The purpose of this article is to show how options trading can be profitable and help you avoid some of the mistakes that are made by stock market advisors. Stock tips come too late because by then the market has already reached a point that you cannot make a profit. The odds are you’ll lose money. If you want to learn a very powerful trading strategy that brings a lot of profit, you should know about unusual option activity scanner
Successful investing requires the ability to investigate and hear the pulse of the investment. Options trading is a form of investing. The key is to act before the big event occurs and prevent it. Unfortunately, the majority of investors find themselves scrambling to get ready for a big event. It’s not uncommon for me to hear clients complain that “the market conspires against me.”
Look at this example. Most investors will experience it at some point. We’ll assume that this is what happened to your:
NewBee, a business you have been watching as an investor for several years now. But as an investor that follows trends, you hesitate to make a move because the new venture struggles with inadequate funding and lacks a solid management team. This company has reached a stage where only a merger will save it.
In the morning newspaper, you read that NewBee was about to merge into a larger corporation named BigBee. Your trading website informs you that NewBee shares have already shot up 80% due to this merger. NewBee stock has already surged 80% on the news about the merger. Millions have already bought a share and are willing to pay a premium of 80%. After your purchase is complete, you paid an additional 85% in order to buy the stock. While the earlier investors had a 60% gain over yesterday’s price, your net loss was 13.5%.
It’s what we refer to as “emotional Trend Buying.” The primary reason that investors lose money is because they do this. Keep in mind that you may be one of the very last to find out about news regarding a company. Always remember to never make a purchase based solely on positive news. It’s not as illogical to associate good news with a price drop. For a better understanding of this idea, we need to take a look at the past.