive stock options (ISOs) that are qualified options or statutory options, and nonqualified stock options (NSOs) are the ESO types. The ISO plans allow employees to defer taxation until the shares bought with the option are sold. The company does not collect a tax deduction for this type of plan.

The employees in the nonqualified stock options (NSOs) should pay ordinary income tax on the difference between the grant price and the price at which they exercise the option. NSO do not meet all the requirements of the Internal Revenue Code (IRC), to be qualified as ISOs.

Stock Options provides detailed information on Stock Options, Stock Option Trading, Employee Stock Options, Stock Option Software and more. Stock Options is affiliated with Stock Broker Career.

[tags]Stock Options, Stock Option Trading, Employee Stock Options, Stock Option Software[/tags]

No one likes to think about the worst-case scenario, or to make a detailed plan to recover should it happen. It’s just one strategy for learning how to trade in a relaxed but focused way so that, should you ever face a severe financial setback, you can recover from it. Trading requires intense concentration and focus, and it’s difficult to maintain this posture when the pressure is on you to perform. Therefore, you have to do whatever you can to minimize any expected or even unexpected psychological pressure.

The most obvious way to relieve such pressure is to think in terms of probabilities and carefully manage risk. By that I mean avoid overtrading, fast markets, exceptional tick sizebe careful just ahead of reports that might drastically affect price movement. Avoid illiquid markets, avoid adding new risk when it appears a trend or swing may be nearing its end.
It’s useful to remember that you may not win on any single trade, but after a series of trades, you will have enough winners to make a profit in the long run. It’s also important to manage your risk. Determine your risk up-front and risk only a small amount of trading capital on a single trade. Doing that will ease a lot of the pressure, allowing you to be more open to see the opportunities that the market offers. Don’t break under the pressure of a potentially fatal loss. Think about the possibility, and be ready to recover from it.

These days planning for contingencies must of necessity include short-term planning. Because the markets have changed so considerably in recent years from what they were many years ago, contingency planning has to include trading simple methods and scalping-type setups. We are in an era of thousands of traders jumping in and out of markets using extremely short time frames. Such trading has introduced an incredible amount of noise into the marketplace. No longer can the industry claim that speculators are there primarily for the purpose of providing liquidity to the market. I have to wonder why it is not plainly stated that trading from a 1-minute chart is simply gambling? In what manner can it be said that jumping into the market one minute and out of the market 3 minutes later is in any way providing liquidity for the hedger, whose sole purpose is the long-term protection of his position?

Short-term noise is a contingency that must be planned for. Erratic, jerky moves caused by scalping must be planned for. This includes having your own plan for making scalping trades if those suit your personality and comfort level.

Plan for sudden drastic moves in the market caused by stop-running. Increasingly, and especially in the stock market, I am seeing more and more of the sudden and unexpected price melt-down, or equally sudden and unexpected price explosion. You have to learn how to protect yourself from such moves, and you might even learn how to profit from such moves.

Joe Ross
Trading Educators Inc

Joe Ross has been trading for more than 47 years, and is a well known Master Trader. He has survived all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits.

Joe is the creator of the Ross hook, and has set new standards for low-risk trading with his concept of “The Law of Charts.” Joe was a private trader for most of his life. In the mid 80’s he shift his focus and decided to share his knowledge. After his recovery, he founded Trading Educators in 1988 to teach aspiring traders how to make profits using his trading approach. He has written 12 major books on trading. All of them have become classics and have been translated into many different languages.

Joe holds a Bachelor of Science degree in Business Administration from the University of California at Los Angeles. He did his Masters work in Computer Sciences at the George Washington University extension in Norfolk, VA. Joe still tutors, teaches, writes, and trades regularly. Joe is still an active and integral part of Trading Educators.

[tags]trading, risks[/tags]