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Articles by Shaun Rosenberg

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227 articles by Shaun Rosenberg · showing 50

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By Shaun RosenbergApr 23, 20091 topic

How to Enter a Covered Call Trade

Covered Calls can be a great way to collect premium from the stock market month after month. So how do you go about entering one? You have to follow these steps.nn1. Find A StocknnOf course the first thing you want to do is to find a stock, you canât enter a trade without it. The stock that you pick should have good fundamentals and be trending either up or sideways. Buying a down trending stock to do covered calls on can be very costly because the premium you sell may be o

Primary topic: Investing

985 views

By Shaun RosenbergApr 22, 20091 topic

Benefits of Vertical Spreads

Vertical spreads allow you to profit in the stock market without having to predict what will happen next. It involves using options and helps you make money if you can predict what will probably not happen in the future. nnFor example we find a stock trading at $70 and expect it to go up. We can buy the stock which can help us profit if the trade goes in our direction. But we would risk losing money if the stock does not go up.nnInstead we can decide to sell the $65 put on th

Primary topic: Investing

738 views

By Shaun RosenbergApr 22, 20091 topic

Why Chart Patterns Work?

Chart patterns give you buy and sell signals that can make you profits and help you limit your losses in the stock market. But what makes them work so well?nnChart patterns work because of psychology. Take the rectangular patterns, this pattern occurs when a stock is bouncing back and forth between 2 levels for a while and then breaks either up or down.nnFor example letâs say we find stock XYZ has been bouncing between $35 and $45 for 1 month. Finally it breaks up to $47. T

Primary topic: Investing

1,161 views

By Shaun RosenbergApr 21, 20091 topic

Protective Puts Vs Stop Orders

Protective puts and stop orders both allow you to limit your loss in the stock market. Each has its own advantages and disadvantages.nnSo say we bought the stock at $54 and want to limit our losses to $4. We could do this by buying the $50 put for $8. Now if the stock goes down the most we could lose is the difference between $54 and $50 or $4. The advantages of doing it this way are.nn1. Gaping downnnIf the stock gaps down and opens at say $48 we would still be able to sell

Primary topic: Investing

1,035 views

By Shaun RosenbergApr 21, 20091 topic

Waiting For Technical Signals

Sometimes you can be researching a stock and find it is a great investment. By all fundamental means this stock should go up, but none of that matters unless the technicals tell you it is a good buy. nnIt can be very hard to resist buying something that should go up logically, but if it isnât going up why buy it. Every fundamental genius has picked stocks that should go up, yet get cut in half or worse. Why is this? Because, they didnât have a plan in place to tell them w

Primary topic: Investing

721 views

By Shaun RosenbergApr 20, 20091 topic

When to Trade 3x ETFs

3x ETFs can be a great way to either increase your profits or increase your losses in the stock market. Before you trade them make sure you are prepared.nnIf you trade them consider the following.nn1. Not for long termnnTipple leveraged ETFs are not for long term investing no matter which way you look at it. There has been some talk that leveraged ETFs favor the downside, and that would mean triple leveraged ETFs really favor the downside, going up in the long run may not nec

Primary topic: Investing

1,056 views

By Shaun RosenbergApr 20, 20091 topic

Income Investing with ETFs

Income investing is a very popular strategy, especially when the markets are volatile. Using ETFs can help you achieve this. And here are a few things you can look for when choosing a good ETF to invest in.nn1. DividendsnnYou want your ETF to have dividends of course. The goal of income investing is after all to make an income off of your investments. You probably want to look at how much dividends a stock has been paying off in the past and compare it to how much dividend yo

Primary topic: Investing

699 views

By Shaun RosenbergApr 17, 20091 topic

Why Trading With the Trend Works

Everyone has heard it, trade with the trend, donât fight the trend, but why does it work so well? Well the simple answer is nemotions, more specifically fear and greed. nnThese two emotions are what cause technical analysis to work. But they are not the only reason; below are 3 reasons why technical analysis works so well. nn1. GreednnWhen a stock starts going up, everyone rushes to it because they do not want to miss the opportunity. As the stock continues to head up more

Primary topic: Investing

693 views

By Shaun RosenbergApr 16, 20091 topic

Rolling Options

All options eventually expire. But there are many times when you still want to use the option contract to profit. In this case rolling your option into a later date can be a good idea. nnWhen you roll options you simply close the option position you are in and open up another option position in with a later expiration date. This can help you in the following ways.nn1. Extend the life of your optionnnIf you buy an option on an up trending stock and that stock continues to tren

Primary topic: Investing

813 views

By Shaun RosenbergApr 16, 20091 topic

4 Ways to Make Money in a Sideways Market

Sideways markets can be hard to profit in if you are trying to catch every little tick. But there are still ways you can profit when stocks are flat. Here they are.nn1. Covered CallsnnOne thing you can do is to sell covered calls. You can simply find a strong stock that you would not mind holding on to for a while and sell calls on it. This allows you to make a consistent income off of your stock as the markets go up and ndown. nn2. Selling Bull Put SpreadsnnWhen you sell bul

Primary topic: Investing

707 views

By Shaun RosenbergApr 15, 20091 topic

Selling Options Instead of Buying Them

Buying options can be a great way to make huge returns in the stock market. But they can also work against you in many different ways. Selling options, however can give you the same ability to make a good return, but with less risk.nnHere are some reasons why selling options can be better than buying optionsnn1. Selling Options gives you a higher Probability of being correctnnIf you are selling out of the money options you can benefit from the higher probability they bring. I

Primary topic: Investing

689 views

By Shaun RosenbergApr 14, 20091 topic

Protective Puts: Why Are They Useful?

Protective puts allow you to protect yourself from huge losses in the stock market when times are uncertain. So what are they?nnWhen you buy a protective put you are buying the right to sell a stock at a given price on or before a given date. So say you own a stock that is trading at $60 and are not sure if the company will go down or not. nnYou could decide to buy the $50 put 6 months out for $3. This way if the stock crashes within that 6 month period you will be able to se

Primary topic: Investing

613 views

By Shaun RosenbergApr 14, 20091 topic

Investing for Dividends

Investing for dividends can allow you to make a nice consistence cash flow from your investments. So what should you look for when finding long term dividend plays?nn1. Strong CompaniesnnThe company has to be pretty stable to say the least. If a stock goes down 50% it doesnât matter that you got an 8% dividend. So, only strong companies, or diverse ETFs should be bought if you are going to hold it for a long period. It is important to look for low risk investments with this

Primary topic: Investing

733 views

By Shaun RosenbergApr 13, 20091 topic

Preventing Unsystematic Risk

Unsystematic risk is the risk you take on when investing in a stock. Basically it is the risk of some new announcements, or earnings reports coming out that could affect the price of the stock.nnSo if you buy a stock thinking it was a good buy and all of a sudden the company comes out with earnings that are far below expectation the stock might react harshly causing you to lose money because of some unforeseen events.nnHowever there are ways in which you can prevent yourself,

Primary topic: Investing

959 views

By Shaun RosenbergApr 13, 20091 topic

Why There is a Stock Market

The stock market has been around for centuries, but why? Why does it help the economy? Does it help in any way? The answer is yes.nnThe stock market was created to help 2 people.nn1. Business ownersnnSay you open up a new shop that cost you $1,000,000 after a couple years your business grows and you are making $200,000 a year from your business. But what if you want to expand? You need another $1,000,000 to open up another shore, and this can be pretty hard to come by.nnSo wh

Primary topic: Investing

1,015 views

By Shaun RosenbergApr 12, 20091 topic

Stop Limits: How Useful Are They?

Stop limit orders allow you to put two different orders into your position, a stop and a limit. It allow you to get in or out at a good price. nnWhen you set a stop limit order you tell your broker that you want to buy a stock between two prices and if you canât get it between those two prices not to buy it. nnSo are they useful? Well letâs look at the pros and cons.nnFirst the prosnn1. It allows you to get into a stock at an exact price.nnBecause of this you will know ex

Primary topic: Investing

710 views

By Shaun RosenbergApr 11, 20091 topic

Stocks Move, Options Move Faster

Options are powerful investment tools. They allow you to profit from rising stocks or from falling stocks by an incredible amount if you are right, but they also come with the risk of having you lose an incredible amount if you are wrong.nnLetâs look at an example. Say we find stock XYZ trading at $56. We believe that this stock is going to go up in the short term so we could either buy the stock, or we could buy the call option on the stock. Both ways could potentially be

Primary topic: Investing

693 views

By Shaun RosenbergApr 11, 20091 topic

Selling Covered Calls as an Exit Strategy

Selling covered calls is a great way to make money in the stock market. But as an exit strategy it has itâs ups and downs. nFirst letâs look at the benefits of selling covered calls as an exit strategy.nn1. It allows you to make consistent cash flownnIf you are constantly selling covered calls on your stock you are constantly bringing in an income off of those calls. This allows you to bring in a somewhat consistent cash flow from the stock market, which is unheard of wit

Primary topic: Investing

997 views

By Shaun RosenbergApr 10, 20091 topic

Out of the Money Stock Options vs. In the Money Stock Options

Option trading is a great way to increase your potential returns in the stock market. But even with options there is room for risky traders and less risky traders. nnIf you want to be a more conservative option buyer you can always buy in the money stock options. If you feel like taking on a little more risk with a little higher possible reward out of the money options can be a good alternative. nnSo letâs look at each of them separately. An in the money stock option is an

Primary topic: Investing

1,251 views

By Shaun RosenbergApr 10, 20091 topic

Stock Options and Risk Management

Stock options allow you to make huge returns in the market. When they are winning it is easy to get carried away with them and risk too much, but if you are going to survive as a trader you must make risk management your number 1 concern.nnSo how do you manage your risk with options, especially considering when you buy options you can already lose 100% of your investment? Here two different things you can do to help manage your risk when dealing with options. nn1. Use small p

Primary topic: Investing

788 views

By Shaun RosenbergApr 9, 20091 topic

Why Short Term Trading Works the Best

Short term trading is a much better way to approach the stock market. It gives you so many different advantages.nn1. It allows you to Cut your lossesnnThe first thing you want to do is to not lose money. The more you lose the less likely you will be able to make up that loss and actually become profitable. It is very difficult to make it back if you ride a stock all the way to the bottom.nn2. It allows you to play on emotionsnnWhat moves the stock market is not news announcem

Primary topic: Investing

734 views

By Shaun RosenbergApr 9, 20091 topic

Why Use Stops

Stop orders allow you to cut your losses short as well as use proper risk managements. So besides the fact that stocks can fall fast, what other reasons are there for you to use stop orders?nn1. It allows to manage risknnWhen you place a stop order on a stock what you are doing is telling your broker if my stock falls to this point or lower cut my losses short and get me out of the trade. This allows you to cut your losses and get out of a stock at the first sign of weakness.

Primary topic: Investing

733 views

By Shaun RosenbergApr 8, 20091 topic

Why Look at Chart Patterns?

Chart Patterns are a very useful tool in the trading world. They are patterns that can give you precise entry and exit signals, and allow you to catch the biggest moves in the market.nnSo why are they good to look at? Here are some reasons.nn1. They give you a buy signalnnWith chart patterns you are no longer guessing when to get into a stock or when to exit. The patterns have clear buy and sell signals that you can look at. This lets you develop rules and get in without any

Primary topic: Investing

771 views

By Shaun RosenbergApr 8, 20091 topic

Why I Use Technical Analysis

The best way to invest in the stock market is by using technical analysis and technical indicators. And here is why that is so.nn1. Technical Analysis can give you specific Buy Signals.nnWhen you are looking at the fundamentals of a company you can find stocks that are undervalued or overvalued, but that does not give you a good signal. You might buy the stock at $30 and have it fall down to $15, not because it wasnât a fundamentally strong company, but because it wasnât

Primary topic: Investing

744 views

By Shaun RosenbergApr 7, 20091 topic

Buying Stocks to Sell Calls On

Buying a few different stocks to sell covered calls on can be a good thing or a bad thing. All basic principles of buying stocks still apply, so choose your positions carefully. nnSo what stocks are good candidates for covered calls?nn1. Good long Term PlaysnnIf you are going to sell covered calls it is important that you do it on stocks that you would not mind holding for a longer term time frame, because you might have to. These stocks should have good fundamentals and be c

Primary topic: Investing

880 views

By Shaun RosenbergApr 7, 20091 topic

Waiting for the Bounce, or Not?

One of the ways to catch a stock is by catching it as it falls on support. When a stock hits support it is normally a good sign that it will go up. But should you wait for the bounce or not?nnIt depends on your own personality. There are advantages and disadvantages to waiting for the bounce. Letâs look at each of them.nn1. Waiting For The BouncennIf you wait for the bounce it is more conservative and the odds that the stock will move in your direction are greater because t

Primary topic: Investing

696 views

By Shaun RosenbergApr 6, 20091 topic

Limiting Losses in the Stock Market

It is amazing that everyone talks about getting the huge returns in the market, but not many people focus on protecting yourself from taking huge losses which is the most important part of trading.nnThink about it if you buy a stock at $30 and it falls and crashes to $10 you have just lost 66% of your account. Ok I know that everyone says to be diversified, so you probably will not put all of your account into 1 stock.nnBut what about bears markets where you get a diversified

Primary topic: Investing

735 views

By Shaun RosenbergApr 6, 20091 topic

Stock Options, Picking the Right Strike Price

Options can be a powerful wealth building tool if used properly. But one big mistake you can make when trading stock options is buying the wrong strike price. This can work against you in so many ways. So letâs examine some strike prices and how they can help you.nn1. In the MoneynnAn in the money option is an option that already has some intrinsic value. For example stock XYZ is trading at $55 we buy the $50 call for $7. This gives us the right to buy this stock at $50, or

Primary topic: Investing

988 views

By Shaun RosenbergApr 5, 20091 topic

Having an Exit Plan for Bad Trades

Trading in the stock market can lead to huge gains, which is why many people will flock to it as a way for them to finally quit their jobs. The problem is that it can also have large losses.nnBecause of this your first concern should be to protect yourself from taking big losses. You want to preserve your capital so that you still have the majority of your account left, even if you get into a few bad trades in a row.nnLetâs look at an example, say you find a stock trading a

Primary topic: Investing

679 views

By Shaun RosenbergApr 3, 20091 topic

Advantages and Disadvantages to Selling Options

Selling Options has its advantages and disadvantages; if you are interested in getting into option trading this is something you might want to consider.nnWhen you sell options you are not trying to predict which way the stock will move, rather you are trying to decide which way the stock is likely not to move to. So if you find a stock that is trading at $70 and expect it to go up you could always sell the $65 put for $2.4 walk away with the premium and profit as long as the

Primary topic: Investing

4,000 views

By Shaun RosenbergApr 3, 20091 topic

ETFs for Long Term Investments

ETFs can be a great way to profit in the long term. If you want to get into investing and do not know which stocks to buy and hold ETFs can be a great benefit to you. And here is why.nn1. Already DiversennETFs are already diverse. If you buy an ETF you are buying something that tracks many different companies and possibly many different sectors. So instead of you trying to find 20-30 different companies to hold you can simply invest in a couple big ETFs. nnThat would give you

Primary topic: Investing

698 views

By Shaun RosenbergApr 2, 20091 topic

Stops on Option Pays

Placing stops on option plays is extremely important for anyone looking to trade options profitably. There are 3 ways you can limit the amount you lose on your option.nn1. Let it expirennI will use this every now and then when I am looking to either make a huge gain or a small loss. What it means to let your option expire is simply this. You buy an option a month or two out expecting a big move in the stock. If it goes your way you could potentially get a return of 200-300% o

Primary topic: Investing

676 views

By Shaun RosenbergApr 2, 20091 topic

Why Chart Patterns?

Chart patterns are naturally occurring patterns in the stock market that can indicate a big move either to the upside or the downside. They can be a good indicator for short term movements.nnSo why are they so important? Why can they give you a great way to trade the stock market?nn1. They offer you a targetnnChart patterns normally have a target that you can shoot for. This means that that when you enter the trade you know what you are planning to happen. nnIt can be hard to

Primary topic: Investing

823 views

By Shaun RosenbergApr 1, 20091 topic

How to Create a Credit Spread

Credit Spreads allow you as a trader to profit by selling options and letting those options expire worthless. It also allows you to limit your max risk because you not only sell an option but buy another option.nnSo letâs look at an example. We find a stock trading at $74 and we believe that the stock will go up in the short term. But we may not want to buy the stock or buy an option on the stock because we would only be profitable if the stock does in fact head up higher.n

Primary topic: Investing

713 views

By Shaun RosenbergApr 1, 20091 topic

Using the Option Delta

The Option delta is a great way to predict how much an option will increase or decrease as the stock moves one way or another, but how do you use it?nnA delta is a number between 0 and 1 that estimates how far a stock option is likely to move for every 1 point move in the stock. Every option has a different delta because of things like time value, and strike price. nnSo how do you use it? Letâs look at an example. Say we are expecting a stock to make a quick move from $55 t

Primary topic: Investing

751 views

By Shaun RosenbergMar 31, 20091 topic

Donât Confuse Stop Limits with Stops

One of the biggest mistakes I have made was confusing a stop limit order with a stop order. This could potentially be very harmful to your account.nnA stop order is simple; when you use it you tell your broker âsell my stock once it gets to a certain pointâ. This way you can effectively limit your potential loss on a stock which would make it easier for you to effectively manage your account.nnA stop limit order on the other hand tells your broker to sell your stock if it

Primary topic: Investing

903 views

By Shaun RosenbergMar 31, 20091 topic

Covered Calls During Volatile Times

Covered calls can be a great way to profit when the stock market is trending sideways. If you donât know which way stocks are going to go it isnât a bad idea to sell some calls on strong stocks. nnSome reasons Selling Covered Calls can be a good idea are.nn1. Monthly IncomennSelling calls is a nice way to make a monthly income from the stock market. If you are a dividend investor a 2-5% cash flow after a year might seem good enough. Forget about dividends covered calls ca

Primary topic: Investing

625 views

By Shaun RosenbergMar 30, 20091 topic

Signs of a Bottom

Everyone wants to find the bottom of the stock market so they can make huge returns and be looked at as a genius. But often times the only way you can tell when a bottom is, is after the fact. There are some signs that you can look at however to determine if the bottom is coming.nn1. No one believes itnnOne of the best signs of a bottom historically has been when no one believes they are at a bottom. Everyone hears bad news and has some reason why the markets will keep fallin

Primary topic: Investing

826 views

By Shaun RosenbergMar 29, 20091 topic

Put Options vs. Short ETFs

Put options and short ETFs are two ways you can look at profiting from the downside, so which one is better. What provides the least risk and highest reward?nnWell at least when you compare it to your total investment put options probably give you a higher risk then short ETFs do. But all and all I believe buying puts is a better way to go about trading the downside then buying short ETFs for these reasons.nn1. Higher rewardnnObviously option trading will give you a much high

Primary topic: Investing

4,295 views

By Shaun RosenbergMar 29, 20091 topic

Cutting Losses on Stock Options

When you hear the words stock options you probably think something like risky or huge losses. But if done correctly trading options can be profitable and help you to experience limited losses.nnMost people who trade options will probably end up going bankrupt, and why is that? It is because they do not limit their losses. It is very important to look at protecting your capital when trading. nnSo how do you limit your losses? Well the first thing you need to do is manage how m

Primary topic: Investing

1,004 views

By Shaun RosenbergMar 28, 20091 topic

Buying Options with a Plan

Anytime you trade stocks in the market it is normally a good idea to have a plan, but when you trade options plans are critical. You do not have the luxury of holding onto the option and hoping it will come back.nnYour plan should be simple to follow and answer the following questions.nn1. TargetnnIt is normally a good idea to have some idea of where the stock is heading and how much you can expect to make on your option. Most people will buy an option and hope that they stri

Primary topic: Investing

819 views

By Shaun RosenbergMar 27, 20091 topic

Top Reasons to Cut Your Losses Short in the Stock Market

The biggest mistake I have seen people making in the stock market is not getting out when they are wrong. Instead they allow a trade they are in to pull back 50% or more if things turn against them.nnThe larger you let your losses get the shorter you will be trading the market. Here are the top 3 reasons to cut your losses short.nn1. Trading is a Business.nnTrading in the stock market is a business; your capital is the lifeblood of your business. If you let the loss on 1 trad

Primary topic: Investing

713 views

By Shaun RosenbergMar 26, 20091 topic

Why Use Stop Orders

Stop orders are very critical in the stock market. It can help you to limit your losses when you are wrong and keep your gains when you are right. Many new investors will fail because they do not utilize this order.nnSo what is a stop order? Well a stop order is an order that you place whenever you are in a stock. It tells your broker that if the stock gets to a certain point, sell my stock. So why should you use it?nn1. Limit Your LossesnnThe most important part of trading i

Primary topic: Investing

704 views

By Shaun RosenbergMar 25, 20091 topic

Stocks Vs Options

There is a lot of debate out there whether it is better to trade stocks or options on the open market. My personal opinion is options give you such an advantage that you shouldnât ignore them.nnLetâs compare buying the stock with buying an option. When you buy the stock you are buying the individual asset at a given price. When you buy the option you are buying the right to buy that asset at a fixed price on or before a given date. nnSo say the stock is trading at $90 and

Primary topic: Investing

836 views

By Shaun RosenbergMar 24, 20091 topic

When Not to Use Stop Limit Orders

Stop limit orders can be very powerful if you use them correctly. However there are certain times when you should just not use stop limit orders.nnBefore we go into when you should not place stop limit orders lets go into what they are first. When you set a stop limit order you are attempting to buy a stock at a specific price.nnIt consists of two parts, the stop and the limit. Letâs say we set a stop limit order with a stop at $50 and a limit at $55. nnWhat that would mean

Primary topic: Investing

1,015 views

By Shaun RosenbergMar 23, 20091 topic

Day Trading Advantages

Day trading can certainly have its advantages in the stock market. Here are a few reasons why it can be a good idea to day trade, if you know what youâre doing.nn1. Shorter Time FramennThe benefit of a shorter time frame is compound interest. The shorter your time frame is the greater compound interest will either work for you or against you. So for example if you could nmake .5% a day you would almost quadruple your account in 1 year.nnNow of course there are days when you

Primary topic: Investing

797 views

By Shaun RosenbergMar 22, 20091 topic

Benefits of Short ETFs

Short ETFs are one of the new inventions in the stock market. They allow people to make money as the markets are falling down. But most investors donât use them in fact most everyone seems to have an argument why you shouldnât use them.nnThere articles say silly things like if you buy them your account will be damaged in the long run. While it is true that your account can be damaged if you buy and hold them, they arenât meant to be held that long. nnNo one that I know

Primary topic: Investing

928 views

By Shaun RosenbergMar 21, 20091 topic

ETFs vs. Stocks

Trading ETFs can be a very profitable thing to do. There are a few major advantages to trading ETFs that you would not have if you decided to trade stocks.nn1. ETFs come with less surprisesnnIf you have ever traded stocks you have probably noticed that you can get some surprises now and then. You might buy a stock for $40 and it slowly goes up to $50 within 2 weeks then some extremely bad unexpected news comes out and it falls back to $40 in 1 day. nnIt can happen a lot, and

Primary topic: Investing

865 views

By Shaun RosenbergMar 20, 20091 topic

Investing in ETFs

ETFs provide a great way for investors to diversify along with not having to pay those huge mutual fund fees. Here are some reasons why ETFs might be for you.nn1. They give you a great way to diversifynnETFs track certain industry groups or markets. So if you buy the ETF for a specific industry group and 1 company from that industry group goes under it is not going to affect you too much because you are invested in the sector as a whole. nn2. Most Mutual Funds do not beat the

Primary topic: Investing

694 views

By Shaun RosenbergMar 19, 20091 topic

Why Use Credit Spreads?

Option selling can be a very profitable thing especially when you sell options using credit spreads. But many investors go nabout it the wrong way.nnThere are a number of people who try to sell naked options on a stock. And if you donât know what that is it is simply selling an option on a stock. nnSay you expect the market will go down, or at least not go higher in the short term. You can still profit from it by selling calls. The problem is many people will just sell a si

Primary topic: Investing

705 views

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