Sunday, August 24, 2014

Short Term Options Trading StrategyThere are many traders who still consider options and warrants to be long term trading markets, but options can even be traded short term. It is important to understand that trading short term options is not dramatically different from trading any other market but there are a couple of options specifics that need to be taken into account. In short term trading, the aptitude to steer the short term market is a key component for continued success. As an equity trader one has to learn to trade with the short trend of the markets to reduce market risk.

Stock Options

Stock options are the old standby of long-time traders. This market is and has been well established with deep liquidity for many years and as a result is the most popular vehicle for quick gains in the market. It makes perfect sense what the strengths are of this platform - namely the liquidity, high name recognition, and broad variety of assets to buy and sell.

Binary Options

The last of the short-term trading strategies I bring up here is using binary options. These types of contracts have become extremely popular amongst low capital traders given their high yields and low transaction costs. It is possible to trade profitably with as little as $100 at some brokers. The drawbacks to using short-term trading strategies involving binary options include small order sizes (typically less than $3000 per trade), limited asset selection (only the most liquid assets are traded), and limited means of exiting trades once executed.


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