When day trading we want to look at alot of indicators but the main one you should look for is volume. Volume tells me when the big boys are buying and selling. The best way to make a profit on the way up, with a call option, or on the way down, with a put option, is by riding their coat tails.
When deciding which stock options to trade, look for stocks that have a high degree of fluxuation and alot of volume behind them. Look for stocks over $100 because when they tend to move, they move in a big way.
If you are buying an in the money or at the money call or put, it will give you a very nice profit for each $1 the stock moves, if it moves in the direction that you invested in. You get a dollar for dollar move when your option is in the money.
Also look at the volume then compare it with the William's Accumulation distribution signals and the Williams % R. If all three are moving in the same direction it is a strong signal to buy the option and ride it out for the profits. This is not a 100% accurate strategy but it will give you much more consistant returns.
To prevent catastrophic losses, always have an exit strategy. Determine the percentage that you are willing to lose, if the market turns suddenly and have that stop loss in place.
Most of all remember that there is no exact science to profiting from the market. Your best course of action is a consistant one.
1)Pick a stock or option trading system and stick with it.
2) Know before you place your orders, exactly how and when
you will get out, either way.
About The Author:
Caterina Christakos is the founder of daytradingonlineclasses.com. For free tips on how to day trade even more profitably go to: http://www.daytradingonlineclasses.com
