www.CandleStickForums.com Trading Leverage There are several ways to increase return on investment in stock trading. One is trading leverage. Trading leverage is a means by which traders maintain their profits in trading stocks while investing less of their own money in the process. Two common ways of gaining trading leverage are using a margin account and buying stock options. When one begins stock trading he has a fixed amount of capital to invest in the endeavor. What he will do is buy stock and sell stock with an eye on the fundamentals and skillful use of Candlestick analysis in order to gain a profit. This is basic to the process. In using trading leverage the first aspects of trading, fundamental and technical analysis, will be the same whether he uses trading leverage or not. In order to profit in the stock market a trader needs to understand the ever changing fundamentals of the stocks which he trades. This is the fundamental analysis that looks critically at a stock’s margin or safety and at intrinsic stock value. With the fundamentals as a baseline successful traders use technical analysis with Candlestick stock charts to predict where stock prices will go next. With studious attention to fundamental and technical stock trading with the skillful use of Candlestick trading tactics the trader can profit from buying stock and selling stock. Then, how can the trader use trading leverage to multiply his profits?

1. By www.CandleStickForums.com

2. There are several ways to increase
return on investment in stock
trading.

3. One is trading leverage. Trading
leverage is a means by which
traders maintain their profits in
trading stocks while investing less
of their own money in the process.

4. Two common ways of gaining
trading leverage are using a
margin account and buying stock
options.

5. When one begins stock trading he
has a fixed amount of capital to
invest in the endeavor.

6. What he will do is buy stock and
sell stock with an eye on the
fundamentals and skillful use of
Candlestick analysis in order to
gain a profit.

7. This is basic to the process. In
using trading leverage the first
aspects of trading, fundamental
and technical analysis, will be the
same whether he uses trading
leverage or not.

8. In order to profit in the stock
market a trader needs to
understand the ever changing
fundamentals of the stocks which
he trades.

9. This is the fundamental analysis
that looks critically at a stock’s
margin or safety and at intrinsic
stock value.

10. With the fundamentals as a
baseline successful traders use
technical analysis with Candlestick
stock charts to predict where
stock prices will go next.

11. With studious attention to
fundamental and technical stock
trading with the skillful use of
Candlestick trading tactics the
trader can profit from buying
stock and selling stock.

12. Then, how can the trader use
trading leverage to multiply his
profits?

13. Trading options, specifically
buying puts and buying calls on
stocks, provides the trader with
two benefits.

14. First of all the trader only needs to
buy an option, and not the stock,
in order to profit in buying
options.

15. Using Candlestick patterns as a
guide the trader can anticipate
stock price movement and buy
options accordingly.

16. The trading leverage in buying an
inexpensive but well researched
stock option is that the trading
leverage obtained with this sort of
stock trading can result in gaining
a substantial return on
investment.

17. The amount gained would be no
more than if the trader buys the
stock or sells short but the
amount invested will be
substantially less.

18. The other advantage of buying
options is that the trader is under
no obligation to buy or sell the
stock in question should
unforeseen events cause the stock
price move contrary to
expectations.

19. Trading with a margin account is
another alternative in gaining
trading leverage.

20. In this case the trader borrows
money from the broker in order to
allow him to trade in larger
amounts than he otherwise could
with his available capital.

21. The differences between trading
options and using a margin
account are that the trader can
magnify his losses as well as his
gains by trading in amount larger
than his own capital and the
trader pays interest on monies
borrowed.

22. On the other hand he does not
pay a premium for an options
contract.

23. Although the wise trader will
always follow his Candlestick
pattern formations in buying and
selling stocks this is doubly
important when trading in a
margin account because of the
downside risk of a losing trade
with magnified losses.