Music Corner World

The most basic facet of trading is learning to differentiate
between what is FACTUAL and what is OPINION. If you stay
interested in the financial markets long adequate you will
discover that there are a batch of sharks out there who have
go expert at making that undertaking very difficult.

Several endorsers of this newssheet have got got contacted me over
the last few hebdomads asking for my sentiment of certain promoters
who also advocator Options Trading Strategies. I do it a point
to not notice on other services. However, without mentioning
any name calling I experience that it is necessary to inform you of some of
the most common and delusory patterns used by some promoters.

One of the great entreaties to Options trading is that there are so
many possibilities and trading strategies that tin be used to
manage risk. However, most services when promoting options like
to demonstrate the enormous REWARDS that are achievable. Although enormous addition is possible, options are considered
bad instruments and potentially very risky in untrained
hands. Since an Option gives the proprietor the right to purchase or sell
something for a specific clip period of time the option is considered
to be a declining asset. Since all options have got an termination date, if all things are considered equal, the near you get to that termination day of the month the less that the option will be worth.

There is an copiousness of literature available on options written
primarily for locating and marketing to the GREEDY INVESTOR. One
booster who charges over $3,500 for his seminars on Options
Education touts that investors in his seminars earn tax returns in
extra of respective thousand percent per year! He supplies and
written documents respective existent clip illustrations and shows how some traders
made a 12,000% annualized return. (Just in lawsuit you thought
that was a misprint that is twelve thousand percent!)

My statistics instructor in college used to state that "The figures
don't lie, but prevaricators figure." Listen Up....because if you don't
learn how to read the mulct black and white that these deceitful promoters
adopt you too volition do those types of tax returns but probably
won't be able to pay your rent!

Most bargainers come in into the financial markets seeking that ONE
home tally trade that will license them to check out of the rat
race. Knowing this fact deceitful boosters arm themselves with
illustrations that volition lead you right into their arms. Here is a
common illustration of their con in action:

Let's state that you purchased an option at $1 per share. On that
very same twenty-four hours the market moved in your direction and you were
capable of merchandising that option at $1.50 per share. Since
Option contracts are all standardised sizes of 100 shares your
nett net income before committees would be $50. You also would have
established a net income of 50%. This is A great tax return considering
that most money managers earn 15% a year!

To determine your Tax Return on Investing you only need to divide
your nett net income by your initial investment. In this instance
you had a 50 cent net income per share on an initial investing of
$1 per share.

Now the boosters come-on the hook....... Even though your net income was $50, your tax return on investing was
50%. This is indeed factual. Think of how EASY it was to earn
that return, after all you did it in lone 1 day! So since
there are 365 years in a year, to cipher an annualized tax return we would multiply 50% modern times 365. The consequence is a staggering tax return of 18,250%. (Now if your tummy is turning by this type of deceit, GOOD!)

I offer you the mathematics below:

Buy Price 1

Sell Price 1.5

Profit $0.5000

Gross Network Income $50.00

% Tax Tax Return 50%

# of Days 1

# of time periods in a twelvemonth (365 days) 365

Initial $ Investing $100.00

Net Net Income $50.00

Annualized Return 18,250%

Now what infuriates me about these boosters is how successful
they are at providing the public with this type of "financial
serpent oil!" One booster in peculiar have actually written a
best-selling book on options that is filled with these types of
misleading and deceitful computations. Hard to believe but an
18,250% tax return will barely pay for the terms of the book!

Although this is a technical point. many of you have got probably
realized that the above illustration is additional complicated by the
fact that the financial markets are not unfastened 365 years a year. If you take weekends and holidays into account you literally only have got 252 years to play with. So the more than mathematically oriented con work force would offer you the following calculation:

Buy 1

Sell 1.5

Profit $0.5000

Gross Network Income $50.00

% Tax Tax Return 50%

# of Days 1

# of time periods in a twelvemonth (252 days) 252

Net Net Income $50.00

Annualized Return 12,600%

Hey 12,600% annualized return...sure beat generation those low yielding
common FUNDS!

Now, I wish I was making this material up, but my letter box is filled
mundane with fluctuations of these examples. No reference is ever
made of the fact that your net income BEFORE committees was $50
vaulting horses which is not bad and might pay for dinner out on the town.

This may look extremely simple and basic to many of you. However, I have got seen many extremely successful people taken
in by this type of deceit. I believe you'll hold that although
the numbers are accurate they are completely unrealistic and the purposes of the boosters are what is in question. Nonetheless, you'd be surprised how many $3,500 seminars the above illustration will SELL.

The financial markets only necessitate one thing of you if you are
to be successful and that is that you manage your hazard on each
and every trade. there IS NO OTHER SECRET. In my ain trading I
must acknowledge that it took me old age to learn how to return a LOSS. Once I learned how to lose and accept it as portion of doing business my trading dramatically improved. Although I see this to be among the most profound truths that I have got learned regarding trading I readily acknowledge that it is nowhere near as marketable as promoting 18,250% returns. Or was that 12,600%? After all 50 vaulting horses IS 50 bucks!

Sometimes it is hard to distinguish between fact and
OPINION. In those cases I mind the words of the great Yogi
Berra, "You can detect a batch by just looking." Nuff said.

Next article I'll get back to LOW hazard trading ideas in these
high hazard markets.

Study away.....and remember, let's be careful out there!

Dowjonesfully,
-Harald Anderson
http://www.eOptionsTrader.com.