How The Plus500 Review Can Help Newcomers Gain Experience
http://bit.ly/JMV7yP
Introduction to Plus500: With several online brokers offering a Forex bonus no deposit scheme competing for the attention of the broker, the Plus500 is still able to hold its own ground in the Forex trading sector. The Plus500 has over ten years of experience as good Forex broker software that helps people utilize the foreign exchange markets effectively to their advantage. Simple and easy website design added to functional utilities make the Plus500 a Forex product to reckon with. In addition to this, the verified credentials and extensive experience in the field makes the Plus500 a flexible tool for new aspirants. An overview of the Plus500 profile: Year that it was founded: 1999 Headquarters: United Kingdom Authorized credentials from: The FSA (Financial services Authority) Language options: English, Arabic Product Innovation: With several powerful competitors in the field with multiple trading platforms, Plus500 offers a single trading platform. This may perhaps be considered a limitation for traders who are seeking specific platforms to trade from but there are tangible reasons why a single trading platform is a plus point for Plus500. The single trading platform has been designed and developed by the in-house specialists at Plus500 and it comes in three versatile formats: An internet specific platform A downloadable version An interface for mobile phone users The USP of having three versions of the same platform is that you can switch effortlessly between all three without having to change your data. For example, if you have using the Plus500 in your office on your laptop and are now commuting in a bus, you can continue your transactions by using your mobile instead. This flexibility makes the Plus500 a good Forex broker as well as a versatile Forex trading tool. Well-designed and easily navigable screen: The Plus500 platform supports a simple and easy to use screen where all the relevant information is displayed, effortlessly. This saves endless clicking and scrolling back and forth to get the required data together. With four clearly defined tabs at the top of the screen that offer choices to access past or current transactions, the Plus500 works well for newcomers who wish to gain experience of Forex trading. More advanced users might refer platforms that offer access to multiple tools like charts and graphs simultaneously. However having said that: There is no doubt that the easy readability of the Plus500 makes it an ideal product for users who prefer uncluttered screens. Other notable features of Plus500: The product comes with a free demo that allows unlimited practice to aspirants who are learning the ropes. While this is not entirely unique to the Plus500, the presence of a free demo certainly is a positive point. There is a small learning center that comes with the Plus500 that offers information to learners by providing examples from the Forex trade sector. Though this learning aims to educate novices about how the Forex system works, it might be seen as limiting by users to wish to access more extensive data. FREE Trading System!
Thursday, April 19, 2012
Forex Round Numbers And Why They Matter
http://bit.ly/IQyUz4
The forex market has a tendency to bounce off major round numbers. Traders looking to benefit from the phenomenon need to build a strategy based around the order flow associated with these levels. First of all it should be noted that he market will not reverse every time it hits a round number. Traders work with probabilities and anything which can be used to build on an edge is worthy of note. The USDCAD currency pair recently traded towards the parity level at 1.000. One first reaching the level price then pierced by a few pips and subsequently retraced hundreds of pips. Soon after the same thing happened again. Why does this happen you may ask? Well it comes down to order flow. The cluster of orders based around key levels like parity on the USDCAD currency pair means that volatility can often follow a move into the figure. We will now look at the order types that are clustered around these levels. First of all the retail traders will place trade entries above and below the round numbers. An order above through the level will trigger and the trader aims to benefit from the following momentum. If the trade does not move in the desired direction the stop loss order is often placed on the other side of the figure. The liquidation of a trade is a reverse order so the stop loss on a buy trade is a sell stop. What happens when this triggers? The sell order pushes price lower as demand for the asset diminishes. No one trader moves the forex in isolation but the aggregate effect of many orders causes the movements we see on the charts. Large institutions may also place orders around key forex round number levels. If a Japanese auto company needs to convert Yen into Dollars it makes sense that the human inputting the order will most likely choose to place it near some kind of round number. Not always but once again we are working in probabilities. Large speculators also trade in options and the boundary levels for these options are quite often round numbers. There is therefore a financial incentive for speculators to protect these option barriers and often the level will be untouched even as price move within a few pips. A penetration of the level will sometimes see a subsequent loss of interest in protecting the area and this causes the price to move through with additional volatility. The EURUSD and related currency majors are some of the best areas to begin looking for this phenomenon. All of the above should not be taken as a reason to blindly trade around these areas as the forex market is extremely risky. If trading the euro you should do your analysis and your own EURUSD forecast before looking at the specific round numbers. The euro can be a good starting point when trying to build a trading strategy though and demo trading allows this to be done with no risk involved. FREE Trading System!
http://bit.ly/IQyUz4
The forex market has a tendency to bounce off major round numbers. Traders looking to benefit from the phenomenon need to build a strategy based around the order flow associated with these levels. First of all it should be noted that he market will not reverse every time it hits a round number. Traders work with probabilities and anything which can be used to build on an edge is worthy of note. The USDCAD currency pair recently traded towards the parity level at 1.000. One first reaching the level price then pierced by a few pips and subsequently retraced hundreds of pips. Soon after the same thing happened again. Why does this happen you may ask? Well it comes down to order flow. The cluster of orders based around key levels like parity on the USDCAD currency pair means that volatility can often follow a move into the figure. We will now look at the order types that are clustered around these levels. First of all the retail traders will place trade entries above and below the round numbers. An order above through the level will trigger and the trader aims to benefit from the following momentum. If the trade does not move in the desired direction the stop loss order is often placed on the other side of the figure. The liquidation of a trade is a reverse order so the stop loss on a buy trade is a sell stop. What happens when this triggers? The sell order pushes price lower as demand for the asset diminishes. No one trader moves the forex in isolation but the aggregate effect of many orders causes the movements we see on the charts. Large institutions may also place orders around key forex round number levels. If a Japanese auto company needs to convert Yen into Dollars it makes sense that the human inputting the order will most likely choose to place it near some kind of round number. Not always but once again we are working in probabilities. Large speculators also trade in options and the boundary levels for these options are quite often round numbers. There is therefore a financial incentive for speculators to protect these option barriers and often the level will be untouched even as price move within a few pips. A penetration of the level will sometimes see a subsequent loss of interest in protecting the area and this causes the price to move through with additional volatility. The EURUSD and related currency majors are some of the best areas to begin looking for this phenomenon. All of the above should not be taken as a reason to blindly trade around these areas as the forex market is extremely risky. If trading the euro you should do your analysis and your own EURUSD forecast before looking at the specific round numbers. The euro can be a good starting point when trying to build a trading strategy though and demo trading allows this to be done with no risk involved. FREE Trading System!
Wednesday, April 18, 2012
Covered Calls - A Conservative, Income Based Investment Strategy
http://bit.ly/HHITsn
In these stressful financial times many of us are tempted by the 'get rich quick' schemes that gain prominence in the popular press and the media, but the collective consciousness is much more aware of the old sore "If it looks too good to be true..." If, like many investors, you have a rational fear of losing your savings or having your retirement fund drift off into the ether, what are the alternatives, if there are any? Simple answer; "Yes!" and they take the form of what are known as a 'covered call'. Most of us are not inherently 'gamblers' we simply want our hard-earned savings to accumulate some interest for us and not to line the pocket books of others. So what we are looking for are conservative schemes that will allow us to have a reasonable chance of a return on our investments - in short, we like to know the risks and the rewards. From the get go there are a few things that you need to put in place before you can trade in covered calls; an account with a brokerage or a retirement account that allows you to write calls, sufficient cash or stocks (greater than 100 shares each) in a number of corporations and, most important, access to a portfolio monitoring and trade selection service. Oh, and the right frame of mind helps too! What we mean by investing with covered calls is an investment strategy that is focused clearly on the investor who wants income rather than short-term gain. You use stocks that you already own and sell an option for a fixed period or event in the future - this is sometimes known as a 'buy-write' trade - because you have bought the stocks and are writing an option to sell the stock at some future date. Let's look at an example; imagine that you own shares in the ABC Corporation, say 100 at $50 and believe that they will increase to, say, $55 in four weeks, then you call your broker and ask them to sell a four week option on them at a strike price of $55. What will happen is that the broker will tell you what each share is trading for as a call option and deposit that in your account - if it's a dollar a share then you would get around $100. So, if over the next four weeks the 'strike price' of $55 is reached then the individual who bought your option will be able to buy your stock at $55 per share meaning that you will receive $5500 for them. That added to the original $100 means that you have made an income of $600 in four weeks. If the stock doesn't reach the strike price then you get to keep your shares and also the $100 - but you can offer them again for a different price. If you are astute enough to be able to judge the way a business or businesses are performing then your only limitation is the amount of income you wish to earn - you already own the stocks. FREE Trading System!
http://bit.ly/HHITsn
In these stressful financial times many of us are tempted by the 'get rich quick' schemes that gain prominence in the popular press and the media, but the collective consciousness is much more aware of the old sore "If it looks too good to be true..." If, like many investors, you have a rational fear of losing your savings or having your retirement fund drift off into the ether, what are the alternatives, if there are any? Simple answer; "Yes!" and they take the form of what are known as a 'covered call'. Most of us are not inherently 'gamblers' we simply want our hard-earned savings to accumulate some interest for us and not to line the pocket books of others. So what we are looking for are conservative schemes that will allow us to have a reasonable chance of a return on our investments - in short, we like to know the risks and the rewards. From the get go there are a few things that you need to put in place before you can trade in covered calls; an account with a brokerage or a retirement account that allows you to write calls, sufficient cash or stocks (greater than 100 shares each) in a number of corporations and, most important, access to a portfolio monitoring and trade selection service. Oh, and the right frame of mind helps too! What we mean by investing with covered calls is an investment strategy that is focused clearly on the investor who wants income rather than short-term gain. You use stocks that you already own and sell an option for a fixed period or event in the future - this is sometimes known as a 'buy-write' trade - because you have bought the stocks and are writing an option to sell the stock at some future date. Let's look at an example; imagine that you own shares in the ABC Corporation, say 100 at $50 and believe that they will increase to, say, $55 in four weeks, then you call your broker and ask them to sell a four week option on them at a strike price of $55. What will happen is that the broker will tell you what each share is trading for as a call option and deposit that in your account - if it's a dollar a share then you would get around $100. So, if over the next four weeks the 'strike price' of $55 is reached then the individual who bought your option will be able to buy your stock at $55 per share meaning that you will receive $5500 for them. That added to the original $100 means that you have made an income of $600 in four weeks. If the stock doesn't reach the strike price then you get to keep your shares and also the $100 - but you can offer them again for a different price. If you are astute enough to be able to judge the way a business or businesses are performing then your only limitation is the amount of income you wish to earn - you already own the stocks. FREE Trading System!
Trading On a Forex Simulator
http://bit.ly/IKAGl7
How are good traders made? Well... trading. The good news is that you don't have to lose any money while you are learning. You can open a demo account with most forex brokers and trade live without putting any of your dollars at risk. You will be able to change to a real account only when you are ready. But even on a demo account, becoming a good trader, can take a lot of time. You need to face different market scenarios to acquire the skills needed to be part of the forex elite traders. Although trading on a demo account is a good way to gain experience for free; your learning process is limited by actual market conditions. It can take days, months, or even years to see different market outcomes. You could use a forex simulator to take trades as if you had gone back in time. You will be able to see years of different scenarios on a very short period of time. Although past performance is not guarantee of the future it is a good start; the market tends to repeat itself. If you can trade profitably on a simulated scenario you will be prepared when you face the real thing, no doubt. Although trading on a forex simulator is a great way to gain experience fast; there are some other things of your trading career that can only improve on a real account, like your mindset. Let's face it, when you are taking positions with virtual money is easy to be disciplined. Maybe you are an experienced trader and you just want to prove your system. Well, a forex simulator is a great tool for that. You can back-test your system with years of real data. Again, although past performance is not guarantee of future profits it is a good indicator. It doesn't matter if you are a newbie trying to learn or a veteran testing new ideas; forex simulators are great tools that can dramatically increase your trading skills. Your decisions are only as good as the information on which they are based. I know trading the forex market can be a rewarding occupation; you need no special skills or natural talents to become a successful trader. Anyone with the determination and the right information can learn how to trade. The only thing you need is good mechanical system, sound money management rules, and above all self-discipline. You could use, the forex market, to complement your salary or as your main source of income. Start-up costs are very low, the schedules are very flexible, the potential profits are very eye-catching. I hope this was helpful information!!! FREE Trading System!
http://bit.ly/IKAGl7
How are good traders made? Well... trading. The good news is that you don't have to lose any money while you are learning. You can open a demo account with most forex brokers and trade live without putting any of your dollars at risk. You will be able to change to a real account only when you are ready. But even on a demo account, becoming a good trader, can take a lot of time. You need to face different market scenarios to acquire the skills needed to be part of the forex elite traders. Although trading on a demo account is a good way to gain experience for free; your learning process is limited by actual market conditions. It can take days, months, or even years to see different market outcomes. You could use a forex simulator to take trades as if you had gone back in time. You will be able to see years of different scenarios on a very short period of time. Although past performance is not guarantee of the future it is a good start; the market tends to repeat itself. If you can trade profitably on a simulated scenario you will be prepared when you face the real thing, no doubt. Although trading on a forex simulator is a great way to gain experience fast; there are some other things of your trading career that can only improve on a real account, like your mindset. Let's face it, when you are taking positions with virtual money is easy to be disciplined. Maybe you are an experienced trader and you just want to prove your system. Well, a forex simulator is a great tool for that. You can back-test your system with years of real data. Again, although past performance is not guarantee of future profits it is a good indicator. It doesn't matter if you are a newbie trying to learn or a veteran testing new ideas; forex simulators are great tools that can dramatically increase your trading skills. Your decisions are only as good as the information on which they are based. I know trading the forex market can be a rewarding occupation; you need no special skills or natural talents to become a successful trader. Anyone with the determination and the right information can learn how to trade. The only thing you need is good mechanical system, sound money management rules, and above all self-discipline. You could use, the forex market, to complement your salary or as your main source of income. Start-up costs are very low, the schedules are very flexible, the potential profits are very eye-catching. I hope this was helpful information!!! FREE Trading System!
5 Forex Tips for Beginners
http://bit.ly/HERKek
I can understand why the forex market is such a popular investment alternative. Start-up costs are very low, the schedules are very flexible, and the potential profits are eye-catching. The sad part is that 95% of all the traders will end up losing money. I want to share some of my experience with you; I hope this will help you become part of the few who profit with currencies. 1. Trade only on large time frames. Trading on small time frames is very profitable for some; it's profitable for your broker, for companies that sell signals, and for some system sellers. Short-term price movements are mainly random; there are a million of variables involved that have nothing to do with the main trend. No one can predict with enough consistency what the prices will do on short-time periods. Successful forex traders use daily and weekly charts, mainly, for their trading decisions. Personally I only take positions once a week. 2. The secret of the rich: Money management. There is a big difference between gambling and investing. If you don't want to wipe out your account, like 95% of the traders, you need to add sound money management rules into your trading decisions. If you learn nothing from this article but this you will be a better trader than most. 3. You need a plan People can't expect to trade without a plan and be profitable; unfortunately most do. You need to know what to do on every case scenario. How much to buy or sell? When to enter the market? When to take profit or loss? 4. Discipline. Keep your emotions under control, don't let the occasional set-back affect them. The key, to become a successful trader, is to be bold, have cold blood, and trust your trading rules. 5. Losses are a normal part of the trade. Drawdowns are those times, in your trading career, where your losses add up, making you doubt your system, or worse, yourself. Learn to love your losses or, at least, accept that they are part of the deal. You should expect the occasional drawdown on your account from time to time. As long as losses are under control you have nothing to worry about. I know trading the forex market can be a rewarding occupation; you need no special skills or natural talents to become a successful trader. Anyone with the determination and the right information can learn how to trade. The only thing you need is a good mechanical system, sound money management rules, and above all self-discipline. If You're Looking for a Good Strategy, Click Here!
http://bit.ly/HERKek
I can understand why the forex market is such a popular investment alternative. Start-up costs are very low, the schedules are very flexible, and the potential profits are eye-catching. The sad part is that 95% of all the traders will end up losing money. I want to share some of my experience with you; I hope this will help you become part of the few who profit with currencies. 1. Trade only on large time frames. Trading on small time frames is very profitable for some; it's profitable for your broker, for companies that sell signals, and for some system sellers. Short-term price movements are mainly random; there are a million of variables involved that have nothing to do with the main trend. No one can predict with enough consistency what the prices will do on short-time periods. Successful forex traders use daily and weekly charts, mainly, for their trading decisions. Personally I only take positions once a week. 2. The secret of the rich: Money management. There is a big difference between gambling and investing. If you don't want to wipe out your account, like 95% of the traders, you need to add sound money management rules into your trading decisions. If you learn nothing from this article but this you will be a better trader than most. 3. You need a plan People can't expect to trade without a plan and be profitable; unfortunately most do. You need to know what to do on every case scenario. How much to buy or sell? When to enter the market? When to take profit or loss? 4. Discipline. Keep your emotions under control, don't let the occasional set-back affect them. The key, to become a successful trader, is to be bold, have cold blood, and trust your trading rules. 5. Losses are a normal part of the trade. Drawdowns are those times, in your trading career, where your losses add up, making you doubt your system, or worse, yourself. Learn to love your losses or, at least, accept that they are part of the deal. You should expect the occasional drawdown on your account from time to time. As long as losses are under control you have nothing to worry about. I know trading the forex market can be a rewarding occupation; you need no special skills or natural talents to become a successful trader. Anyone with the determination and the right information can learn how to trade. The only thing you need is a good mechanical system, sound money management rules, and above all self-discipline. If You're Looking for a Good Strategy, Click Here!
Trading Options Futures in Asset Listed Exchanges
http://bit.ly/HPNhbf
Have you ever tried to list a Property for sale only to have it sold immediately after you list it No? Something like that rarely happens. The same thing goes for buyers trying to find sellers of property they want to purchase. Often, you have to search far and wide, using an agent, and then you have to spend time with attorneys and bankers, not to mention the negotiating process with the seller to finally come up with a transaction price. There just isn't any centralized marketplace where you can simply pick up the phone and say "sell" and have your house instantly sold. When it comes to stocks and commodities or Options futures however, there are centralized locations to buy and sell instantly these are. Those locations are called exchanges it is here that all Options futures and any kind of stock is traded. Most people have heard of Wall Street. That's the location of the New York Stock Exchange and the American Stock Exchange. Chicago is the location of the biggest exchanges for commodity traders - The Chicago Board of Trade and the Chicago Mercantile Exchange. Back in the early-1970s, traders at the Chicago Board of Trade got together and decided to begin trading options futures. This eventually led to the world's busiest options futures exchange, The Chicago Board Options Exchange. A few years later, the options futures exchanges began trading options on their own products - futures contracts. Currently, all of the major futures exchanges trade futures options on commodities. There are also five U.S. exchanges that trade futures options on stocks, stock indexes, interest rate products and currencies. Those exchanges are: The Chicago Board Options Exchange, The American Stock Exchange, The Philadelphia Stock Exchange. The One reason that exchanges can provide you with instantaneous purchase and sale transactions is because the products available for purchase and sale are identical. That is, one share of IBM is identical to another share of IBM. As far as the commodity exchanges are concerned, they make sure that each ounce of gold is identical to all the others. They even do quality checks for products like oil and soybeans and orange juice. They want their customers to know that when they buy a barrel of oil (for example) that the oil they're getting will be identical to all the oil that all other oil buyers get. Obviously, this could never be true of real estate. That's because each property is different, with its own set of individual advantages and disadvantages. Because no property is identical, you simply can't buy and sell, sight unseen. But with exchange-traded products or options futures, you can buy and sell sight unseen, because you know that every share of Ford is going to be exactly like every other share of Ford, and every bushel of corn is just like every other bushel of corn. So when you want to sell, someone else can buy with confidence. A market that offers the ability to instantly enter and exit positions at a reasonable price is said to have "liquidity". The other advantage to exchanges is that they eliminate counter- risk. Take for example the real estate transaction. Typically, you've got to set up a meeting, with an attorney present, sign dozens of contracts and forms, and make payments only with bank- certified checks. Then and only then does the property change ownershipship. The reason for all of this is to prevent, as much as possible, one party to the transaction from defrauding the other party to the transaction. The bank certified check is a classic example of this. It protects the seller by reducing the chance that the buyer might present a bogus check. Needless to say, when you pick up the phone to buy or sell a stock or options futures, you aren't being asked to present a certified check. That's because the brokerage firm instantly acts upon your request, and the exchange guarantees the trade. Let's say a trader places an order to buy an options future. What happens is that the order goes to the exchange, and then someone sells that trader the options futures. If the buyer then backs out of the trade, the seller has still sold the option. That's because the exchange and the broker guarantee that the trade has been executed and both will stand behind it. Essentially, the trader has bought the option. But if the option buyer suddenly backs out of the trade, the brokerage firm has become the buyer of the options futures. If for some unforeseen reason the brokerage firm can't meet the obligation, then the exchange itself and its many members stand behind the trade. This multiple level of redundancy on "listed" stocks, futures and stock options futures is one of the key ingredients to having a successful marketplace. Many traders take it for granted, but it is the one critical factor that gives traders around the globe enough confidence, so that when they pick up the telephone to place an order, they know that they are getting exactly what they ordered. And they don't have to worry about the performance of the person taking the other side of their trade. An example occurred in 1987. The stock market crashed in October of that year and many options futures traders got wiped out. It was so bad that these traders were unable to meet their commitments. That left the brokerage firms to make up the difference. Some smaller firms were unable to handle the financial stress, which meant that the exchange members had to meet the commitment individual traders were unable to meet. The next day, the Federal Reserve Board stepped in and strongly hinted, in a very carefully worded, prepared statement, that banks go ahead and loan as much money as needed to exchange member firms, so that the exchange members could meet the financial obligations of all traders. With those words, counterparty risk was eliminated and a crisis was averted. Confused? Get a FREE System Here!
http://bit.ly/HPNhbf
Have you ever tried to list a Property for sale only to have it sold immediately after you list it No? Something like that rarely happens. The same thing goes for buyers trying to find sellers of property they want to purchase. Often, you have to search far and wide, using an agent, and then you have to spend time with attorneys and bankers, not to mention the negotiating process with the seller to finally come up with a transaction price. There just isn't any centralized marketplace where you can simply pick up the phone and say "sell" and have your house instantly sold. When it comes to stocks and commodities or Options futures however, there are centralized locations to buy and sell instantly these are. Those locations are called exchanges it is here that all Options futures and any kind of stock is traded. Most people have heard of Wall Street. That's the location of the New York Stock Exchange and the American Stock Exchange. Chicago is the location of the biggest exchanges for commodity traders - The Chicago Board of Trade and the Chicago Mercantile Exchange. Back in the early-1970s, traders at the Chicago Board of Trade got together and decided to begin trading options futures. This eventually led to the world's busiest options futures exchange, The Chicago Board Options Exchange. A few years later, the options futures exchanges began trading options on their own products - futures contracts. Currently, all of the major futures exchanges trade futures options on commodities. There are also five U.S. exchanges that trade futures options on stocks, stock indexes, interest rate products and currencies. Those exchanges are: The Chicago Board Options Exchange, The American Stock Exchange, The Philadelphia Stock Exchange. The One reason that exchanges can provide you with instantaneous purchase and sale transactions is because the products available for purchase and sale are identical. That is, one share of IBM is identical to another share of IBM. As far as the commodity exchanges are concerned, they make sure that each ounce of gold is identical to all the others. They even do quality checks for products like oil and soybeans and orange juice. They want their customers to know that when they buy a barrel of oil (for example) that the oil they're getting will be identical to all the oil that all other oil buyers get. Obviously, this could never be true of real estate. That's because each property is different, with its own set of individual advantages and disadvantages. Because no property is identical, you simply can't buy and sell, sight unseen. But with exchange-traded products or options futures, you can buy and sell sight unseen, because you know that every share of Ford is going to be exactly like every other share of Ford, and every bushel of corn is just like every other bushel of corn. So when you want to sell, someone else can buy with confidence. A market that offers the ability to instantly enter and exit positions at a reasonable price is said to have "liquidity". The other advantage to exchanges is that they eliminate counter- risk. Take for example the real estate transaction. Typically, you've got to set up a meeting, with an attorney present, sign dozens of contracts and forms, and make payments only with bank- certified checks. Then and only then does the property change ownershipship. The reason for all of this is to prevent, as much as possible, one party to the transaction from defrauding the other party to the transaction. The bank certified check is a classic example of this. It protects the seller by reducing the chance that the buyer might present a bogus check. Needless to say, when you pick up the phone to buy or sell a stock or options futures, you aren't being asked to present a certified check. That's because the brokerage firm instantly acts upon your request, and the exchange guarantees the trade. Let's say a trader places an order to buy an options future. What happens is that the order goes to the exchange, and then someone sells that trader the options futures. If the buyer then backs out of the trade, the seller has still sold the option. That's because the exchange and the broker guarantee that the trade has been executed and both will stand behind it. Essentially, the trader has bought the option. But if the option buyer suddenly backs out of the trade, the brokerage firm has become the buyer of the options futures. If for some unforeseen reason the brokerage firm can't meet the obligation, then the exchange itself and its many members stand behind the trade. This multiple level of redundancy on "listed" stocks, futures and stock options futures is one of the key ingredients to having a successful marketplace. Many traders take it for granted, but it is the one critical factor that gives traders around the globe enough confidence, so that when they pick up the telephone to place an order, they know that they are getting exactly what they ordered. And they don't have to worry about the performance of the person taking the other side of their trade. An example occurred in 1987. The stock market crashed in October of that year and many options futures traders got wiped out. It was so bad that these traders were unable to meet their commitments. That left the brokerage firms to make up the difference. Some smaller firms were unable to handle the financial stress, which meant that the exchange members had to meet the commitment individual traders were unable to meet. The next day, the Federal Reserve Board stepped in and strongly hinted, in a very carefully worded, prepared statement, that banks go ahead and loan as much money as needed to exchange member firms, so that the exchange members could meet the financial obligations of all traders. With those words, counterparty risk was eliminated and a crisis was averted. Confused? Get a FREE System Here!
Tuesday, April 17, 2012
Photography Online Course
http://bit.ly/HKhl97
Check out these deal of the day products: Photography Online Course 3 Months Membership Site. Guaranteed Client Satisfaction Because The Content Is Very Well Documented. I Can Send You Some Samples If You Want. Photography Online Course
http://bit.ly/HKhl97
Check out these deal of the day products: Photography Online Course 3 Months Membership Site. Guaranteed Client Satisfaction Because The Content Is Very Well Documented. I Can Send You Some Samples If You Want. Photography Online Course
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