I believe that the first step after deciding that you want to be financially independent is to divide your current assets into long and short term categories. 80-90% of your money should be in the long term group. For most people this will be mutual funds. Next is to set up a plan to regularly and consistently add to this area. I look for 20%+ out of long term investments. After that has been accomplished, the 10-20% that remains can be considered. Here I look for the big returns. I prefer to position trade options on stocks. Much of the site is designed to support option traders with trading ideas and ongoing education. To be successful one must have a way to find great stocks, know what option to buy, when to buy it and when to sell. Finally a clear system of money and risk management must be in place.
The average position is open 2-6 weeks. I prefer to make a few very good trades rather than a lot of O.K. trades. This not only cuts down on commissions but requires far less time than frequent day or swing trading.
In a word...big profit. Options provide an enormous leveraging advantage over stocks with the ability to clearly define risk limits. Using options you can participate in the growth of the very best companies without needing huge amounts of money to invest. One thousand shares of a $100 per share company would cost $100,000. But you can achieve control of 1,000 shares of the same company using options for perhaps $5,000. When the stock price then goes up, the option price will also rise but in an accelerated or magnified way. This is how triple digit returns are achieved using options.
Advanced Membership to The Freedom Partners entitles you to receive alerts and updates directly to your E-mail address when they are issued! For the minimal cost of upgrading to Advanced Membership you can benefit from time sensitive market alerts without having to wait for posting onto the site.
Choose a broker that offers option trading. You will want to find a broker that can provide quick and accurate trade executions. Within the Member area you will find complete listings of brokers with direct links to many of the most popular brokerage sites.
An excellent real life example of the power of leveraging the stock market through the use of options on stocks was made clear to me to day. About a year ago I bought some LEAPS on Cisco Systems. LEAPS are simple options with a longer time frame to expiration, up to two years. At the time I brought two contracts. Since that time Cisco has made two 2 for splits. My previous two contracts have now grown to eight contracts due to these splits.
In conjunction with this, the underlying Cisco stock has appreciated nicely. My options are now well "In-The-Money". That means that their strike price is below the current price of the underlying stock. This adds value to such an option. Currently when Cisco shares raise $1, my option premium also increases by $1. Think what this means. It is staggering!
Every time Cisco goes up $1, I make $800! Why? Because each single contract controls 100 shares of the underlying stock. Today Cisco stock went up $5 1/2. So I made $4,400 today alone on this one position. Yesterday Cisco went up about $6, so I made $4,800 yesterday!
Consider then, the awesome power of prudent use of options on stocks! And that my friend is what I am here to teach you.
1. Log onto www.OnlineOption.com
2. Click on the "Resourses" Page at the main member page.
3. Now click "Charting." This will take you to the Big Charts.com site. "Note" if you get to Bigcharts directly you will be on the wrong page. You will see at the top left a white box headed "Enter Symbol or Keyword". Put DJIA which is the symbol for the Dow Jones Industrial Average. On the left tool bar (dark blue) click on "time frame".
4. On the next box below (white) open the drop down and choose "6 months".
5. The next lower box is headed "frequency" Open the drop down and choose "daily".
6. Now move further down the tool bar two boxes to "indicators".
7. The first white box dow is headed "Moving Averages". Open this box and chose SMA (2-Line). You will see directly to the right of the moving average box, a smaller white box. Type in this box (30,7)
8. We now go down further, skipping a box and work on "Lower Indicator 1". Open this box and highlight "volume+".
9. In the next box down, "Lower indicator 2", open it and highlight Williams%R". Lower indicator 3 is left at "none".
10. Now scroll down to "Store Chart Settings". CLICK THIS TAB
11. To the right a grey box headed "Store Settings "comes up. Click OK.
12. Now a second grey box pops up. Click OK again.
13. After the refresh you will see a chart of the Dow Jones Industrial Average. The chart will have two moving averages, a volume + pane and a %R pane.
14. You can now enter any symbol in the Symbol box, hit the "Draw Chart" button and a new chart with the settings you just entered and saved will appear.
15. From this point on each time you log onto OnlineOption.com and choose charting you will simply need to enter the symbol you are interested in and click the Draw Chart button. All our specific parameters will be displayed on the new chart!
1. When you are viewing a chart that you would like to keep as reference for later comparison simply press the "add to favorites" button near the top right of the view area. It is framed in powder blue.
2. A grey box headed "Add Favorite will pop up. There is no need to enter the stock symbol again but you may ad some personalization. Click OK.
3. A second grey box pops up to inform you that your favorite stock has been saved. Click OK again.
4. If you are later viewing another chart that you want to place on your watcjlist, simply follow steps 1-3 again. You may save up to 20 charts.
To view your favorites click the "view favorites" button. On the next page you may see an individual chart by clicking on it's green button. Or, to click "chart favorites". You then will see a small graph of each stock. Click on this small chart to bring up a full size chart of your choosen stock.
CBOE stands for the Chicago Board Option Exchange. This organization operates a website known as CBOE.com To get to this site log onto OnlineOption com. and in the main member page click on "options chains". If you attempt to go to CBOE from another route you will be on the wrong page for our purposes.
Here we will obtain quotes of various options on stocks that we will be studying and trading.
One can subscribe to a real time version of CBOE but it is not necessary. Once you have a brokerage (trading) account you will get real time option quotes there prior to opening or closing positions.
I am a very new member. The question occurred to me as to whether one should remit 80% of each profit made (and I'm sure there'll be many) to one's other longer-term investment portfolio, or what?
Excellent question. If you do not need the profits made in trading for day to day living, then I suggest that you put 1/2 of the profits into your long term account. Then, just leave the remaining 1/2 of profits in your trading account. This way you will be doing three very inportant things.
1. Building the amount in your trading account for greater future trading power.
2. Preserving money for taxes.
3. Supercharging the increase of principle into your long term account.
Call 1 800-599-0514 or go to www.investors.com. If you are in the U.S. the IBD will be mailed to you for two weeks at no charge.
Members of OnlineOption.com receive a $50 discount on MetaStock software. To get information and/or your discount call Kelly Clement at MetaStock. His number is 1 800-587-8026. You can also find a link to download the special offer once you log in to OnlineOption.com.
By using the Virtual PC program on your MAC the PC based MetaStock charting program that we use for technical analysis functions properly as reported by our members.
Here is the official statement by MetaStock:
Officially MetaStock is not supported when installed onto a Mac computer. However, we have several clients using MetaStock on the new Macs with the Intel processor and they have reported that they've encountered minimal issues. While we haven't tested MetaStock on Macs, our discussions with customer using it indicate that for the most stable Mac environment, the Windows operating system must be running through a Mac application called Boot Camp. Similar applications may not work properly (for example Parallels or Virtual Machine). MetaStock software installed on a Mac computer is eligible for the 30-Day Money Back Guarantee. All conditions and requirements apply to Mac users regardless of the timing or nature of potential Mac related issues.
MetaStock will make every effort to provide support for running our software on a Mac and help customers troubleshoot issues they encounter; however as we have not officially tested MetaStock in this environment, we are unable to guarantee support beyond a reasonable effort.
The Windows to Wealth book and CDs series is primarily involved with technical analysis of charts, and its practical application. The Online Option Trader Manual is more of an instruction on the treatment of trading, into which technical analysis would fit.
The Windows to Wealth book is definitely more detailed, but is specifically aimed at reading charts.
The primary focus of the site is on learning to trade rather than providing specific entry and exits. Dr. Cooper does on occasion send out trades that he is doing but more frequently alerts members to charts that are showing impending potential trades. Members of the site interact with each other within the site itself and are able to post their trades along with viewing the trades of other Advanced Members. We are not an advisory service and do not get involved in specific trade recommendations.
We do not have a mechanism in place to capture all the trades that students make. To make such % return figures even close to relevant we'd need to break down the numbers according to experience level, adherence to the stock screening criteria, following of entrance technicals, market trends, proper exit timing and so on. Even if all this were done we would then need to have 'faith' that a true cross section of members reported their trades regularly. In addition we would have to have a way to check that the information they entered was accurate. All this would be a full time endeavor for a staff of people.
Therefore there is no record of trades made available to members of the site.
The IBD is unique because of the proprietary formulae which are used to arrive at the Rankings we depend on. It can be difficult to obtain the IBD outside of the U.S. There is a trial online subscription available but it has two flaws. Firstly, it is expensive. Secondly, the online format is very hard to use for the Trade Candidate Filter as explained in the Online Option Trader manual.
If you find that getting the IBD is not practical in your area there are two choices:
1. Do without it. There are candidates that are discussed in the War Room of OnlineOption.com which you can pick up on. You can also use the Watch Lists on OnlineOption.com to get your own watch list started.
2. Many members choose to upgrade to Advanced Membership. With this level of membership we actually do the screening each day and e-mail new candidates to you as they are found. This, along with the other benefits of Advanced Membership, is not only cheaper than getting the IBD but provides other tools and supports to traders. If you choose to upgrade from Basic membership simply log in, go to My Account and click the upgrade button.
Thank you for being a part of our trading family!
A little 'bending' is permissible during markets wherein very few new candidates are coming through. The first rule to alter is the closing price. I move it down from $50 to $40 when the flood gates need to be opened a bit.
Results in trading vary wildly. Dr. Cooper suggests that becoming a full time trader is a process rather than a single leap. After finding success in paper trading, gradually transition to real money trading. Early trades should be small. With profits your trading account can then be grown. One challenge with going 'pro' is that the emotional side of trading becomes more pronounced. This is one reason that you should keep the 'day job' during the process.
To trade the indices:
NASDAQ = QQQQ
Dow Jones = DIA
S&P 500 = SPY
The system of chart analysis that we use to trade stocks and options is directly applicable to commodities.