Hoping and praying that the stocks that you just bought will go up is not the best strategy to use, however it is the one very often used by the average Joe stock trader who is stock trading internet. The only good point they have is that in bull markets most stocks will go up.

Statistics show that in a bull market about 75% of the stocks will follow the general trend and go up, and in a bear market 75% will also go down. Trading with the trend is the best way to trade as 9 out of 12 stocks will follow the trend and give you the best chance of making gains on your stock purchases.

But what if you own some good stocks and don’t want to sell when the market is clearly going down, or about to go down?. There are a couple of tactics that you can consider, both of which involve the use of options, CALL options and PUT options. There is the widely known strategy called Covered Calls, and the much lesser known one called the Married Put.

If you are going to trade options it is essential that before you start trading you get the best option trading education that you can. You should also practice stock trading until you are comfortable with the process. This is a very important point that must be taken seriously, if you don’t understand the terminology and the theory then you should not be trading options. If the terms Put option, Call option, Married Put and Covered Call are new to you then don’t trade until you have studied sufficiently.

Selling calls against your stock in 100 share increments is the basis of the covered call strategy and it can provide about a 2-7% buffer against the loss in stock price. However a bigger drop in stock price will not be compensated for using the covered call strategy, in general.

Stocks in a bear market, and even in a bull market, can drop quickly on news or earnings releases, as much as 15 to 40% within a month. Using covered calls to protect your stocks will only provide limited protection of less than 7% at best and so will not save your account if the stock takes a 40% tumble.

The better solution to providing downside stock protection is the option strategy called the Married Put. As the name suggests the PUT that you buy is used to provide protection when the stock goes down because Put options will increase in value when the stock decreases in value. The term married is used because the option that is selected has to be very compatible with the stock, in other words a good match, if the strategy is to work.

The selection of the best Put option is not straight forward and involves several criteria which are listed below:

1. The strike price of the option

2. The current stock price

3. Choice of options, in or out of the money

4. Put expiration time

Even though the married Put protection only has a short life span if offers much more protection than the covered call. It can provide as much as 95% loss recovery in the event of a significant drop in the stock price.

The downside of the good protection is that you have buy the Put which is a cash debit whereas the covered call is a credit. But there are ways of off-setting this expense and there is much more to this strategy when executed correctly. The Married Put can be made to pay for itself and used to generate good gains if the market, or stock to be specific, moves a lot.

The general idea of the Collar Trade is to combine the covered call and married Put strategy into one, this is what is called the Collar Trade. In effect you put a collar around the stock, sell a call and buy a PUT. If you do this correctly most of the cost of the Put can be offset by the credit from the covered call so you can protect your valuable stock at almost no cost. Yes this is a great strategy which the general public is unfortunately ignorant of, and most brokers don’t understand.

The strategy that I have outlined above is unknown to the average stock market trader but is one of the best trading systems you could have.

Forex Trading Methods: More Keys to a good method

Forex trading is littered with methods, systems and automated programs — the challenge is finding the right one for you. IN our recent series we covered many of the keys to idenitfying a good trading strategy. Today, we wish to expand on that list.

First, a good trading method will elude using too many technical indicators, or, avoid any use of the incorrect technical indicators. The significance here is simplicity. Click Here for info Forex Income Engine and Lunch Time Trading.  Any method that weighs a foreign exchange trader  down with too many indicators is rather more likely to puzzle the currency exchange trader , or, create opposing trade potential.

So one key to a good method is the use of some indicators which together can identify a robust trade opportunity. We’ve found it barely needs more than three or four indicators collaborating to attain this. If a forex trading method is using more than that, forex traders should be cautious.

As well, any method should not be 100% mechanical. See  Forex Income Engine 2 Review. By mechanical, we mean no room for market interpretation.  A good trading methodology will permit the foreign exchange trader  the power to see the bigger picture – for instance, is a foreign exchange pair in an extended downtrend?  If this is the case is now the right time to buy an uptrend?  A mechanical system may ’signal’ buy – but a foreign exchange trader  who does not apply the bigger picture or direct interpretation of what’s occuring in the market may blindly follow such signals and be in danger of heavy loss.

A good technique should use easy indicators to spot a trending forex pair, and use them in such a fashion to provide higher chance profit potential and lower risk.

Last, a good foreign exchange trading technique should provide objective rules that help the currency exchange trader  create trading discipline. On discipline, we are referring to the actions of trading — purchasing, selling, setting stops, for example. If too many calls are left to the foreign exchange trader , they are very likely to be uncertain, fearful or unable to drag the trigger on their trading actions. Therefore it is imperative that the rules of a trading method be simple and easy to follow, but allow for some interpretation about entering a trade.

With these additional keys, a forex trading method is more likely to provide a successful trading experience for the forex trader. See more on Forex Income Engine 2.0 Lunch Time Trading.