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 way, [...]
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 non-directional [...]
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 tend to play [...]
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 you hear [...]
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 long [...]
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 are [...]
