Are you interested in skyrocketing profits in your trading account? Look no further; options trading could be an outstanding choice for making profits from market movements. In this article, you will learn what is options and how their strategies can work.
Options is an agreement that gives the buyer the right, but not the obligation, to buy or sell a fundamental asset at a pre-fixed price and time. The fundamental asset can be a stock, index, commodity, or currency.
Options come in two kinds: calls and puts. A call option offers the buyer the right to buy the fundamental asset at the strike price before the option expiry date. A put option offers the buyer the right to sell the fundamental asset at the strike price before the option expiry date. The strike price is the price at which the purchaser can purchase or sell the fundamental asset.
How Do Options Work?
People might confused about the concept of options trading about how they work. For better understanding, we have distributed it into five main parts.
1. Based on Stock
Every option is based on assets; in most cases, that means stocks. However, an option usually represents 100 shares of a specific stock that the owner of the option can purchase or sell while the option is still active. It is called exercising the option.
2. Type of Option
There are two types of options available: either a call or a put.
3. Expiry Date of Option Contract
Every option contract comes with an expiry date, but the date could be from a few days to a few years from the time you purchase the option. You can purchase or sell the option based on or sell the option contract to somebody else who wants to purchase it up until the expiration date. However, when the expiration date comes and goes, the option vanishes.
4. Strike Price
If you select to exercise the option, the strike price is the price you will be able to sell or purchase each share of the stock that the option contract is based on. If you have a call option with a strike price of $50 and the stock’s price rises to $85 per share, you will still be able to buy at $50. It also makes your option contract much more worthy on the options market.
5. Cost of the Option (Premium)
Cost per share you need to pay for the option contract. You usually see an option listed for $10. But it is not truly worth $10. Keep in mind every option represents 100 shares of a specific stock. This $10 is the cost per share of the option. So, actually, you would multiply the cost of the option by 100 to get your premium; in that case the premium is $1000.
6. Types of Options Trading Strategies for Novices
The process can be more complicated than navigating traditional stock trading. It happens because investors jump into this without a real strategy in mind. The powerful key to success in options is learning the different ways to invest before approaching it. Mostly, investors try to learn and perform, and as a result, they get confused or portfolio losses.
The below-mentioned list guides you with some of today’s best options and strategies for novices:
1. Buying Calls Or Long Calls
Buying calls is an outstanding strategy for newbies and investors who are confident in the prices of a certain stock, ETF, or index. Long calls give the ability to investors to take benefit of rising stock prices, as long as they sell before the options expire. This type of strategy helps to reduce overall risk when trading options. The potential loss is only the cost-per-share (premium) paid to purchase the contract. However, the potential profit is unlimited depending on how much the price of the share is increased.
2. Buying Puts Or Long Puts
Buying puts is quite similar to buying calls, except investors assume the asset will decrease in value rather than increase. Traders typically utilize this strategy as a replacement for short-selling because the risk is smaller. When buying puts, traders are only risking the amount of premium if the asset crosses the initial strike price. Depending on the value of the premium, buying put can be a low-risk path to take benefit of falling prices.
3. Short Puts
The short put is a trading strategy for novices and investors who are selling options. The aim behind this strategy is to make a profit from the premium paid on options contracts. Suppose Investor A is executing a short put strategy and sells a put option to Investor B. If the value of those shares stays the same or increases, Investor B will definitely let the put contract expire. After the expiration of the contract, Investor A would keep the initial premium, thus profiting from the transaction.
4. Married Puts
The married put gets its name by combining two strategies of investment: stocks and options. These investments will be made concurrently, with investors purchasing one put option for every 100 shares of stock they purchase. If you remember from above, a put option hopes on share price decreasing. Therefore, in a married put, investors are attempting to make sure of themselves against a loss in share value. When implemented correctly, this strategy offsets portfolio losses while waiting for the prices of stock is increase.
5. Covered Calls
The covered calls strategy is made up of two options trading strategies. First, an investor must have fundamental stock in a company. Then, they must sell a call on the stock and get a premium. In a covered call, the investor is expecting that the stock price will be the same or slightly decrease. However, pushing the purchaser of the options to let their contract expire. In that way, the investor will keep the premium money they received. This strategy is common among investors expecting to generate income from stock ownership while the stock price remains the same or slightly changes.
6. Protective Puts
Investors usually use a protective put strategy to protect themselves from potential losses. Investors buy a long put against shares they already own, which protects them if the stock price is decreased. The comparison between a protective vs. married put is that a protective put is used to reduce losses from shares you already own. On the other hand, married put protects shares you are purchasing simultaneously. This strategy is commonly utilized when investors are hoping for a short-term decrease in share prices.
In this options trading guide, we have shared comprehensive details about options and their strategies. However, this trading is not for beginners; you need deep knowledge before you dive in.
Majestic EA software is the optimum choice for automating your forex trading. But are you curious about whether you should use the MetaTrader 5 platform for trading in the foreign exchange market? After reading this guide, you will find how much you can boost the profits of your forex trading using Majestic EA on the MT5 platform. So, let’s get started with all the details.
Why Should You Trade Forex Using the MetaTrader 5 with Majestic EA?
The integration of different tools and platforms is vital in modern trading systems. Current financial markets are fast-paced, which is why traders require access to a wide range of tools and resources to keep at the top of the competition.
The amalgamation of majestic EA in the MT5 platform enables a trader to streamline trading activities and automate tasks. Including trade execution, order management to reduce the risk of errors, risk management, and access to the forex market data, news feeds, and analytical tools. All these features help traders to make more informed decisions and stay ahead of the foreign exchange market trends.
So, let’s get into the details of why a trader should opt for Majestic EA on the MetaTrader 5 platform.
MT5 uses the MQL5 programming language, which lets the traders make custom indicators and automatic trading strategies. This platform also supports automated trading via EA (Expert Advisor), which can execute trades on behalf of a trader.
So, with the integration of majestic EA on the MT5 program, a trader doesn’t have to worry about seeing their screen all the time. This EA is designed to identify profitable trade opportunities and execute forex trades automatically with a high degree of accuracy.
Conclusively, automating traded strategies of MT5 and majestic EA benefits a trader to take advantage of the foreign exchange market even when away from their PCs.
Risk Management to Protect Assets
The technology-motivated finance markets are now very fast-paced, which is why the security of the assets of a trader is very important. Traders and investors need to be confident that their trading platforms and tools are secure and reliable. And can protect their sensitive financial data from cyber threats and other security risks.
Both the MetaTrader 5 platform and Majestic provide various risk management tools. Traders can use it to protect their assets and minimize losses in forex trading. Moreover, MT5 and Majestic Software offer two risk management tools: stop loss orders and take profit orders.
- Stop loss order: When the price reaches a pre-determined level, this toll robotically closes the trade and restrictions the probable loss.
- Take profit order: Once the price reaches a pre-determined level of profit, the software automatically closes the trade to secure the trading profits.
Furthermore, a trader can use the built-in position sizing algorithm in Meta Trader 5 and Majestic EA to know the appropriate position size based on risk tolerance and account balance. So, when a trader implements risk management and money management techniques properly in the MT5 platform and majestic EA, they can protect their trading losses and profits.
Boosted Order Execution
MetaTrader 5 platform provides faster and more accurate order execution. MT5 program uses multi negotiated strategy tester and adjusted order processing algorithms. It ensures that orders are executed quickly and efficiently.
However, the improved order execution can enter and exit trades at the desired price without delay, which is important for scalping and day trading strategies. So, with the amalgamation of Majestic EA in the MT5 platform, traders can execute different types of forex orders. Including market orders, limit orders, stop orders, and trailing stop orders.
- Market orders: It lets the traders buy and sell at the current market prices.
- Limit orders: It lets the traders set a specific price at which they want to buy or sell.
- Trailing stop orders: It is used to limit losses by automatically selling if the price drops below a certain level in forex trading. While if the price goes up above a certain level, then the trailing stop will also move up accordingly.
However, we have already shared about the stop loss and take profit orders in the above section.
Another key feature of Majestic EA for forex trading is its input parameters to customize its capabilities. Traders can customize the range of parameters of charts and indicators. Like period length and preferences to their specific trading requirements and preferences. This personalization raises a more efficient and effective trading experience. Because traders can configure their workspace to align perfectly with their trading style to specific market conditions.
Multiple Time Frames for Exact Analysis
When traders use the majestic EA software on the MetaTrader 5 platform, they can view multiple timeframes on a single chart. This feature enables a trade to analyze the price movements across different timeframes at the same time. As a result, traders can gain a more accurate perspective of the underlying market trends of foreign exchange and make informed trading decisions.
Suppose a trader uses the daily chart to know the overall trend and the 1-hour chart to pinpoint exit points. This multiple-streaming analysis can significantly improve the accuracy of trading decisions and increase profits from forex trading.
Graphical Objects for Better Visualization
One of the main features of majestic EA for forex trading is its graphical objects. When a trader uses this EA on the MetaTrader 5 trading platform, it helps traders visualize forex market trends and patterns with ease, which is important for developing a strong trading strategy.
However, this platform offers 40 plus graphical objects. Including line channels and shapes to easily identify support and resistance levels, market trends, and chart patterns.
Resistance levels are vital for forex trading because this key feature helps a trader identify positions where prices have historically resisted breaking through. When a trader analyzes these levels on their MetaTrader 5 charts, they can anticipate the potential reversals or breakouts and fine-tune their trading strategy accordingly.
NOTE: When engaging in price approach resistance levels in foreign exchange trading, it is recommended to use stop orders as a way of limiting losses. While still letting for potential gains if the breakout happens.
Using this feature lets a forex trader manage the risk more efficiently without missing out on money-making opportunities.
Are you exploring futures or want to learn about them to become a better trader? This guide provides you with everything you need to know about futures trading, why people trade in futures, its pros and cons, and some tips that help you to get more profits in futures.
What is Futures Trading?
It is basically a contract that offers terms for delivery or cash settlement of a specified asset like stocks, resources, or products at a specified date in the future. In a contract of futures, a buyer and seller are involved; a buyer has to pay a certain price on a preset date. However, a seller has to offer the underlying asset at the specified price. The price of the futures contract is derived from the price of the underlying asset that, makes futures a form of spin-offs.
Suppose you have a farm and grow wheat, and you may want to bolt in a price for your wheat before it’s time to crop. It can assure a certain level of profits for the year, and there would not be any shock if the price of wheat collapsed. While it is also revenue that you would not gain, the profits of the price of wheat shoot up before harvesting time.
Why People Use Futures?
People use futures trading for hedging or risk management and speculation purposes.
- Hedging or Risk Management: Futures contracts bought and sold to get or deliver the underlying commodity are typically used for hedging determinations. Many institutional investors or companies frequently use it. As a way to help manage the future price of that commodity on their operations or investment portfolio.
- Speculating: The contract of futures is usually liquid and buy and sell up to the time of termination. It is a vital feature for speculated investors and traders who don’t own the underlying commodity and do not want to. They can buy or sell futures to direct an opinion about and profit from the direction of the market for a commodity. Then, previous to termination, they will buy or sell an offsetting futures contract position to remove any responsibility to the actual commodity.
Pros and Cons of Futures Trading
Like any other trade deal strategy, there are some benefits and drawbacks of futures that you should know before getting started. So, if you are a seasoned trader or novice, you will find these below-mentioned facts valuable.
- Simple Pricing: Prices in futures are based on the current spot price and adjusted for the risk-free rate of return till expiration and the cost to store commodities physically.
- Hedging: Investors use futures to protect unrealized profits or minimize losses. The wide selection of futures products available lets the trade take a cost-effective hedge against the broader market or specific sectors and individual commodities.
- Leverage: It is an investment strategy when you rent money to increase the return on an investment. Futures are traded with leverage on margin, letting an investor control larger positions with a small initial outlay. Yet, it can be an ironic sword if the asset price moves in the unintended direction. Traders must know that they can lose more than their initial margin in this trading.
- Variation: A futures contract offers a diversified portfolio of multiple assets for investors to trade, like stocks, indexes, commodities, crypto, currencies, and many more.
- Complex Procedure: There are some complexities involved in futures trading. Investors and traders require a good deal of time and effort if they want to be successful. It means they have to monitor the market and keep on top of the current events.
- Over-leverage: Leverage benefits you to amplify returns with less of a cash outlay. If the market turns against you, then you will be responsible for the full amount of the losses and be subject to the margin calls. Simply put, leverage also amplifies losses.
- Dealing with Expiry Date: Futures contracts have expiry dates that traders need to monitor. When the contract slants its expiry, its price may rapidly lose value or become worthless. To combat this, investor frequently rolls forward their contracts to an extensively dated one as the expiry date approaches.
- Physical Delivery: If you fail to close your position or you don’t trade them off into offsetting contracts over. Then, you take the risk of taking physical delivery of the underlying asset and pay the agreed-upon price.
4 Tips to Consider When Trading Futures
- Plan your Trade: Before executing a trade, make a plan for your strategy. It means having not only a profit objective but also an exit plan in case the trade goes against you. Moreover, feelings like fear and greed make trading decisions harmful to you. Because your emotions can make disastrous decisions like push you to leave a profitable position too soon or hang onto a losing one too long.
- Save your Positions: To make your commitment stronger, you should trade with stop-loss orders. It helps you to decide on a bailout point first and then set a stop at that price. Moreover, the OTO: One Trigger Other strategy lets you place a primary order and protective stop simultaneously.
- Be Patient: Don’t get so conclusive in the market actions that you lose sight of the bigger trading portrait. You should monitor the working trades, open positions, and account balances. But don’t hang on to every uptick or downtick in the market.
- Learn from Margin Calls: Margin calls frequently indicate an emotional attachment to a losing trade. Instead of adding funds or dropping positions, it might be wise to leave the losing trade. Cut losses, learn, and seek the next trading opportunity.
Q: Is trading in futures profitable?
Ans: Yes, if you have a good investment decision mind, then you can make money in the future because, in the future, you are trading with 10 times as much exposure as with normal stocks.
Q: How to trade futures?
Ans: It depends on the broker and your account position; with that broker, you may be appropriate to trade futures and also need a margin account.
Struggling to find out about the automated forex trading robot? Here, we have got you covered everything you need to know before you step into automated trading.
What is an Automated Forex Trading Robot?
Automated Forex trading robots, also known as Expert Advisors (EAs), are software programs designed to execute trades on behalf of traders based on pre-defined criteria.
The Forex robots can analyze the market conditions and situations and the price movement and find the possible option faster than any human. Furthermore, a human can make decisions in an emergency based on their emotions and can take lots of risks in trading.
This is where an automated trading robot comes to your help as it follows a unique and specific algorithm according to the set parameters. Moreover, it also allows you to make decisions on entry and exit trades according to your risk tolerance. The best EA robot you can find is Majestic EA with a lot of amazing features for flawless trading.
How an Automated Forex Trading Robot Works?
Majestic EA has developed a forex trading robot that is powerful and designed for the MT5 platform. It is a powerful trading tool that helps you to automate your forex trading process faster and makes it easier and more profitable for you than before.
They have a unique trading algorithm that utilizes advanced technical analysis to find potentially profitable trading opportunities and execute trades for you on your behalf. Now it means you can sit back and watch your trading account grow with the help of your forex automated robot without the need of constant monitoring and manual intervention.
At Majestic, EA is customizable, unlike some other robots. You can set the needs and goals everything according to your trading style. It has a user-friendly interface and has a wide range of settings and parameters and you can tailor them according to your trading preferences and risk tolerance.
It is customer-friendly, and providing the best for its users is the top-notch priority of the Majestic EA to make the trading experience seamless and stress-free. They are always ready to answer all the queries you might have related to the robots or the trading in general.
A good automated forex trading robot can level up your trading game and experience the benefits of automated trading.
Advantages of Automated Trading:
- EAs can trade around the clock, reacting to market movements and opportunities even when the trader is unavailable.
- Robots follow programmed rules without emotions, eliminating the impact of fear or greed on trading decisions.
- EAs can be backtested using historical data to assess their performance under various market conditions before real-money trading.
- Automated systems can execute trades swiftly, responding to market changes in milliseconds, which might be challenging for a human trader.
- EAs maintain discipline by adhering to predefined rules, ensuring consistency in trading strategies.
Disadvantages of Automated Trading:
- Automated systems may struggle to adapt to unexpected market events or changing economic conditions due to the absence of human emotional judgment.
- Over-optimization can lead to algorithms that work well in historical data but fail to perform as expected in real-time market conditions, potentially resulting in poor trading outcomes.
- Technical problems such as connectivity issues, system crashes, or data feed errors. It can lead to missed trading opportunities or unintended trades, introducing a risk of system failures.
- The complexity of automated systems requires ongoing maintenance and monitoring. Making them resource-intensive for traders to keep them effective and up-to-date.
- Relying on historical data assumes that past market conditions will repeat, and unforeseen events or structural changes can make the algorithm less effective in current market conditions.
Algorithmic Trading Strategies of Forex Trading Robots
Automated Forex trading robots, also known as Expert Advisors (EAs), are software programs designed to trade the Forex market automatically. These robots use pre-defined algorithms and trading strategies to execute trades on behalf of the trader.
- Backtesting: Before deploying an EA in live markets, it is crucial to backtest the algorithm. And using historical data to evaluate its performance. Backtesting helps assess how the EA would have performed in past market conditions.
- Risk Management: Implementing proper risk management rules within the EA is essential to protect the trading account from significant losses. Parameters such as stop-loss levels and position sizing are often configurable.
- Platform Compatibility: EAs are typically designed to work with specific trading platforms, such as MetaTrader 4 (MT4) or MetaTrader 5 (MT5). Traders need to ensure compatibility with their chosen trading platform.
- Continuous Monitoring: While EAs can operate autonomously, regular monitoring is still necessary. To ensure the robot is functioning correctly and to intervene if needed.
- Market Conditions: Market conditions can change, and an EA that performs well in one market environment may struggle in another. Traders should be cautious of over-optimization.
- Security: Security is a critical consideration, as EAs have access to trading accounts. Only use reputable EAs from trusted sources to avoid potential security risks.
- Slippage and Latency: Slippage and latency can affect the performance of automated systems. Traders should consider these factors, especially in fast-moving markets.
- Educational Resources: Traders should have a good understanding of the Forex market. And knowledge of the algorithmic trading principles before using automated trading systems.
- Legal and Regulatory Considerations: Traders need to be aware of and comply with relevant regulations. Which is regarding the use of automated trading systems.
While automated trading can provide efficiency and discipline, it’s important to approach it with caution and not solely rely on automated systems. Human oversight and intervention are still crucial for adapting to changing market conditions.
Forex robots use algorithms to analyze market conditions and make trading decisions based on predefined criteria. Trading strategies can range from simple moving average crossovers to complex mathematical models.
They are really helpful for investors and traders to trade 24/5. And find the perfect opportunity to execute a trade and earn lots of profit. Additionally, thorough research and testing are essential before deploying any automated Forex trading robot.
A forex robot is also known as EA (Expert Advisor), which is a trading software that trades automatically based on a set of preset conditions and strategies. However, many robots for trading in foreign exchange markets were developed with the goal of deceiving traders. But Majestic EA is one of the most trustworthy forex bots that really produce profitable trading.
Is a Forex Robot Profitable?
If a trader uses a manual or automated trading system, the main purpose is to make a profit. So what if a trader uses an automated bot for forex trading; will it be profitable or not? The answer to this question is actually yes.
However, a robot can make money for a trader, but there is no guarantee it will be successful in all conditions of the foreign exchange market. The performance of any bot depends on some factors that are:
- Specific algorithm
- The up-to-date state of the forex market
- Strategies a trader is using
- Quality of programming in the bot
A robot that is designed to trade in a strong market may be able to produce profits in a market trending upside. But may also spar or even lose money in a sidelong or bearish market.
Consequently, there is no such thing as a universal forex robot that consistently makes profits in all market conditions. Instead, different robots may be better for different market conditions, and it is up to a trader to select the right robot for the specific trading requirements. Furthermore, even the top best forex bot requires regular monitoring and adjustment of settings to maximize their performance.
How to Make Use of Majestic Forex Robot?
Wondering how this bot works? Forex traders prefer to employ the best forex robots because they want to make easy money from the market without putting in a lot of time or doing anything manually.
When trading in a foreign exchange market, a trader basically creates a basic technical trading strategy via the RSI: Relative Strength indicator. Then enter the currency pair trades into the trading system every time RSI oversold or overbought on a particular chart.
Consequently, every time RSI hits a particular number, every trader wants to buy or sell and set an accompanying take profit and stop loss level. That’s how manual trading in forex works.
However, instead of sitting watching the charts for hours on end, the Majestic robot can do it for you. All you need is some basic MQL5 programming language to begin the process. This software has the technology to do the trading process automatically. Traders just have to make the strategies for this robot and give a level of automation.
There are some important factors traders have to consider before activating the automated Majestic trading system. Here are some factors that you should consider before using the Majestic Forex robot.
- Select the suitable currency pair and the ideal time frame to trade to maximize the profits.
- Get a good VPS provider to make sure that you will not have any losing trades due to slippage and disconnections when ready to run the Majestic robot in the live foreign exchange market.
- Also, find a reputable forex signal provider and a plethora of risk management features to get the most out of your automated trading.
The Productivity of Majestic EA
Now you are thinking that Majestic software is really productive or not. Every forex trading robot promises profitable trades, while not all automated bots live up to the expectations of their users. Moreover, some federal governments consider the forex robots to be fraudulent. That is why there are no articles from reputable news websites that support these robots.
So, the answer to whether this robot is productive or not basically depends on how a trader uses this robot. Because it is a type of AI: artificial intelligence, and it can execute highly complicated jobs at a high rate. At the same time, it is not proficient in creative thinking and has no idea what will happen soon. Because their functionality is restricted to how they were initially written and their historical performance.
Benefits of Using Majestic Forex Robot
1. User-friendly Interface
The Majestic Forex bot is easy to install on your system, access, and use. It means that you don’t have to endure the distress of functioning it.
2. 24/7 Trading
Automatic trading with Majestic relies on PC to execute the trades. Many people say that it is difficult and complex to trade with a robot, but the fact is it is actually simple and easy to use. so opt for a trading bot software that trades on your behalf and keeps you out of any trouble.
3. Execute Trade Faster and Efficiently
The Majestic Forex trading bot trades automatically and constantly as it is a computer, not a person; that is why it never sleeps and never takes a vacation. This trading software is designed to work in the forex market so that you can do things that you can’t do when trading manually.
4. No Human Emotions
Another advantage of using this trading software is it can remove human emotions like fear and greed from the trading procedure. Emotions can impact trading decisions and lead to impulsive and irrational trading decisions. However, the Majestic Forex robot is not influenced by emotions and strictly follows the pre-determined trading rules that make sure the trade is executed based on objective criteria.
5. Better Liquidity
Trading in a foreign exchange market means having the transactions immediately executed, and using the majestic forex bot means the more promising the business can be. Because it is a market that is loaded with buyers and sellers who do trading 24 hours a day 5 days a week.
6. Uses a Higher Leverage Level
This robot uses a high level of leverage in forex trading. However, it does not take a lot of assets to make a good amount of profit which is why the large amount of leverage granted to forex traders. A trader must be careful using high-leverage