Putting Candlestick and Option Strategies Together

Putting Candlestick and Option Strategies Together

The serious option investor can make very strong profits utilizing correct trade analysis. The reduction of risk can be incorporated into the trade analysis. The same analytical tools for finding high profit stock trades can dramatically im­prove profitability with some simple option strategies.

A successful option trade utilizes a series of quick and easy trade entry steps. A successful option trader needs to prepare exit strategies the same as they would when trading the underlying stock. When the stock trade does not work, the option trade does not work. Unfortunately, this makes the effect of the bid/ask spread more pronounced.

The benefit of being in a successful option trade is the large percentage returns that can be made. Losses, as far as percent loss, on a particular trade will be much more exaggerated than a stock trade, of course. That makes the concept of the option trading “program” that much more important than each option trade.

Keeping in mind, the basis for successful investing is to put the probabili­ties in your favor. Probabilities imply that not all trades are going to be success­ful. The purpose of learning a trading strategy is to use the parameters and historic observations that have worked successfully a high percentage of the time. Utilizing the candlestick signals has that proven track record. Applying that information to option trading, leveraging the use of your funds, requires the same mental process as a successful stock trading program. When all the indicators/signals point to a successful trade, take advantage of what you have learned.