Reblog: How To Trade Thin Markets


A thin market refers to a market characterized by a minimal number of buyers and sellers plus high price volatility. Also referred to as a narrow market, it is also characterized by high bid-ask spreads and low trading volume.

This type of market does experience lots of drastic swings thus making it difficult for traders and investors to trade systematically. As a result, it is quite common in a thin market for price fluctuations to be larger between transactions and slippage can be a common occurrence.

As said earlier, a thin market is characterized by a small number of traders – buyers and sellers- which results in a low volume of transactions and illiquidity. Due to this, price movement becomes more volatile.

Continue Reading


Reblog: Calendar Spread Definition – Day Trading Terminology


Calendar spread is an options strategy that allows traders and investors to enter long and short positions simultaneously for the same underlying and strike price but different expiration dates.

Option traders can utilize calendar spreads as a way to get into a long position at a cheaper price by selling the other leg and bringing in a credit. As a result, the option trader has the choice of owning longer-term calls or puts for less money. Keep in mind that this strategy can be used with both calls or puts.

How To Trade A Calendar Spread

Calendar Spread

As said earlier, the calendar spread is an option trading strategy where a trader opens two legs with different expiring dates for the same security. In the picture above, you can see that we are selling the earlier expiration (aka the front month) in January and buying the longer expiration set for February. Your max loss on this trade is your net debit you paid to open the position while your max gain is theoretically unlimited.

Continue Reading


Reblog: Trading Terminology By Warrior Trading


Bar Chart Definition: Day Trading Terminology

A bar chart is a graph characterized by a vertical bar and it’s used by technical analysts to learn more about trends. In trading, a single bar is used to represent a single day of trading. As one of the most popular chart type aside from candlesticks, it represents price activity within a given period of time.

As a result, traders and investors use this chart type to spot trends and patterns. What you need to know is that a bar chart is similar to the candlestick. The only difference is that the body of a bar chart is not filled like that of a candlestick.

As the western version of the Japanese candlestick, they help investors and traders to observe the contraction and expansion of different price ranges.

Continue Reading