This article discusses how to make money from option trading, and also avoid the traps of many stock market tips. You will never be able to take advantage of stock recommendations because prices are already too high. Most likely, you’ll make a mistake. If you want to learn a very powerful trading strategy that brings a lot of profit, you should know about unusual option activity scanner
A successful investor will have to possess the qualities of a good physician who can investigate carefully and understand the pulsebeat of an asset. It is this that options investing is. Acting before something big happens and preventing it is what options investing is all about. Unluckily, investors often scramble while the big events unfold. One of the most common things I hear from my clients is: “It’s like the market has conspired against me.”
Take a look at what usually happens to investors. Let’s say that it has happened.
NewBee’s name has caught your attention as a potential investment for a long time. Although you follow trends as an investor, your hesitation to take action is due to the lack of adequate funding for this new venture and its weak management. A merger is the only way to save the business.
A newspaper announces that NewBee has decided to merge with BigBee. When you get to your trading account, the NewBee share price has jumped by 80 percent on this news. NewBee shares have soared by 80% in value thanks to the announcement of a merger. Once your buy order has been filled, the 85% premium you paid will be fulfilled. But you are then shocked to see how quickly that stock fell in price. Investors who bought the stock yesterday made a 60% return, but you lost 13.5%.
The “emotional tendency buying” that just occurred is exactly what we mean. It is one of the most common reasons why investors lose cash. It’s important to remember that the news about a business is often not announced until after it has happened. It is a good rule to not buy on any news, no matter how positive. Good news, as absurd as it might sound, is usually accompanied by a decrease in the market price. This concept is best understood by taking a step away.