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Changes Over the Last Several Years -- By: Bill Kraft
Copyright 2009, Makin' Hay, Inc., All Rights Reserved
Bill Kraft
Editor |
Option traders are about to see an important and long overdue
change. Option symbols are finally changing so that it will be easier
for traders to identify the option they are seeking or trading. At
the initiative of the Options Clearing Corporation option symbols will
become much more straightforward and easy to understand. The old
symbols have been used for the past 25 years and gradually will be
replaced by the new symbols that our more intuitive and more easily
deciphered. For example, the April 2010 $35 calls on XYZ may formerly
have been XYZDG but now will be XYZAPR1035Call showing the stock
symbol, expiration date, strike and option type. Though longer these
new symbols seem much more self explanatory.
Knowing these changes in option symbols were about to be
implemented got me to thinking about other changes in trading over my
lifetime and particularly in just over the decade in which I have been
trading for a living. One very dramatic change has been in commission
structures. I remember paying a couple hundred dollars in commissions
when I made my first trade almost too long ago to recall. Once, in a
seminar in the early 2000's I mentioned a stock trade I had made where
I paid a $12.50 commission to buy 1000 shares of stock. An older man
in the front row was completely disbelieving, blurting: "You did not.
No way you only paid a $12.50 commission." He had been trading for
years and was accustomed to the high commissions charged by the full
service brokers. I had to show him my confirmation before he would
believe me and he was irate with his own broker because he had made
the same trade and paid more than $150.
Option trading for retail traders was quite rare before the
'90s. Commissions and illiquidity made options difficult to trade for
the littler guy and quotes were both untimely and hard to find. I
recall when I began trading for my living I was still using newspaper
option quotes as my starting point.
As with so much of our lives, home computers have made a huge
difference in our trading. I recall beginning to make online trades
enjoying very reduced commissions and utilizing quotes that were only
15 minutes delayed. Real time quotes were still expensive to obtain
and the 15 minute delay was remarkable. Now, of course, many online
brokers provide real time quotes free of charge and charting services
have real time charts for very little cost.
Charting, too, has been revolutionized. Though I never did my
charts by hand, I did use what would now be considered some pretty
primitive charts. Today charting has become so sophisticated that
almost any indicator can be attached to and used in conjunction with
the charts.
Clearly, technology has made much more available and in many
instances at a very reduced cost. I'm sure the readers could add many
innovations to the few mentioned here.
The problem continues, however, that so many traders continue to
be overall losers. Technology and the other changes have not changed
that problem except, perhaps, to add more traders. What I believe we
all must keep in mind is that it is we, not the technology, who trade.
We must deal with our own psychology when money is at risk. We must
understand how to discipline our trades, when to cut losses and how to
let profits run. These are issues about which I have regularly written
and about which I regularly teach in my coaching sessions.
Enjoy the advancements. Understand, though, that people made
money in the markets long before the advancements and people still
lose money in spite of them. That might teach us that there is more
to learn and that learning through reading, through seminars and DVDs,
and through a coach or mentor may well exceed the technological
advancements in importance.
Good Trading!
Bill Kraft
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Here's a look at a trade Bill is currently working on:
FedEx Corporation (FDX)
FDX has turned down over the last three trading days, but
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March lows Once the current dip stops with an upturn, I am considering
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Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
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Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
Interline Brands Inc. (IBI)
Trend Trader closed a 2 day trade in IPI for a $1.79 a
share gain. The stock has moved up again and broke above a resistance
level on Friday. I would like to see how it deals with that resistance
and assuming it does so positively, it could well be a candidate for
another entry in the not too distant future.
Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
"Trade Your Way to Wealth" by Bill Kraft is an Amazon.com best seller!
"Smart Investors Money Machine" is Bill Kraft's most recent publication.
"Trading for Keeps: Making Money with Low Risk Option Trades" a trading DVD by Bill Kraft
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We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
Verigy, Ltd. (VRGY)
While I'm not quite ready to hop on board, VRGY showed
some real strength on Friday as it gapped up and stayed up on quite
high volume for this stock. While there were a number of positives
including a close above the 20 day EMA, increasingly positive MACD and
an upturn in stochastics, I am a little bothered by its inability to
close up near the high for the day. In any event, I still think this
one may be worth watching in that it did close convincingly above
recent resistance.
Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
"Trade Your Way to Wealth" by Bill Kraft is an Amazon.com best seller!
"Smart Investors Money Machine" is Bill Kraft's most recent publication.
"Trading for Keeps: Making Money with Low Risk Option Trades" a trading DVD by Bill Kraft
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