Stock and Options Trading

Guides and Strategies

Category: Trading

Stock Index Trading and What It Means

To understand what stock index trading is, we first have to have a brief understanding of what a stock and a stock index is. A Stock is basically the capital or essentially the basic setup money invested in setting up a business or a company.

A stock index or stock market index is a method by which a particular section of the stock market is measured, as opposed to a price of an asset such as Gold. Trading is basically the transaction of shares from one buyer to another or among multiple buyers in the stock market. In this case it needs to be explained that shares are nothing but the original stock which is divided into manageable chunks of capital.

Stock index trading is basically the trading of shares or stocks of different companies in the stock market. Stock indices are of two major types i.e. international stock market indices like S&P which cater to the stock trading of companies regardless of which nation it is domiciled in.
stock trading strategy

The other type of stock index is the national index which is basically the stock index pertaining to an individual nation. This type of index keeps track of all companies based in that particular nation with respect to stock indices.

Trading in stocks take many forms, the most popular of which is day trading, the other types are automated trading, algorithmic trading, delivery trading etc. Without going into the intricacies of each, we will attempt to glimpse at the basic functioning of the most common type of trading .i.e. day trading.

Day trading is basically trading in stocks and shares during the day time functioning hours of the stock exchange, all trading in this method stops along with the closing time of the respective stock market daily. Usually day trading has remained the forte of financial experts and investment gurus, but of late with the advent of online trading, even users at home are at liberty to indulge in day trading with a reasonable amount of success.

Options Trading For Gold and Currencies

If you’ve chosen correctly an options trading strategy, it make highly profitable. Currencies and commodities can be assets. This is one way to access options of many different assets. The other way is to spot trade these markets.

Many assets like currencies, and commodities such as gold and copper are closely related. With a sharp instinct, a trader using an options trading strategy can see correlations between these currencies and commodities

Speaking about correlations between currencies and commodities, South Africa is one of example. This country is the world’s largest exporter of gold. In the international market gold prices can be correlated with currency. Like currency Rand with gold prices.

goldSo, when you find the spread between gold prices and RAND to be unusually wide and out of its historical relationship, you can simultaneously trade a gold call and a rand put in case the spread between RAND and gold prices is negative or the other way around.

Maybe you can see similarly , the spread between Australian Dollar and Gold prices widens and becomes out of sync with its historical relationship. This is one of many examples of options trading strategies. When You look carefully, the other options trading are the spread between the Australian Dollar (AUD) and Reuters Commodity Index widens.

Reuters Commodity Index is a useful index that shows general commodity prices. What you are doing is betting on the fact that the spread is wider than the historical levels and is expected to narrow down to the normal.

You can also take options in currency markets and try to profit from a price at a future level. If you notice the dollar has somewhat overshot, maybe due to a data release in the USA, then you could look to use options to trade at lower risk than taking an actual position in the spot market. However as with all investments, due care should be taken when using options. Although the risk can be limited, it is still a way of losing money, as well as making money. Make sure you understand how it all works first.

Why You Should Look At Copper ETFs

If you have been looking for a new way to make some money on the stock market, it may be time to explore some options in exchange traded funds. Better known as ETFs, these investments represent tangible items, such as energy or precious metals. One such option is a copper ETF. Copper has become a valuable resource for things such as electrical wires and is very popular for making money. Even though the value of it is low compared to previous years, it’s still may be a good investment and financial plan to look into copper ETFs because as the economy grows and gains more strength, so will the value. That makes now the right time even more so.

As the economy gains strength once again, more structures will be built and that will stimulate the value of everything involved in these projects. Wires are needed to run electricity throughout, and that requires a good deal of copper. If you have invested in a copper ETF, you will make money when this sort of growth occurs. For instance, many of the world’s nations depend on the health of China’s economy. China has been able to preserve their economy more so than others and they are predicted to begin growing and expanding first. Thus, the copper value around the world will see the effects of this growth.

One of the best things about investing in a copper ETF is that the value doesn’t fluctuate as much as other metals, such as gold. Gold values depend on politics so much that it can be a roller coaster ride. Another aspect of copper is that it can be used in the liquid form, and that makes it even more attractive to invest in. ETFs are also tax efficient, and it’s easy to make money without having to pay out a chunk of taxes at the end of the year.

What Is The QQQ Etf?

The QQQ ETF tracks 100 of the largest domestic and non financial international companies. Ranking is based on market capitalization in the Nasdaq stock market. By definition it is a broad index fund that excludes financial based companies.

While the QQQ is heavily weighted in technology stocks, it is not considered to be a tech fund. It has always been associated with technology stocks and the technology sector. Many technology companies will list their stocks on the Nasdaq market, particularly the largest more successful companies in the world. Since QQQ is focused on the Nasdaq, it is not surprising that it is overweight to some degree in technology related equities.

Diversity has always been important to many investors. While QQQ avoids financials, it has diversified into Biotechs and some consumer stocks such as Starbucks Corp. (SBUX). With a good mix of consumer, biotech and technology investments, QQQ may be destined to outperform over the long term. This investment strategy has served it well since 2013. QQQ has outperformed the Dow Jones Industrial average over the past three years.

The future appears to be bright for QQQ. The world is increasingly dependent on technology and this trend appears to be accelerating. Biotech is also expected to do well as aging baby boomer appetites for life extending and quality of life demands increase. Drug makers and biotechs are well positioned to meet these demands. Technology companies are also developing solutions to meet the needs of aging baby boomers in addition to the worlds increased demand for technology solutions.

About ETFs

An ETF (Exchange-Traded Fund) is a type of mutual fund which is traded as a regular stock on the stock exchange.

Index tracking exchange traded funds (commonly called stocks ETFs) are one of the most popular and most traded exchange traded funds. Among them you may find QQQQ (Qubes), SPY (Spider), DIA (Diamonds), XLF, IWM and others.

Index ETFs gives investors an opportunity to invest into a basket of stocks with a purchase of a single ETF. In this way it cost effective type of investment into indexes and market sectors.

There are three main points why exchange traded funds attract so many investors:

Convenience: Investing in ETFs are as easy as investing in stocks. You just need to buy one as you would buy any regular stock.
Low fees. Like index fund, ETFs have low fees.
Tax efficient. There are no unexpected capital gains/losses when you purchase an ETF. Sell when tax-wise it makes the most sense to you.

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