A lot of different parties hype the merits of buy and hold investing because in the past this approach has worked very well at providing steady returns over a long period of time. Building positions continues to be an essential aspect of any stock trading approach even today.
However, it should not form your entire strategy. If you're uninterested in the market then it may be your main technique but if you enjoy studying the markets and trading then you'll need to use other strategies as well.
More than one strategy can be used to make money in the markets, and option trading is so versatile that you can combines strategies in one vehicle. An option strategy will let you make money when the markets go up using very little money. It can also help you make money when the markets go down, again risking less money than you would on a short sale.
For those who are just keyed up for stocks and pursue various technical data and charts such as macd indicator, time is to get on the job and move into option trading along with commodity trading. For placing bets, not big in nature, and insurance, options are undoubtedly a remarkable and exciting device. For in stocks you often end up with too much of a cost for such purposes and the stocks not being equally volatile, the options are just a better choice over stocks making the latter's utility poor comparatively.
Perhaps your goal is to utilize option trading in order to be able to hedge your bets on those shares of securities you choose to invest in. This greatly reduces your financial risk and allows you to have significantly more control over your investment outcomes. A put contract will give you a measure of protection in case there is a major downturn in your stock price. You can also earn from your stock positions if you sell out of the money calls on them.
Once you learn the basics of using options as insurance on your stock holdings, then you can start to use them to speculate on other stocks. This lets you place large bets on stocks using less money, and is less risky than margin trading. If you think a big move is about to come, whether up or down, you can profit from it by buying calls or puts on that stock.
If you are new to the markets then you may not be aware of all the tools that are available to you. With the right knowledge and skill set, you can make money in any kind of market. Options are the easiest way to make a lot of money by taking advantage of leverage in an up or a down market.
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