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Day Trading of Stock & ETF Option

Investment Option day trading lots of people love that because to book profit or loss need to wait very little time. For beginner I personally advise you stay away from option day trading up to the time you become well familiar with stock market.

Advance day trader can go for stock option or ETF option. Before to explain how to select stock or ETF for option day trade first you need to know what option is. Basically option design to protect long term investor, it just like insurance, for example if you want to insure your car for six month how much premium you pay, for one month insurance how much,
same way stock or ETF option working. Longer term more premium, shorter term less premium. Again insurance premium depend on risk, high risk, high premium and low risk low premium same way stock, ETF or INDEX option working. Closer to Strike Price higher the premium then far strike price and in the money even more high.

Basically option premium of particular Strike Price, moving exponentially with stock or ETF natural price movement, strike price closer premium turn in higher speed curve area of exponential function and that’s a favorite area of day trader.

How to select stock or ETF for day trade? It’s a very wide topic and difficult to explain all of thing here but I give you some guide line. Very first thing you need to visit our stock trading and breakout stock trading page to know common real good techniques to select stock or ETF. You can apply that all techniques with small time frame to find out short term trend.

Second method is work with support and resistance, because once market clears out support it goes up to next support, same way for resistance once market cross resistance it goes up to next resistance. You can enter after support or resistance clear in same direction of trend or if technical indicators show market is over sold then you can enter in reverse trend at support with considering support as stop loss, same way if market is over bought then you can enter in reverse trend at resistance with considering resistance as stop loss.

For successful option day trading stop loss is very important you can’t ignore it because option price very sensitive with natural price and time, as time pass price goes down like insurance.



Investing Basic

Day trading Basic
How to find stock for Day Trading
Day Trading of Stock & ETF Option
Stock Market Instrument
Importance of Media in day trading
Stocks For Day Trading With Support | Resistance
Importance of Stop Loss
Importance of News in stock trading
  



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