Online option trading - take a break

Dear fellow traders,

Thanks to Trader Travis from Learn Stock Options Trading who shares with us an article on why you should take a break from your online option trading till the 2nd week of January 2011.

Here's the article.

Meanwhile, the bill to extend all Bush-era tax cuts for at least 2 years and extend aid to the jobless for 13 monthswas was passed through the House on Thursday, 16 Dec 2010. The bill was just signed by the President.

A day after the Senate passed the tax legislation easily by an 81 to 19 margin, the House of Representatives followed suit - 277 to 148 - sending the bill to President Obama to sign and reap a restorative bipartisan victory six weeks after the Democrats defeat on the 2 Nov 2010 elections.

The legislation will add $858 billion over two years to the already soaring U.S. federal deficit in an effort to stimulate the economy.

I take this opportunity to Wish Everyone a Very, Merry Christmas!

Tony Chai

Trade Updates

Dear friends,

The markets have moved higher. The S & P 500 has surpassed the early Nov high. In fact, S & P 500 is trading at a new 2-year high. The 30-Day Moving Average and the trendline are pointing upwards.

The NASDAQ is equally impressive. It also reached a new 3-year high.

The bullish market is buoyed by news of a deal by President Obama to extend the Bush-era tax cuts for at least another 2 years. This raises the optimism that the economy will have room for growth in 2011; though there's some debates whether extending the tax cuts (including the estate tax) for the super rich is appropriate.



Nevertheless, The Federal Reserve Chairman Mr Ben Bernanke said the Fed is ready to provide additional stimulus measures to help the economy to create jobs. The FED is dipping into the the quantitative easing measures by buying 600-billion-dollar of bond as announced after the last FOMC meeting in November 2010. The fed fund rate rates are near zero% and the FED can't cut interest rates any more as a measure to revive the economy.

Here are the updates of my Star Trading System trades.

I wish to take this opportunity to wish everyone a Merry Christmas & a Happy New Year!

Good Trading,

Tony Chai

Update of Trades

Dear fellow traders,

The following is an update of the trades made with the Star Trading System as discussed in my previous post :

The following are real money trades using the same Star Trading System :

Happy Thanksgiving!

Regards,

Tony Chai

Profitable Option Trades with the Star Trading System

Dear friends :

The above is a list of option trades that I've paper-traded with the Star Trading System. To comply with privacy rights, I regret that I'm not allowed to display the stock tickers and options in these trades.

The Star Trading System is a swing trading system which rides with the trend of the market. It comprises a specific set of rules to select the stocks to ride on this trend. But the stock selection is automated with the help of a software called Telechart 2007. This automatic stock scanning process saves us tons of time from manually scanning the thousands of stocks or ETF traded in the US market.

Then the system has very precise rules to qualify the best options to leverage a trade on the stock candidates. And that's not all. Mr Jason Ng, President of Masters 'O' Equity Asset Management (Singapore) Pte Ltdthe and creator of the Star Trading System, further streamlined the essential criteria to consider when the US market opens to eventually decide whether to enter those option trades.

All these stringent steps are given and to be strictly followed for one single purpose - to trade an option position which meets the highest selection criteria and executed at the most opportune moment where there's a higher probability of success.

Alas, the market is unpredictable. Thus, the Star Trading System has a stop-loss method to minimize loss of trading capital in case the market go against the option position.

The Star Trading System also recommends a few profit targeting methods which I find useful to control traders' 2 weakest emotions during trading - fear and greed.

However, I have to stress that the Star Trading System is not a get-rich-quick trading system. You still need to put in some efforts to do your homework to prepare for your trades and monitor them when they are already in position. But believe me once you get use to the steps outlined very clearly in the system by Jason, you will spend lesser than 1 hour (or even lesser than that) a day to do the steps I've mentioned above.

You'll realized I did not bother to hide the options paper trades on Apple Inc. (AAPL) and Amazon.com, Inc. (AMZN). These were actually earnings gapping trades to show you the fallacy of this trading technique. I've mentioned in this blog entry why I've stopped trading the earnings gapping technique.

The following are some of the trades that are still in position using the Star Trading System.



Good Luck in your trading.

Yours Truly,

Tony Chai

Guest Post at OptionAlpha.com

Dear friends,

I've made a guest post at OptionAlpha.com where I've talked about the current market condition and also shared some of the valuable principles in trading that I'm adopting now.

The S&P 500 Chart 

The Dow Jones Industrial Average

Cheers,

Tony Chai

The Social Network aka Facebook

Dear friends,

When I sign up for a Facebook account back in year 2005, I didn't realize this social network portal is going to be that BIG!

Nowadays, if you're not in Facebook, you're out!

Just look at smartphone users around us, almost everyone I see is scrolling his or her Facebook account. During break times at work, almost every colleague is sneaking in to check who has left what in their Facebook account.

Medias, corporations are riding on this Facebook frenzy to promote themselves. It's certainly a hip market tool that has extended beyond the Google PPC marketing avenue.

Talking about hip, the movie "The Social Network" has been released in the US in Oct 2010. I guess you know what's the movie is about :)

I just went to the Rotten Tomatoes movies review site and found that this movie has garnered an amazing 97% rating!! That's remarkable for a movie which does not boast big budget FX special effects and action sequences. I believe it should have scored brilliantly with a clever script, good directing and a great cast and I'm pretty sure this movie will do great in next year's Oscar. From the rave reviews that I've seen so far, I guess this is one movie that I will not miss.



By the way, my Facebook ID is Tony Chai. Wow! I just found out that there are tons of Facebook users registered as "Tony Chai". I won't be too surprised since up to July 2010, Facebook has more than 500 million users around the world. The company is estimated to be worth at least US$30 Billion.

Regards,

Tony Chai

P.S. I just watched the movie and I've only one word which aptly describes it - Fast. It's like a computer program being coded line by line by a professional programmer. Each dialogue is quick and kept the pace of the movie tight without making the story too confusing. Mr Jesse Eisenberg portrays the character of Facebook's creator, Mark Zuckerberg, really well. I wonder whether Mr Mark Zuckerberg talks bullet-fast like that in real-life synonymous with how quickly he generated those Facebook program codes. I'm also wonderfully surprised that Mr Justin Timberlake put up a great performance playing the character of the inventor of Napster. Go watch it!

Market Update - 29 Oct 2010

Dear Traders,

The U.S. Markets have performed remarkably these few weeks.

The Dow Jones Industrial Index and S & P 500 Index have surpassed the Aug 2010 High and have almost reached the late April 2010 High. But the Nasdaq 100 (an Index comprises mainly of Tech Stocks) has performed even more impressively by breaking the April 2010 High shown below.

A lot has been said whether the current market rally has been caused by Quantitative Easing (QE) measures by the Feds, which have been used previously to revive US from the 1930 depression and also adopted by Japan when interest rate has reached 0%. Money have been created to help increase the level of reserves held by the commercial banks. Securities have been bought in the open market by bank institutions.

The following video gives you a good idea of what Quantitative Easing (QE) is all about :



I'm not an expert whether this could be the real cause. But I do notice the US exchange rate against our country's (Singapore) currency has dropped tremendously. A market rally is usually tied to the country's economy strength. Is the current US stock market rally indicating the US economy is strengthening? But how do we explain the weak US currency?

May be fellow traders familiar with economy can enlighten me.

Thanks,

Tony Chai

Market Update - 2 Oct 2010

Dear friends,

As of 2 Oct 2010, The Dow Jones Industrial Index (DOW) and the S & P 500 Index have risen past their June and Aug High in a bullish fashion during the past few weeks. Their 30 Day Moving Averages have also recently been pointing upwards.

Their next point of resistance would be the May 2010 High.  

Interestingly, the trading software from BestChoiceSoftware analyzed that the DOW has, in the pat, risen 86% of time between Oct 27 to Nov 12.

I wonder whether this would happen this year.

This is for your information and I'm not affiliated to this trading software company.

Have a nice weekend!

Tony Chai

Market Update - 6 Sep 2010

Dear friends,

As of 3 Sep 2010, Friday, the S& P 500 index is pushing towards the 200DMA. It seems destine to test the resistance level at 1130.

On the other hand, the DOW has touched the 200DMA after closing at 10,447.93 on 3 Sep 2010. Its next level of resistance will be at 10,700.

Regards,

Tony Chai

Market Update - 3 Sep 2010

Dear friends,

On 3 Sep 2010, Friday, The Dow was up 127.83 points (1.2%), to close at 10,447.93. The Big 3's other Indexes also rose. The S & P 500 Index rose 14.41 points (1.3%), to close at 1,104.51, while the Nasdaq Composite Index was up 33.74 points (1.5%), to close 2,233.75.

The broad equity market rose due to better-than-expected employment data released on 3 Sep 2010, Friday - the latest piece of improving news on the U.S. economy.

The Labor Department announced that 67,000 jobs have been added in the private sector in Aug 2010, more than the 44,000 that analysts have forecast. But that's still a far cry from what economists consider to be a healthy level for the economy, where a more comfortable figure would be between 100,000 to 150,000.

Regards,

Tony Chai

Market Update - 1 Sep 2010

Dear friends,

The US Market surged about 3% on 1 Sep 2010 on the positive note from the ISM (The Institute for Supply Management) index released on 1 Sep 2010 and the Consumer Confidence Data on 30 Aug 2010. On Wednesday, the ISM index rose to 56.3 in Aug 2010 from 55.5 in July 2010. On Tuesday, the Consumer Confidence Data, released by the Conference Board, rose to 53.5 in Aug 2010.

On Wednesday, 1 Sep 2010, the Dow Jones industrial average was up 255 points higher (2.5%) to close at 10,269, the S&P 500 rose an impressive 31 points (3%) to 1,080.

Burger King shares were up $2.41 to close at $18.86 on news of potential buyout. Apple shares rose after unveiling their new line of iPods and the new streaming Apple TV Box that will offer movie and television rentals From Disney, Netflix.

But looking at the S&P 500 chart, you'll see that the index is still below the 30 Day Moving Average (blue line). We should be cautious if the July 2010 low is breached.

The Labor Department will release the more closely followed non-farm payrolls data on Friday, 3 Sep 2010.

Regards,

Tony Chai

Disclaimer : For information purposes only. Not intended as any form of stock recommendation or solicitation.

Free Options Trading Course

Dear fellow traders :

Just want to share a site with you if you've always wanted to learn about stock options and how to trade them.

Travis has devoted a considerable amount of time and effort to create a web-based home study course in his site. To facilitate learning, he has organised the options trading materials into modules so that the knowledge could be acquired in a step-by-step manner. The wonderful thing is, the knowledge he shared is free.

I wish to commend Travis for presenting the materials in layman terms for the benefits of beginner traders. But seasoned traders will find his modules on technical indicators useful as I have always been confused with their proper use to aid my trading. I believe many of you will like module 6 where Travis reveals the steps of how he actually trades options, something which most traders will not share freely.

Travis' option trading web-based home study course


Hope you find the lessons useful.

Regards,

Tony Chai

Read This if You Feel Down

Dear friends :

Do you sometimes feel that life have beaten down and you're overwhelmed with adversities?

May be these words of wisdom extracted from "The Greatest Miracle in the World" by Mr Og Mandino will lift your spirit :

Memorandum from God

Mr Og Mandino was an inspirational writer who had written a number of books which have changed peoples' lives and even to the extend of saving their lives. He chanced upon Mr Simon Potter, a wise, gentle old man who called himself a "Ragpicker of people". Simon lent Mr Og a helping hand when he was stuck in the cold, snowy car park near his office. What ensued was an endearing, mysterious friendship between these 2 great men. Mr Og Mandino was enlightened by Simon's philosophy of life and his many words of wisdom shared during their frequent meetings. The book "The Greatest Miracle in the World" described how they first met. From the author's beautiful writing style you'll pick up golden nuggets everywhere, including the "Memorandum from God". The book will encourage and perks you up if you happen to be at a crossroad feeling that you've failed or faced with insurmountable obstacles. You'll be touched many times while reading the book.

If you're in Singapore, you can pick up this brilliant book at less than S$10 at the Popular Bookshop. You may get a further 20% discount since they are having a "Jumpstart Your Life" promotion which run till end April 2010. (Latest : I've checked that if you bought it at less than S$10, the 20% discount doesn't apply.)

Or you can buy it from this link :

The Greatest Miracle in the World

On the same note, you may also be interested in reading "The Greatest Mystery in the World", the last book written by Mr Og Mandino. The author had some final moments with his old friend, Mr Simon Potter. Simon left him an old notebook containing the "The 7 Rungs of Life's Ladder" which he hoped Mr Og would share with the world. Be prepared that you will both cry and be enlightened by this final book from Mr Og Mandino.

As mentioned, you can pick up this book from the Popular Bookshop at less than S$10, or you can choose to buy from the following link :

Greatest Mystery in the World

I hope the above-mentioned books will help you in any way in your life.

Best Regards,

Tony Chai

Anger

As traders, fear and greed are the two emotions that we commonly handle in our trading decisions.

But I believe another emotion that we also sometimes experienced would be - anger.

Most traders have learned to be calm and sensible during trading. But there would certainly be times times when we fumed at missing out a fantastic trade, for not buying more contracts of a great trade, or frustrated for committing that same trading blunder again.

We would blame just about anything or anyone when our trading suffered. Somehow we didn't realize that the anger have originated from us.

I recently read a book called "Zero Limits" co-written by Dr Joe Vitale & Dr Hew Len. The book was quite an eye-opening read. It mentioned that we are the one who are fully responsible for any circumstances which are happening within & around us.

When we encountered another person pouring out his or her frustrations, whether they were meant for us or not, we should accept that we were partly responsible for that happening, since his or her frustrations had come into our lives.

Naturally, we are responsible for our own anger too.

The way to resolve this would be, strange it may sound, is to keep cleansing ourselves by constantly repeating the phrases "I love you", "I'm sorry", "Please forgive me" and "Thank you" to ourselves.

According to the book, these are simple but powerful words that we convey to the Divine. We connect to the Divine by expressing our love and gratitude to him. At the same time, we seek the Divine's forgiveness of our wrong doings.

Saying these 4 phrases will cleanse the memories of greed, fear and anger associated with anything (including trading) as we give in to the Divine to handle the situation for us.

We would experience a peace of mind that the Divine is taking care of us. Another positive outcome of cleansing ourselves is that we are now open to receive the inspirations from the Divine for us to act upon.

I encourage you to read more about this ancient Hawaiian practice called Ho'oponopono from "Zero Limits" to experience this positive feeling.

I hope that in time you will gradually banish your anger not only in your trading but also in other parts of your life.

"I love you", "I'm sorry", "Please forgive me", "Thank you".

Zero Limits: The Secret Hawaiian System for Wealth, Health, Peace, and More

Regards,

Tony Chai

Swing Trading

Dear fellow traders,

I have totally stopped trading the earnings gapping technique for a while.

It is a highly unpredictable way to determine the price gapping direction after a company's quarterly earnings - which is more like a gambling strategy where you hope one big hundred percentage profitable trade could cover a few losing ones.

But in the long run you'll never grow your capital trading this way - mainly because each trade you take is an expensive one, where option premiums will normally cost more before earnings since they are inflated with high implied volatility. If the stock price gapped in the wrong direction or gapped too little, you'll lose the whole premium because that's when volatility crunch (ie. loss of all implied volatility in an option premium) kicks in after the earnings are announced.

I've currently switched to a swing options trading system which, in my opinion, is a more logical way to trade the US market. I'm referring to the Star Trading System. It's a step-by-step way to trading where :

1) you first check the trend of the market and trade according to this trend (not against it)
2) scan for qualified stocks to trade according to this trend
3) filter out suitable options to trade the stock(s) using the leverage power of options
4) check the rules for entry and once a trade is qualified and executed, a stop loss is set immediately
5) set a profit target immediately or hold on to the trade to milk a bigger profit until an exit chart pattern occurs
6) once a trade is made & the stop loss (and the profit target) is set up, you just switch off the pc and let the trade run

Detailed criteria & rules for executing the above steps would be given to you.

Unlike most options trading systems that you can buy online which you only get an e-book or training videos without much training support, this swing options trading system is packaged in such a way that you get not only an e-book but also daily email lessons (for a month) to provide you with additional materials beyond the e-book.

In addition, Mr Jason Ng, the creator of the Star Trading System, would also provide a one-to-one MSN mentoring service to you for 15 mins. every trading day for a month to make sure that you fully understand how to apply this swing trading system.

I have paper traded this technique for about 2 months and I've found 80% of the trades to be successful. But due to the terms of conditions I couldn't display the options trades here. I find the system logical and take the guess out of trading thus I have just started trading real money with it.

But do not treat this as a get-rich-quick system as you do need to put in efforts to carry out the steps mentioned above. But they would take less 30 minutes a day or less once you're familiar with the steps. And believe me, Jason have made every steps simple so that they would not be too difficult even for a beginner trader to follow.

Also, do not expect this system to produce 100% winning trades every time because frankly such a system don't exist. I target about 15% to 25% profit for every trade and would only aim for more profit when I feel I'm more proficient with the system. What I like is that the system keeps the trade in check since the stop loss is in place once the trade is put up, meaning I don't have to monitor the trade every hour of the day.

I find the course affordable since most of the trading workshops in Singapore cost at least S$3,000 to attend.

Mr Jason Ng is the President of Masters 'O' Equity Asset Management. He is also The Chief Option Strategist / CEO of the hedge fund "Master's Capital Inc.". He developed the "Star Trading System" and described the system as "the most objective, accurate and consistent, technical short term trend riding strategy that has ever existed". He even provide a LIFETIME Money Back Guarantee if you find that the system has not improved your trading.

If you still do not know what you're doing in your trading, why not give this swing options trading system a try - it may just change the way you trade from today.

Get the Star Trading System here.

Thanks & Best Regards,

Tony Chai

Related Posts
What is Swing Trading?
Why Options?
Money Management
Options Trading Risks

Here are the links to Jason's other informative web-sites :
Daily Market Analysis
Options Trading Knowledge