Trading Library

One of the factors that you need to consider is the price. The success of your strategy depends mostly on the movement of share prices in the stock market, so you need to decided where the share price headed. It can rise, fall or just remain steady. Once you have determined where the share prices will go, you can now narrow down the number of strategies that you can use.

Where is the market headed?

The third factor that options trader need to consider is time. Unlike shares, they have an expiry date that traders are bound to. In options trading, the movement that you are looking for, whether its a rise or fall, must take place by the expiry date. After the expiry date, the option is worthless. So its no just about the movement and fluctuation of price, you also have to think about the time frame.

Options Time Frame

When share trading, legal ownership of your share allotment must also change hands. Along with the title to the shares, the seller gets paid and the buyer gets the product in an exchange called a settlement.

In the Australian Securities Exchange (ASX), settlement is facilitated by a computer system called CHESS or Clearing House Electronic Subregister System. CHESS is operated by the ASX Settlement and Transfer Corporation (ASTC). CHESS registers the share title or ownership electronically.

Futures is a popular day trading contract. It enables traders to buy a certain quantity of an asset for a predetermined price date and price. However, unlike in options, the traders are obligated to buy and sell. Futures traders have to follow the terms and conditions of a contract.

One of the requirements when becoming a trader is keeping yourself up to date. Financial news releases are reported everyday. Apart from reported profits, forecasts by so called gurus and interviews by CEO provide information about the company that you may be investing or trading on. It is known that whatever happens in the news are mere confirmation of what's already in the market, but what about new releases?