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Showing posts from February, 2020

Take Advantage of Options: Three Ideas

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As you know, the US main brokers (Ameritrade, Fidelity, Charles Schwab, eTrade) are now offering zero-commission in stocks, ETFs and options trading. A piece of great news, by far the best this year for retail traders.  It's a great opportunity to start trading options more aggressively, creating an options-based portfolio as now commissions are no longer cutting our profits. I share here some suggestions for taking advantage of the power of options during trading.


1. Options as a substitute for Stocks: Delta > 0.80
Substituting stocks with options has two unique advantages: only options bring leverage and protection.

- Options provide tremendous financial leverage to users when they are used in a conservative way: you can control the same amount of shares with less money, and mainly, the % returns are much higher when you trade with options. This carries another advantage: with more money available you can diversify better your portfolio.

- And provide protection: with the ap…

Basics of Elliot Waves, a prediction tool

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The Elliot Waves theory is very popular among traders. Proposes that trends in price results from traders' predominant psychology, with the same recurring movements in fractal "waves" patterns. So, price action is divided into impulsive and correction moves. Trends show the main direction of prices, while corrections move against the trend.





The theory is extensive, many books and strategies are developed from them, and some traders only trade using this theory.  I think that for use as an additional tool for our day trade analysis, we just need to manage the basics of impulse and corrective waves, for a preception of the price structure and identify repeatable patterns.
The Elliot Waves Theory has three rules and more guidelines to follow, and usually what you see sometimes didn't match with another trader view.

1. Five impulsive waves 12345 moves in the direction of the main trend, followed by three waves ABC in a correction (totaling a 5-3 move). The underlying 5-…