Rock Star Trading

Become A Successful Trader

How do I become a successful trader? This year has been a time that I stepped back from the market and have taken time to educate myself more about how the market flows. I have watched it technically and then how news wrecks havoc on the charts and then how the market falls back into its’ normal flow.

I have learned that fear and greed really do play a large role in trading the stock market and that if you allow either of those to sit at your trading desk with you, your results will suffer. For me, fear has kept me out of many trades that I should have entered. I saw the setups, I knew where the entry was, but I was to scared to pull the trigger. If I entered the trade at all it was usually too late and then I just prayed to get back to even to i could get out. Sound familiar? I think every trader goes through this stage and to become a successful trader requires that you control fear and greed.

If you want to become a successful trader, you must continually educate yourself. I am not talking about spending thousands to get some guys “perfect system“. I mean learning how to evaluate a stock and a chart and see how they work together and sometimes how they do not.

You will also see that you trader better once you have developed a trading plan that works for you and one that you are confident with. Once confidence is established, fear is pushed aside. Continually refine your plan and know that it is ok to change it if market situations change. Focus on your plan and learn that you will have losses. Choose your method and be consistent in applying it and you will become a successful trader.

Tags: day trading, day trading psychology, featured, stocks, trading, video

Four Criteria For Picking the Best Stocks For Covered Call Writing

By Brad Castro

Covered call writing is a popular option strategy that many individual traders and investors use to generate income. It’s popular for two reasons: it’s an easy strategy to understand and trade, and it can be set up relatively conservatively.

For those unfamiliar with the covered call writing strategy, it works like this: for every 100 shares of an optionable stock that you own (each option contract represents 100 shares of the underlying stock, although not every stock trades options) you can sell someone else the right (but not the obligation) to buy those shares from you at a certain price (strike price) by a certain date (expiration date). The amount you receive for writing the call is called premium, and it’s immediately added to your brokerage cash balance as soon as the trade is processed.

If the stock closes above the strike price at expiration, you will be obligated to sell your shares at the agreed upon price. If not, the call option expires worthless, you retain ownership of your stock, and you are free to repeat the process.

Although covered call writing is a fairly straightforward option income strategy, that doesn’t mean it’s easy to consistently make great returns. The strategy has two significant risks:

• When the underlying stock makes a large move down, the premium income you receive acts as a limited buffer only – it will protect you to a certain extent but not if the stock really crashes
• When the underlying stock makes a big move up, you’ll miss out on any capital gains above your strike price (the price at which you agreed to sell your shares)

That’s why proper trade selection is so crucial to successful covered call writing. Arbitrarily choosing stocks on which to write covered calls, or worse, choosing stocks primarily because they have high levels of premium (the higher the premium available, the greater the expected volatility of the stock), are recipes for covered call failure.

Here then are four criteria for picking the best stocks on which to write covered calls:

1. Choose stocks with good fundamentals. If you write covered calls solely for the income, you should still select stocks that you think would actually make attractive long term investments. Depending on how you set up the trade, you can still profit if a stock trades lower, but a strong, reliable, and profitable company tends to make fewer, less shallow, and shorter in duration share price dives. Remember, you must own a stock first before you can write covered calls on it. So choosing mediocre and unprofitable companies only adds extra risk–and stress–to the trade.
2. Choose stocks with good technicals. There is no requirement that you become a technical analysis superstar in order to be successful at covered call writing, but you should at least familiarize yourself with the basics of technical analysis. I’m not a big technical oriented trader myself, but if you’re going to be making short term option trades (even if they’re conservative covered call trades) you really do need to have some kind of basic understanding of technical analysis or access to tools and resources that can help you quickly assess the short to intermediate term technical health–and therefore the covered call suitability–of a stock.
3. Choose stocks with solid growth prospects. Stock options associated with growth stocks typically have more premium available than mature or extremely predictable companies. That’s because they’re historically more volatile, as the level of growth (or the point when growth begins to slow) can be difficult to forecast accurately. In order to generate significant income with covered calls, you will need to focus on growth stocks. Not all growth stocks are created equal, however, and you’ll do yourself a huge favor by taking a little extra time to use various research tools and resources to help you separate the the wheat from the chaff.
4. Choose stocks with attractive AND realistic premiums. If you’re writing covered calls for income, you’ll want to choose stocks (technically and fundamentally healthy and with solid, long term growth prospects) with an attractive enough amount of premium in order for it to be worth your while. But you’ll also want to be realistic. When you come across options with an explosive amount of premium available, beware. High levels of premium equals high levels of expected volatility and uncertainty. No matter how high your potential returns on the trade, these type of stocks are not suitable for consistently successful covered call strategies.

Writing covered calls can be a great strategy to generate significant streams of income. But just because it’s an easy strategy to understand and to trade, doesn’t mean it’s an easy strategy to successfully execute on a consistent basis. The good news is that there are numerous resources available to improve your covered call performance and returns.

For additional covered call income information and resources, please visit http://www.great-option-trading-strategies.com/covered-call-options.html

About The Author:

Brad Castro is a practitioner and promoter of Leveraged Investing, or option trading techniques and strategies designed to simulate successful value investing. Leveraged Investing has two objectives: to acquire stock in quality companies as cheaply as possible and then to squeeze more returns from those stocks once they’ve been acquired. Please visit http://www.great-option-trading-strategies.com for more information.

Article Source: http://EzineArticles.com/?expert=Brad_Castro
http://EzineArticles.com/?Covered-Call-Writing—4-Criteria-For-Picking-the-Best-Stocks-For-Covered-Call-Writing&id=2051259

Tags: options, stocks, trading

KBLB – Kraig Biocraft

Kraig Labs has brought onboard two experts in business to assist them with the marketing of their new products. Raymond Kutsunai, the former general manager of SmithKline & French Laboratories, Japan, and SmithKline Beecham’s former CEO and Chairman Henry Wendt have joined the board of advisors. Here are some videos that explain why this company is worth investing in:

Tags: kblb, stocks

KBLB – Kraig Biocraft

So I thought I would try my hand at some penny stocks and saw this one recommended in an email. The price was floating around .25 and the company announced a 9 to 1 stock split. I bought 1000 shares at .255 and ended up with 10k shares worth .0255. If I had done my homework on this I would have seen that the company is basically a one man show with no revenue. Now its trading around .014. This stock moved one day after a paid pumper put out a news release on it. Find out how that works here! I’m going to hold this until it goes to zero or it takes off. I would expect heavy selling if it ever gets back around .25

Tags: kblb, stocks