FAQs: About our System

Description: Trading System, trading, options trading system, signals, trading strategy

With our FAQ section, we've provided more detail to answer some common questions about our options trading system. We would highly suggest that you review our questions and answers here before you email our support department. If you still have questions after reviewing this section please send us an email.

• How easy it is to use your trading system?
• Where can I see examples of your signals?
• Do you send email alerts? When do you send them?
• What trading strategy (money allocation strategy) could be used with your system?
• How much is required to trade your system?
• How often does your system generate trading signals?
• How long does your position stay opened?
• Does your system have stop-loss?
• What options are used in your trading system?
• Where can I see an example of signals generated by your system?

• How easy it is to use your trading system?

  Our system is very simple and easy to use. When the system generates "Long" signal it selects closest in the money call options which expire in 2-3 months and sends email alert. At the same time a signal is posted in the members' area. When our system generates "Short" signal it selects closest in the money put options with 2-3 month expiration and sends email alert with corresponding update in the members' area of our website. When signal is generated our trading system states what options to buy (symbol, type, strike and expiration) at what price to buy and at what price to sell.
  (more about it in Simple Trading System)

• Where can I see examples of your signals?

  Examples of our signals as well as examples of our email alerts could be found on our "Trading Signals Example" page.

• Do you send email alerts? When do you send them?

  We send email alert as soon as a signal is generated. In order to receive email alerts, after signup, you have to log into the members' area and register your email address you would like our email alerts to be sent to.

  There are five types of signals that could be issued by our trading system:

  1. When a new signal is generated;
  2. When a trade is opened;
  3. When the system recommends to change exit price;
  4. When the system recommends to change stop-loss;
  5. When the trade is closed.

• What trading strategy (money allocation strategy) could be used with your system?

  As a rule, we do not recommend investing an entire portfolio in options. We are especially against investing all money a trader has in a single options trade. It could be a smart choice to have not more than 10% of investments in options. At the same time, it could be a good trading strategy, from time to time, to withdraw profit from the options portfolio in order to protect earned profit from losses.
  
  We recommend using only two money allocation strategies in options trading: a) investing fixed amount, and b) investing fixed percentage ( for more information, see Money Allocation Trading Strategies). We know that the trading strategy of reinvesting the principle and profit in order to achieve a compound effect (as it often done in stock trading) is financial suicide in options trading.

• How much is required to trade your system?

  As a rule, the minimum amount required to use any trading system is the amount that may at least cover the expenses connected with trading, which include a brokerage commissions and a subscription fee.
  
  Usually, we recommend calculating the minimum amount required to try the system before using it. The minimum amount calculation could be based on the historical performance of the options trading system. From the history, you need to find two numbers: 1) average number of trades per month, and 2) average monthly system's return.
  
  For instance: In order to buy and sell options, you have to make two transactions and pay $30 commissions (or less, depending on the broker). If a trading system generates 3 signals a month, and the monthly subscription fee is $50, then the system's average monthly expenses are 3 x $30 + $50 = $150. Now, if you intend to invest $5,000 into this options trading system and from the history you see that this system may deliver 10% ($500) profit per month in average, then you may assume that you will put 7% ($350) per month into your pocket.

• How often does your system generate trading signals?

  Depending on the market volatility our system may generate from 1 to 5 signals per month. In high volatile market our system may stay longer in cash by waiting for more conservative and stronger signals. At the same time in less volatile market, when the trend is more clear and options trading is considered less risky, our system could generate more options signals.

• How long does your position stay opened?

  Depending on the current market condition a system could have opened position from several hours to several day. The less time system stays in the position the more conservative it is. However, in less volatile markets, when options do not lose their value as fast as in volatile markets, our system may have position opened up to several weeks.

• Does your system have stop-loss?

  Yes, we have stop-loss parameter, and stop loss could be issued at the same time when a signal is generated. On the other hand a signal could be generated without stop-loss which could be set later when there is a need in cutting losses.

• What options are used in your trading system?

  Our options trading system is set to generate signals for most liquid options: QQQQ and SPY options. Liquidity of these options is the main reason we chose them. The second important reason to consider working with QQQQ and SPY options is that these options are tied to the NASDAQ 100 and S&P 500 indexes, furthermore, index technical analysis could be used to generate signals. As a rule technical analysis applied to the indexes generates better results than the same analysis would be applied to individual stocks simply because indexes are more stable and they reflect the sentiment of the industry (market) and do not depend on a volatility of a single company.

• Where can I see an example of signals generated by your system?

  There are five types of signals that could be issued by our trading system:

  1. When a new signal is generated;
  2. When a trade is opened;
  3. When the system recommends to change exit price;
  4. When the system recommends to change stop-loss;
  5. When the trade is closed.

   

 

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