Leverage Trading

GoogleCat
GoogleCat

Hey Veeky Forums. I'm looking into leverage trading and exploring options, forex, and futures. I don't want to play very risky but still looking for worthwhile opportunities, and I'm not sure how to approach them. Could you guys explain the differences in trading styles between them, and which one would be easy to get into coming from a stock market fundamental, sorta technical background?

Also just general discussion about leverage Trading & market strategies.

MPmaster
MPmaster

leveraged trading
don't want to play risky
pick one

farquit
farquit

options are the least risky as long as you don't sell naked puts and calls.

Emberfire
Emberfire

Im not saying "no risk" just not high risk YOLO stuff. Basically just good calculated decision-making.

Firespawn
Firespawn

True, i have been looking at straddles and strangles, it seems like a pretty good strategy to me.

Evil_kitten
Evil_kitten

Well if you're doing defined risk option spreads then you're actually taking less risk than just buying long stock.

That's what people don't seem to understand.

Evil_kitten
Evil_kitten

Can you go more into this? Treat me like a total beginner

Snarelure
Snarelure

Well take for example a vertical spread.

You sell one option and then buy another option to define the risk. If the price of the stock goes through your spread you only lose a limited amount.

It's kind of like using a stop loss on a stock for example.

Ignoramus
Ignoramus

Huh, would the buy contract have to be using the same time period? Or could you buy at a different strike price?

takes2long
takes2long

In a vertical spread yes you are using the same time period or expiration and yes they have to be different strike prices. You can't buy and sell an option at the same strike price in the same expiration or you'll just be netting out to zero.

Well you could do it if you bought a call and sold a put at the same strike but that would be a whole different thing. I don't even know what that would be.

takes2long
takes2long

Got it. How about forex? actually, forex vs futures, which is more profitable, and which is more straight forward/easier to get into?

Stark_Naked
Stark_Naked

Well you could do it if you bought a call and sold a put at the same strike but that would be a whole different thing. I don't even know what that would be.

well if you're crossing the spread each time I'd call it stupidity... if you're not then it is crude and rather lucky market making without the need for delta hedging, inventory management etc..... however, realistically, you're not going to get to do that

Harmless_Venom
Harmless_Venom

forex is for mugs

you, as a retail trader, don't have a fair shot at it. It is traded between large banks and on ECNs which have rather opaque sets of rules... for retail traders is it also 'traded' between you and a 'broker' who is acting more like a bucket shop and quoting you a two way price that they take the other side of.

VisualMaster
VisualMaster

I don't think that's right. The market is efficient and is a fair playing field. Anyone can take part and in fact retail traders can be much more flexible in their strategies and nimble in the marketplace and do things that institutional investors who have vast sums of cash can't do.

I'm product indifferent. You can buy and sell currencies and futures when they look like they're at price extremes but you have to be directional. With options you can also be neutral and trade time as well.

Need_TLC
Need_TLC

least risky as long as you dont sell naked
the next guy lists 2 naked strategies
biz

SomethingNew
SomethingNew

Halp my bull call spread is long vega
Wat do

This is you in the future OP

Raving_Cute
Raving_Cute

How about trading futures? One contract in the /NQ gives 5 bucks a movement tick, meaning if it goes up 5 points you make 100$, goes down 5 you lose 100$.

You can buy or sell contracts, which is sorta like buying and shorting stocks.

Any scalper or day trader may find this to be rewarding, especially a good technical chart and PLENTY of limits & stop losses, at least that's how I see it..

SomethingNew
SomethingNew

Avoid debit spreads when implied volatility is high. You want to be doing credit spreads then. Debit spreads during times of low implied volatility.

PurpleCharger
PurpleCharger

I don't think you know what you're talking about - the FX market isn't efficient, is fragmented and has different sets of rules for participants

if you're a retail trader your trades won't even come into contact with those of institutions - you'll either trade against a two way quote provided by your broker or you'll trade in some ECN that is basically just set up for retail traders with undisclosed liquidity providers which are either run by the company providing the ECN in the first place or are external but either way have a set of rules in place that gives them inherent advantages above you - such as last look provisions or even fucking basic stuff like being able to place a limit order.

If you think FX is a fair playing field then you don't really know what you're talking about

eGremlin
eGremlin

If your broker is a bucket shop. Probably.

TurtleCat
TurtleCat

Institutions make massive profits from stop hunting, brokers are also notorious for offering undisclosed "VIP-offers" to large trading account holders. I'm not saying there is a conspiracy, but I doubt institutions stop hunt without calculating the profits before dumping their load

happy_sad
happy_sad

I'm not really sure what your point is here but none of that stops you doing what you want to do.

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