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Difference between Stock and Options Trading
The difference between stock and options trading is a matter of risk hedging and leverage. Otherwise there is no difference between stock and options trading of stocks. In each case traders must learn and follow both the fundamentals that drive stock prices and technical analysis of market sentiment which leads to volatility outside of what fundamentals might dictate. Both direct trading of stocks and trading of stock options can be done from trade station or, rare for these days, with a phone call to a stock broker. Beginners need to learn about stocks, how to set up a trade station, both fundamental and technical analysis of stocks, and basic trading strategies. Traders make money trading within channels, adopting a contrarian view as a trend runs its course, or by scalping small profits as stocks and stock options fluctuate throughout the day. One difference between stock and options trading is that in options trading one can pay to stake out a price position that limits risk. The other difference between stock trading and stock options trading is that in trading options one can enter and leave a position with a relatively low investment of capital and make much more money for each dollar put at risk than in directly trading stocks.