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Directional Trades with Stocks

What is a directional trade In general, a directional trade is a trade in which you are betting on a particular direction (up or down) in the movement of price of a security. If you are right and the security goes in the direction you chose, you make a profit. If it goes the other … Read more


Directional Trades with Options

Directional and non-directional option trades Maybe you have already heard about an option trade being directional or non-directional. What does it mean? In short, this distinction is about how much the trade is exposed to movement in price of the underlying security. This article explains directional trades. Here you can find the second part concerning … Read more


Moving Averages: Choosing the Right Period Length

Topics: Trading Strategies > Technical Analysis      

There is no perfect moving average Like there is no “right” way to do many things in finance and trading, there is also no “right” moving average period. Advantages of faster moving averages Most people who like trading are naturally attracted to tools that seem to work faster and show more action. That’s why we … Read more


Volatility of Security Prices

Topics: Portfolio Management > Statistics      

What volatility means Volatility is a measure of how much something tends to change. Unlike the usual way people look at prices of securities and their changes – up or down, the volatility point of view does not care about the direction so much. In fact it does not distinguish between up and down. When … Read more


Trend Is Your Friend. But Sometimes It’s Enemy.

Trend is your friend, so they say If you have looked for some trading advice in books or on the internet, you have probably come across the phrase “Trend is your friend”. This is one of the most widely accepted (and most widely reproduced) pieces of trading wisdom. Its core idea is that (in the … Read more


Long Straddle: How Your P/L Behaves

How to create a long straddle A straddle is the simplest non-directional trade you can make with options. A straddle is a combination of a call and a put option with the same underlying asset, same expiration date, and most importantly, same strike price. In short, all the basic characteristics of both options you buy … Read more