Loredana Sargu's Articles in Articles - articles.webworker.com

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Loredana Sargu's Articles in Articles

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"Volatility Watch" for Better Trades There are rules of thumb in every field of interest. I am referring to certain generalizations and assumptions that people make and observe. In the markets there are many but one that catches my attention lately is the correlation between the directional movement of the market and the volatility that is expressed in option pricing. The rule of thumb is; when markets go up the volatility goes down. Recently there is a glaring inconstancy to this assumption and it needs to be noted. Target Practice for Better Trades I often use analogies to teach principles and I have often said that you can’t throw a pile of lumber off a cliff and have it land in the shape of a house. Stocks, indices and commodities charts can look random and erratic but there is usually a pattern hidden in there. From the right perspective those random and erratic movements can suddenly take on powerfully precise and rhythmic symmetry. "Those Darn Market Makers" and Better Trades I just finished a training session on the internet and I answered a question that I have answered 100 times before or more. It got me a bit worked up because there is far too much mythology out there about the market and how it works and who does what to whom. I am going to attack one of the straw men of trading myths. Option Pricing with BetterTrades Option pricing is a mystery to most traders. They struggle to comprehend terms like implied and historical volatility or intrinsic and time value, or the "Greeks" (Delta, vega, theta, gamma, rho…). These terms are intimidating and my experience suggests that at least half the folks you hear talking about them do not really understand very much about them. It is important to at least be intellectually honest about it and know what you don't know. It is also a good idea to debunk your vocabulary and get what you do know (or think you know) right. And because it is easy to get a head ache from trying to read and comprehend the myriad of equations and models generated from minds of multi-degreed scholars speaking a language only they seem to understand, it is comforting to know you do not have to learn a whole lot about the technical math soup. It is however, mandatory that you gain some working skills in how to recognize and flow with the option prices or you will get whipsawed and shredded by them. Portfolio Sabotage and Better Tardes I am writing this as I am sitting here at the airport in NYC, after an incredible private tour of GROUND ZERO, from someone who experienced it first hand. It is just unbelievable to see what these people have been through and how much it is still effecting them today. It sure makes me grateful for my many blessings and how every day is such an incredible gift to never take for granted. Getting Back What Works for Better Trades In my last newsletter I began my discussion relating to the secret difference between profitable traders and non-profitable traders. I stated that people who consistently win the stock market battle are those individuals who remain focused on "the basics." I promised to continue the discussion in this newsletter. I ended the last article with a "cliff hanger" ending, where I promised to talk about charting patterns, entrances and exits, and more. Stay The Course in BetterTrades Today, most of us lead pretty hectic lives. We have four children in college at the present, so if you're not familiar with 'hectic', you are cordially invited to visit the Eldridge household for a while! While we're all being pulled here and tugged there, prudence dictates that someone in our household remain focused enough on the "big picture' to be able to direct the rest of us along our paths. I'm sure we all have similar situations in each of our homes. We can use this to draw an interesting parallel to our trading. Every Day Success for Better Trades There has never been anything I've done which hasn't taught me something. Often these 'lessons' are simply reminders of mostly insignificant 'truisms' of life. Occasionally they can call back into focus really useful principles we might have 'packed away' for a season. One of these was vividly placed before me in a trade last week. Turning Point to Better Trades Recently in a Denver LEAPS class, I was teaching some tips on drawing support and resistance and how to read some basic candlesticks patterns to fine tune an entry into a trade. I was explaining how I get great entries by using the prior days' low (for a down trade) and the prior days' high (for an up trade) to confirm the stock direction.

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