Studying the stock market’s past in order to try to predict the stock’s future is referred to as technical analysis.
Trading options are a form of security that you can invest and trade in the stock market. They are securities based on normal stocks. Purchasing an option gives you the right to buy an underlying stock at a specific price at a later date. You profit if the stock market value rises above the agreed price. If the value of the stock crashes, you have only lost your premium.
Options Trading: The information on option trading and how they are traded on exchanges.
Options: A guide on getting started with options.
Welcome to the Technical Analysis Basics Guide: Learn the option trade basics.
Technical vs. Fundamental Analysis
There are two categories used to analyze securities and make investments called technical and fundamental analysis. A fundamental analysis requires research of the market and specific stocks checking if they are undervalued or overpriced. A fundamental analyst looks at the basics of a company to figure fair value. A technical analysis predicts a stock’s price by looking at its past performance. A technical analyst cares more if the public will buy the stock and not what the stock is worth. A technical analyst goes with the moment and trend to find if it will continue to go up or fade down.
Technical Analysis: Introduction: An introduction into technical analysis
Technical Analysis vs. Fundamental Analysis: Compare a technical and fundamental analysis.
Fundamental Analysis Vs Technical Analysis: The debate over fundamental and technical analysis.
Understanding a Bar Chart
A bar chart is a basic tool of technical analysis. The financial instruments embedded in bars which are plotted as prices over a specific time period. You can spot a pattern of a stock more easily with a bar chart. A bar is four prices in a given day or time period. It is known as price bar. The price bar displays the opening price as a left horizontal line and the closing price as a right horizontal line. The high price is at the top of the bar and the low price is represented at the bottom of the bar.
Technical Analysis of Commodity Markets: Emphasis on Bar Charts: The emphasis on bar charts.
Learn to Use Currency Trading Bar Charts: Learning how to use currency trading bars.
Technical Analysis-The Bar Chart: Examine the bar chart in technical analysis.
A candlestick is a chart that displays the high, low, open and close for a security each day over a specified time. There are two basic candlesticks. A Bullish Candle is when the close is higher that open. The color of this candle is usually green or white. A Bearish Candle is when the close is lower than the open. The area in the middle shows the range of the opening and closing prices. When the block in the middle is marked in, the stock closed lower than it opened. This color is usually red or black.
Understanding Forex Trading Bullish Candlestick Charting: Information on how the Forex Trading Bullish candlestick works.
Introduction to Candlesticks: An introduction to the formation and history of candlesticks.
Online Trading Concepts: Learn the basics of the Candlestick.
Technical Analysis of Options
To be successful in your options, you must develop and depend on strategies. Keep in mind of the amount of time it takes for a move, as options lose value over time. Understand the statistics related to the options. Know the percentage of the option along the size of an average option. Avoid being too optimistic. View your options in a conservative way by using strategies with expiration dates.
An Option Greek measures the options sensitivity to various risk components to the price of an option.
Delta measures the rate change in an option price. An estimation of the change in Delta for a one point move in a stock is called a Gamma. The measure for time decay of an option is called Theta. Measuring the standard deviation of the past 30 days of closing prices in the underlying security is called volatility. A Rho Greek measures an option price due to interests rate shifts.
It is important to understand the terms when it comes to technical analysis. However, you do not have to know how they work. Different software programs can help you learn the terms. Learning from hands on experience is one the best ways to learn from trading.