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Myths of Trading

There are many trading myths that affect both novice and experienced traders. Typically, these myths force traders into a narrow belief that they have to be perfect or nearly perfect in order to succeed. This myth, along with a few others, holds traders back from achieving their true mission-making profits.

Limitations of Stop Loss Order

Stop loss orders are simply a tool. There is nothing wrong with them when used properly and with the proper expectations. When a trader works within the confines of the ability of a stop, then the frustration of stop orders can be diminished. The simple fact is that when you know what to expect you can’t be disappointed.

Drawbacks Of Synthetic Option

No matter how great the benefits are, when it comes to trading synthetic options there are still some drawbacks. The first drawback is the fact that it is capital intensive. The option must be purchased up front and the margin or cash for the position must be put in place. This means that you essentially have two trading positions at the same time.

Synthetic Option Versus Standard Option

Synthetic options come in one of two flavors, synthetic calls or synthetic puts. They each are designed to simulate a standard call or put option without the drawbacks. A synthetic call is simple to initiate. A long position is first established in a spot forex market, futures market, or stock market; then an at-the-money put is purchased to protect the long position against any downside risk. A synthetic put requires that a short position be initiated first and an at-the-money call is purchased to protect the short position from any sudden moves to the long side. They are one of the most underused risk management tools available.

Five Core Components of a Trade Setup

Now you have become more flexible in your trading. You no longer define yourself in such rigid terms as day, swing, or position trader. You have become more of a market specialist. You have found the few markets that you want to trade and you now find yourself open minded to the daisy chain effect that bears on the markets you watch. Are you ready to get started yet? Not quite.

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