Preserve Opportunity Both Ways with a Long Straddle


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Preserve Opportunity Both Ways with a Long Straddle

There are a number of potentially profitable strategies for trading Forex online. The strategies that one uses are usually based on his or her experience and skills as well as the market at hand. Traders should be knowledgeable as to the fundamentals that drive the currency pair or pairs that they trade. They should be skilled in the technical analysis of Forex pairs. The particular strategy will usually follow once a skillful trader assesses the market.

Following Trends

What is going up tends to continue going up for a reasonable period of time. What is going down tends to continue in a downward course for a period of time. This is the gist of trend trading of Forex pairs, the first of our strategies for trading Forex online. To the extent that a trend continues for day, weeks, or even months, a trader can make small but steady profits in trend trading. In general, a trader uses this approach when he believes that the fundamentals support a continued upward or downward trend. He or she will typically wait for a market pull back and buy, doing this repeatedly, until the trend appears to be exhausted.
Following and Reacting to the News
To the extent that a trader can predict changes in fundamentals he can trade foreign currencies very profitably. To the extent that he is skilled at technical analysis of major Forex pairs and minor currencies he can profit from the short term market inefficiency that is the result of the Forex news. This is the more common way to make a profit from the Forex news as price over shoot both up and down before settling into a new market consensus.

Contrarian Trading

A contrarian in Forex trading firmly believes that all trends will stop and that the market always over reacts to the news. He or she knows from experience that many other traders jump on the band wagon, so to speak, of a trading situation. Because late comers want to make profits too they tend to overstay their welcome in the market and drive prices too high or too low. The contrarian Forex trader typically engages in profitable currency trading at the end of rallies or market slumps when the market has overshot the fundamentals. His strategies for trading Forex online are steeped in fundamentals and a suspicious view of the market.

Scalping Forex Profits

One of the common strategies for trading Forex online is scalping. The trader sits at his trade station, uses technical indicators to predict very short term market moves, and enters and exits trades without waiting for great profits. This can be tedious work for some but is quite profitable in the hands of a skilled Forex trader.

Staying in the Channel

Channel trading in Forex is similar to contrarian trading.

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Preserve Opportunity Both Ways with a Long Straddle

  1. 1. By www.Options-Trading-
  2. 2.  Options trading involves the purchase or sale of puts and calls on stocks, commodity futures, or currency pairs. a-long-straddle/
  3. 3.  Professional options traders commonly use any of a number of basic options strategies. a-long-straddle/
  4. 4.  The point of combining puts and calls, buying and selling is to hedge risk, increase the likelihood of profits, and leverage trading capital. a-long-straddle/
  5. 5.  In a volatile market a common tactic is to preserve opportunity both ways with a long straddle options strategy. a-long-straddle/
  6. 6.  Profit in trading stocks, commodities, and currencies, commonly occurs in volatile markets. a-long-straddle/
  7. 7.  Traders use their knowledge of fundamental factors and their skill in technical trading to predict price changes. with-a-long-straddle/
  8. 8.  However, in really volatile markets a trader may believe that a stock is virtually certain to either rise or fall but he or she is not certain which way it will go. a-long-straddle/
  9. 9.  He or she will preserve opportunity both ways with a long straddle. a-long-straddle/
  10. 10.  In using a long straddle a trader buys both a call and a put on the same stock with the same expiration date. a-long-straddle/
  11. 11.  The worst case scenario is that the stock price does not budge and the trader is out the cost of two options contracts. a-long-straddle/
  12. 12.  This assumes, of course, that he or she does not follow the trade and exit one or both positions as market conditions warrant. a-long-straddle/
  13. 13.  If the stock price goes up the trader loses the cost of the put contract and if the stock price falls the trader loses the price of the call contract, a-long-straddle/
  14. 14.  again assuming that he or she holds the contract to expiration or until the contract is absolutely out of the money. a-long-straddle/
  15. 15.  In case of a large market move in either direction the trader gains substantial profits on either the call or the put contract. a-long-straddle/
  16. 16.  There are many options trading strategies. a-long-straddle/
  17. 17.  To preserve opportunity both ways with a long straddle is a basic and often timely trading tactic. a-long-straddle/
  18. 18.  When choosing to preserve opportunity both ways with a long straddle there are now two options contracts to watch. a-long-straddle/
  19. 19.  Most commonly a trader does not wait until expiration when a trade goes well. a-long-straddle/
  20. 20.  He or she may execute the options contract and in the case of a put sell the stock in question or in the case of a call buy the stock in question. a-long-straddle/
  21. 21.  However, it is more common for options traders to exit the trade by executing the opposite trade and simply taking the cash. a-long-straddle/
  22. 22.  When the trader engages in a long straddle he or she is not sure which direction prices will head. a-long-straddle/
  23. 23.  What he or she is sure of is that prices will be volatile and more likely than not the price of the stock will change and do so substantially. a-long-straddle/
  24. 24.  When fundamentals and technical factors become clearer the stock price may begin to move. a-long-straddle/
  25. 25.  At that point the trader can exit the weaker of his two positions before the contract becomes out of the money, i.e. worthless. a-long-straddle/
  26. 26.  Once the contract is worthless, however, there is no need to exit the contract. a-long-straddle/
  27. 27.  It will simply expire worthless and, if things change, it could become valuable again! In the end the use of a long straddle double the chance of a profitable option trade. a-long-straddle/
  28. 28.  For more insights and useful information about options and options trading, visit a-long-straddle/