Trading With Iron Condor Options

There are several different types of option spreads such as verticals, calendars, butterfly, strangles and iron condor. They all have different ways of generating a profit and used in different trading scenarios. This article, however, is going to explain the benefits and when to use one of these option spreads, the iron condor.

First, in my opinion the iron condor should only be used under the following conditions.

• When the volatility (VIX) is below 40
• VIX is channelling between 25 or 40
• Credit of $0.50 or greater ($0.70 is ideal)

Second, the iron condor will produce money faster than other option spreads but carries more risk. Since you are selling this spread, it is a credit spread and therefore receive your money when you place your trade. However, since the iron condor has a low and high trading range, the stock can move out of this range causing the trader to lose money and either will have to close out the trade or make adjustments. This is less likely to happen if the volatility is below 40 and the trade is made and held during non news changing events for that stock or index.

Third, the condor can be used on any stock or index however, I recommend using it with high volume traded indexes such as the DIA or SPY. Since these indexes have very high volume it is much easier to find the desired trading range. If the stock is not highly traded then it may be more difficult to set up your trade. For example, you want to purchase a 27 call, but only a 20 or 30 is available. When this is a case, it will make it more difficult to meet the credit spread of $0.50 or greater.

Finally, the iron condor makes a great trading strategy when combined with other monthly trading strategies such as a combination of another condor used on a different stock or index or a different but complimentary spread to the condor. This combination makes a nice options portfolio and will be easy to manage and allow less time to monitor.

Financial Spread Trading - The Dangers of a Demo Account

Anyone starting out financial spread trading is usually advised to begin by 'paper trading'. This is where you use pretend money to place your trades rather than your hard earned cash. Just about every financial spread trading company will allow you to open a demo account and to trade with pretend money. On the whole, this is a great idea as you can place your trades safe in the knowledge that if things go badly wrong you won't lose any 'real' money. Equally, of course, any successful trades you make only earn you 'pretend' money. Nevertheless, if you are able to say, increase a 100,000 account to 150,000 in a short space of time it does give you immense confidence.

However, I can tell you from personal experience that this sort of success does not guarantee you success in the real world of financial spread trading. And the reason for that, in my opinion, can be put down to one over-riding factor and that is 'emotion'.

Risking 100, 200 or more on each trade you place on a demo account is easy. You place your trade and then let the market get on with it. You apply your chosen strategy and either make a profit or a loss. There is absolutely no emotion involved. Transfer that to the real trading environment and there is absolutely no comparison. Suddenly emotions come in to play. You will be trading with real money and as a result will experience all the emotions that go with it. You will feel fear of losing your money in a losing and greed of wanting more in a winning trade.

So whilst using a demo account is a good idea for testing out your strategies please do not imagine for one moment it will be the same in the real world of financial spread trading.

Why Do So Many People Fail at Trading?

• Apparently only 5% of traders are actually successful at trading. The stock markets are so misunderstood and that is why so few people are unsuccessful at it in the long run

• Trading is a business/profession and not a hobby and it should be approached as such, but very few people do

• The reason so many people fail is because traders need to understand psychology of trading, and yet this crucial element is ignored most of the time and because it is ignored by most, most fail

I explain further
The markets themselves are so simple if you know how to read them, and the complexity is not in the market, but in not understanding the psychological issues in trading.

Give two traders the exact same instructions and the exact same training, and you will get two different sets of results.

The problem is twofold:

1) Firstly, a lack of understanding of the market and blindly following a system they bought from the web and not understanding it

2) The bigger problem though, even if they do understand the markets, is not the understanding of what trades should be executed, but rather not understanding to a core cellular level that the even the best traders that make $millions are only right 50% of the time.

The subconscious cannot handle being wrong and there is a fear of losing money because we have been brought up from a very young age with the understanding that we must be right, and that being wrong is bad.

It is these subconscious thoughts that force traders to act irrationally. This trading concept is just not understood by the majority of people and this is why so many people who try their hand at trading, quickly blow out their accounts (also helped by the fact that they have not been taught about money management, specifically relating to the concepts of money management of their trading account)

Trading can be very hard psychologically especially if there is no understanding of the markets.

A lot of people approach trading as a hobby, whereas it should be treated more as a profession or a business.

You would not expect a surgeon to be able to read up on how to operate on the web and then operate, yet that is the approach that a lot of so called traders take, having read a few concepts online and then risk their capital.

Both the psychological aspects and the actual trading system aspect of it are skills, and skills can be improved. A trader just needs a guide to help them through this perceived maze, for something that is actually very simple.

Trading Skills - 4 Little Known Ways to Become a Successful Trader

To become a successful trader there are three things that a trader must constantly deal with. They are objectivity, fear and greed. When trading becomes too serious...when the outcome takes on great importance, then fear and greed tend to influence the trader's decisions. The trader loses some objectivity as the situation becomes more serious. At some point fear and greed can take over entirely and when that happen the wrong decision will usually be made.

If having a playful attitude about trading will make you a better trader, then how do you do it? That's a good question. There may not be a pat answer that applies to every trader but let me tell you what works best for me.

1. Look at the markets in terms of numbers, of lines on charts. Think of the markets as a challenge...a game that is fun to play. Think of it as a game of percentages... a game of discipline. A game to see if you can always do the right thing.

2. Don't think "money". Think in terms of points. Never count your money in a trade while still in the trade.

3. Don't trade to make money... trade to win the game. The point is, don't put the emphasis on money but on being a successful trader. When you are successful the money will be there.

4. Keep fear and greed out of the picture by taking very small positions at first. When you become successful then gradually increase your positions size... but never enough so that you begin to think "money".

Whether you won or lost a particular week is not the important thing. It is better to have done the right thing and lost than to have done the wrong thing and won. Doing the wrong thing puts you on the road to ruin. Doing the right thing insures your success.

Winning Day Trade Strategies That Actually Work to Cut Your Risk

Day trading can be a great way to make account money do you want from the stock market. By reacting to changes you can make a huge profit in the short term. The grim truth, however, is that the vast majority of day traders lose money rather than making it. The good news is that this is typically because they fall onto easy to avoid pitfalls and don't make use of effective day trade strategies. Here are day trade strategies which work.

Let's look at some of the popular day trade strategies which traders use. Scalping is likely the safest of the day trade strategies which you can employ in your trading. In it, you pull out of your investment as soon as it turns a profit. Here the goal isn't to make a large profit but to essentially go short as soon as you receive any profit, getting in and out quickly and safely.

Fading is another one of the most popular day trade strategies which requires more knowledge about a stock on your part. In this method, you go short on the stock after a successful trend stables off. The assumption is that the original investors are beginning to sell, offsetting any purchases newer investors are making, and this anticipates that the trend will reverse shortly.

Whatever day trade strategies you use, think about how you want to set your stop loss which you can either set up through your broker or through an online trading site. There are two options to use when setting up your stop loss. One is the physical amount which you can't stand to lose more than. The other is a mental stop loss limit which can be set for any time a significant reversal trend emerges. It's a good fail safe to have both in place.

If you don't have time to devote to analytics yourself, think about using a program to do it for you. There are a number of traders who sign up for member only mailing lists for finding the best cheap stocks and simply invest in the picks which are generated for them by the program. You don't need to have time or experience to make a profit this way so by combining your stop loss methods with good analytical stock software, you can make a great deal of money in the short-term.

Squash the risk in your day trading and couple effective day trade strategies with precise penny stock picks from the best analytical penny stock focused picker on the market today.

For more day trade strategies as well as reviews on the best stock pick technology of today, click either link in this paragraph and start your path to financial independence once and for all.

Simple Day Trading Tips

Trading is a very popular investment technique. With the power of the internet, it is now possible for the average person to open an account with a broker and start trading. There are two main ways of trading: long term and short term. Short term trades are entered and closed on the same day and this is called intraday or day trading. This basically means trading that is done the same day. Some of these trades last for minutes or hours at a time. The most popular day trading technique is known as scalping. The scalper is an individual who makes dozens or hundreds of trades per day, trying to "scalp" a small profit from each trade by exploiting the bid-ask spread.

In order to do this successfully, it is necessary to recognize and understand the current trend. There is always a trend in trading, one just has to to be able to identify it. Once its identified, use it to the full benefit. The best times to trade would be when the market is making a move in a specific direction, either up or down, as confirmed by technical indicators and most importantly price. It is also critical to have a volume indicator to confirm a move in either direction.

There are a number of ways to identify the start of a price move. A very powerful signal is the breakout - when a stock moves out of a range and starts climbing or falling, along with increasing volume. This shows that there is a buying or selling frenzy going on and is the best time to jump in.

The hardest part of day trading is knowing when to exit a trade, whether it is at a loss or a profit. As a result, strict rules need to be set in advance of the trading day so that decisions are taken based on a preset plan rather than emotions. This mechanical way of trading will ensure long term profitability as in the heat of a trading day, decisions based on emotions can lead to huge losses which are unsustainable.

A timeless wisdom in trading applies, which is to cut losses short and let profits run. This is not always easy to do, hence the need for a plan set out before the start of each trading day, to be followed religiously once trading is underway. It is important to trade by facts, not just feelings or greed. What is seen should be the determination of whether to trade or not.

Lastly, among the best intraday trading strategy, is to be sure to start the next day fresh. The previous days' trades and any activities should not carry over to the next day. Be sure to close any and all positions by the end of the day, each day. Again, it is not good practice to have the positions open when a new days starts. Intraday traders should practice these techniques to ensure a good outcome.

The Truths and Myths About Binary Options Trading

You see the banners advertising binary options or digital options platforms all over the web these days and it just seems too good to be true. Gain up to 71% in less than an hour? Get back 15% if the binary options expire out of the money? Yes, all of these statements are indeed true and you can really make thousands of dollars with options in very little time. For those of you skeptics out there who are still not sure about purchasing fixed return options, read this post on the truths and myths of this brand new investment tool...

Myth: The probability of earning from binary options trading is low.

This couldn't be more untrue. Those who invest wisely and study the underlying assets that they purchase do earn big. The biggest advantage that binary options trading has over regular trading is that you don't need to predict how much the market will move. It's enough to just to recognize the fluctuation of the market and to determine whether the options will go up or down. It only takes a one pip movement to put your investment in-the-money and you will receive your full return.

Myth: You need to be a financial expert to succeed with binary options.

There is no need to have extensive knowledge to trade options successfully. All you need is the ability to predict the direction of the market. To do this, all it takes is an hour or two of reading markets and industries updates from your favorite internet news source every day (which you probably do already). Using an online options trading platform is really easy. There isn't much to it except clicking on the "up" or "down" arrows. I don't mean to over-simplify here but that's really how basic it is!

In addition, to identify trends before you trade, most options trading platforms display the movement of each underlying asset on the market for the past hour in a linear graph form. There is usually an option to review the previous expiration rates of the underlying assets as well.

Myth: You have to sit at the computer and follow your options all day.

Huge myth! Transactions expire automatically so there is no need to sit in front of your computer all day. Results are available for checking at any given time. Also, many providers offer a free SMS results service.

Truth: If your market prediction is wrong, you get your money back.

Yes indeed! On the good options trading sites, whenever you purchase Call or Put, you are awarded the reverse option automatically without any fee that protects 15% of your investment. Simply put: you invested $10,000 and it was successful - it turned into $17,000. The opposite expiration would still leave you with a $1,500 refund.

Truth: You can receive 71% in returns with binary options.

Depending on the underlying asset, you can make between 65 - 71% and it only depends on one thing - the rate of the underlying asset at the time of expiry.

Truth: You don't need a broker, advisor or to pay commissions to trade fixed return options.

All you need is a account and then it is just you and the market.

Truth: Binary options account members get bonuses for depositing.

Another great truth! Some binary options sites will reward traders with extra cash if they deposit a certain amount to their binary options account. Also, there are sites that have special weekend deals. Don't be surprised if you receive a phone call or email from time to time from a customer service representative offering you a loyalty bonus.

Truth: Binary options are a thrilling and exciting investment tool.

And if you are not yet ready to invest, try out a binary options site demo. You'll see how easy it is and be fully convinced!

Earning an Income From Day Trading

Some experienced traders dogmatically assert that nobody makes money day trading. That is probably because they have tried, failed, and found some other trading style that suits them better. There is no doubt that day trading is a tough, competitive business, but the good news is that if it is your dream, it can be made to work for you.

Successful traders specialize in a trading niche which suits their temperament. In the process of doing this they may try different vehicles and strategies which are unsuccessful (for them). This is usually because the strategy is unsuited to the trader, not because it is "bad".

After following a few blind alleys, I found my niche day trading grain futures contracts. I enjoy getting almost instant feedback on my trades, and having my money safely parked on the sidelines most of the time. It turns out that day trading suits my temperament, whereas longer term trading does not.

Day trading critics often trade relatively stodgy Forex markets. However, trading costs can sink a day trader, and, despite "commission free" trading offered by brokers, Forex trading costs are too high due to spread and slippage charges.

I prefer markets with greater volatility and enough volume to ensure a tight spread, but not such a huge volume that the market becomes hard to read. The grains (soybeans, wheat and corn) do the trick for me.

Do NOT decide on a market before you decide on your trading style. Find the style that suits you, then find the markets that respond best to that trading style.

Successful day traders should:

Learn the concept of support and resistance in a market.
Develop a trading system based on tactics at support and resistance levels.
Test the system on independent data to make sure it has a positive Expectancy.
Learn money management techniques to prevent taking on to too much risk.
Day trading often involves regular repetition of a simple trading plan to place high probability trades. If you learn the principles outlined above, stick strictly to your plan, and learn to avoid mistakes made in the heat of the moment, you are well on the way to day trading success.


Most day trading is done by professional traders who experience lower stress levels than you because they are using bank funds. You have to beat them at their own game despite the additional anxiety of having your own money at risk!

Two cardinal sins for a day trader are trading without a plan, and over-trading. You must have a plan which dictates your every move in the fast paced cut and thrust of a market session. Otherwise you will be a victim of bad decisions driven by emotions, the downfall of many a trader!

Over-trading often arises because you experience a loss and try to get it back by taking an unplanned trade. Very often, you end up making a bad day into a disastrous day. Sometimes people over-trade because they feel the more trades they take, the more money they make. In fact, all they are doing is building up huge trading costs which make it very difficult to make a profit.

Even though I am a day trader, I take less than one trade per day on average. If the trades you take are good quality, you can still make good returns. (For example, I placed 15 trades in February 2010 and recorded a return of 39% on trading capital invested. You can see the trades here).
David Bennett trades US commodity futures from his home on the Gold Coast in Australia. He provides coaching and mentoring services for people wanting to start trading for themselves. Visit http://www.12oclocktrades.com to read more futures trading articles.