Make Money Forex Commodities Options

Hmmm and you can lose your shirt (and pants) too!

As with all good things in lfe that you want to be effective at

you have to take your time and be very very careful or you can lose your shirt (or more)

Read about it, get starter courses and when you feel ready get an account, a mini type that you can dummy trade on and do dummy trades for as long as it takes to get comfortable and confident.

A word of warning here, with dummy trades it is easy to be unemotional as real money is not involved. Once the real thing gets involved it is much easier to fall victim to greed and doubt i.e., push a trade to far in the hope of squeezing all the profit out or follow it down in the hope it will reverse.

Doubt, similar to greed but indecision on when to get out or even into a trade.

So dummy trade until the mechanics are second nature and then trey the smallest trades possible and see how you react to events to assess if you have the mental set up to do it. If you don't (and that's not a bad reflection on you as most people do not) then I'd advise trying equity spreads which can be less vicious or even just good old real shares in a trade on the dips or cycles way.

For a courese, check out http://www.forex-master-trader.info/ which offers a free forex basics course as well as a paid product.

Hope this helps and good luck making money :-)

CALLs

A 'call' confers on the (option) contract holder the right to buy an asset at a stated price on or before a specified expiration date. A right to buy, not an obligation. The call owner always has the option to let his option expire. (Of course, he then loses the initial money invested in buying the contract.)

Call buyers are betting the underlying asset - the stock, bond, commodity, etc - will increase in price before the expiration date. And, not only rise, but rise enough to make a profit.

How much is enough?

The price must rise enough to cover the difference between the market price and the strike price (the price at which the stock, say, must be bought). And, since the option itself has a cost, the price has to rise enough to cover that additional amount. That cost is called 'the premium'.

The cost (the premium) of an option - whether call or put - is determined by several factors, including the price of the underlying asset, the strike price, the time remaining on the option, and others.

(The time remaining is particularly important. Simple common sense suggests that if you have 90 days to exercise an option, your risk is lower than if you have only one day. In 90 days the price may well rise the several points needed to generate a profit. With only one day remaining, the odds are lower.)

Suppose it's April 1, for example, and Microsoft (MSFT) has a market price of $27. Call options for June 30 are selling for $3 with a strike price of $30. You buy one contract for 100 shares.

So, if you held until expiration you either lose $300 ($3 x 100, the initial price of the contract not including commission), or buy the underlying stock at $30. If the current market price were $35 you've made $200. ($35 - ($30+$3) = $2 per share x 100 shares, ignoring commissions.)

When the market price of a share is above the strike price, the option holder is 'in the money'. If the market price is lower, he's 'out of the money'.

PUTs

A 'put', by contrast, gives the option buyer the right to sell an asset at a certain price by a stated date. The right, not the obligation.

Puts are similar to 'shorting stock', in this sense. Put buyers are betting the stock price will fall before the option expires.

In this case the market price must fall below the strike price in order to garner a profit from exercising the option. (Ignoring the cost of the put, for simplicity.) Under those circumstances, the option holder is 'in the money'.

For example, take the same situation as above but let the option be a put. If the market price falls to, say $25, your profit would be:

First, $3 x 100 = $300 = Cost of put, excluding commissions.

Then, buy 100 shares at $25 per share = $2,500 to repay broker 'loan' (since shorting stock involves borrowing shares you don't own, then repaying later).

Finally, sell 100 shares at Strike price = $30, 100 x $30 = $3,000

Therefore, your profit = ($3000 - $2500) - ($300) = $200.

This applies to forex specifiucally and in a general sense to all investment trading genres -

A signal is some sort of indicator of change - that a price movement is likely one way or the other.

Signals can also refer to tips or recommendations given by services or software that specialize in such things. 'Buy euros now at 1.1901'. Those signals are delivered in any number of ways, by email, SMS text message to a cell phone, IM message and so on. Some are no more than flashing text and/or icons on trading software. The software contains in-built algorithms that use the methods of technical analysis, combines it with current market data and generates a signal.

An example of a technical signal, for example - the MACD (Moving Average Convergence/Divergence). Without going into details here, it uses the moving average - the change in an average price over time. A signal can be generated when the value of MACD crosses above (or below) a certain threshold. Buy when it moves above the line, sell when it falls below.

There are many types of signal indicator and as with so many investment subjects signals - or technical analysis as the overall subject is generally called - has it's devotees and knockers.

My opinion is that in forex signals can be very useful once you're clued up on them and what they mean, especially in a fast moving trade situation - which forex almost always is.

As with any trading tool, it has to be used intelligently in order to avoid disasters. Entirely automating your buys and sells can amount to automatically losing money. Using a signal service can make your life easier, but never abandon your investments entirely to an automated service.

Hope this helps and good luck making money :-)