The Rise of Active Trading
By - Dan Raju, CEO at Tradier on Aug 19, 2021 at 11:01:57 AM

All-in-mobile-phone_t20_mopVrd

As markets continue to grow and evolve, so do the strategies for trading in them. More and more investors are looking to trade in their buy-and-hold strategy for a more active approach, realizing that stocks can be traded like commodities. In order to stay ahead of the curve, it's important to know what these new traders are doing with their money and why they're jumping ship from passive investing strategies. We'll take a look at some of the reasons behind this shift and how you might want to start thinking about your own investments in light of this change.  There's no such thing as a one-size-fits-all approach when it comes to trading stock - so we hope you find something useful here!

Active Trading: Why is it on the rise?

Active trading is the act of buying and selling securities based on short-term movements to profit from the price movement. The mentality associated with an active trading strategy differs from a long-term, buy-and-hold strategy in that it relies more heavily on capturing trends or market swings rather than simply holding onto assets for extended periods of time. Active traders capitalize on higher payoffs because they can take advantage of opportunities as soon as they arise, whereas those who rely solely on passive investment strategies will have less control over when opportunities come knocking.

Advances in technology have led to a new wave of demand for option strategy backtesting, P&L probabilities, and risk analysis metrics. With so many different features available on financial apps today such as Monte Carlo simulations and delta hedging abilities, people are able to go about their day without having the need to be glued to a computer screen all day long. Nowadays you can even find self-directed auto management options that allow your portfolio strategies to run themselves which is both convenient and productive.

The vast array of options education on the internet has opened up a world without bounds for people who once thought that they couldn't invest and trade stocks like Wall Street pros do. People have also begun to understand that using these tools can offer much greater leverage over straight stock trades when used correctly which offers opportunities to make more money with less risk than ever before!

The many different styles of trading have their own pros and cons in terms of risk versus reward factors. Some traders want a high-risk/high-reward gamble while others are content with the more stable lower returns on investment that come from less risky strategies like day or swing trading stocks.

Different Styles of Active Trading

Day trading is the most well-known style of active investing. It can be considered a pseudonym for all forms of actively managing one's own investment strategy. Day traders, as their name implies, are quick with buying and selling securities within the same day.

Traditionally, day trading is an activity that has been left to professionals. This primarily consisted of specialists or market makers who are experienced in the field. But now with electronic trading avenues opening up for novice traders as well, anyone can partake in this practice and make a profit by tapping into the resources.

Each strategy has its risks and rewards, and it will require a good deal of experience and expertise to figure out which one will suit you best. Fortunately, the proliferation of online trading has simplified this process by allowing new traders to learn from real market pros in a safe environment.

Some assets just don't react as well to prices as others. Stocks, for example, are notoriously unpredictable in the short term due to their high correlations with the overall stock market. Even then, the difference in performance between different securities in the same index can be minute. It's still possible to make a profit using this method of investing but bear in mind, passive trading requires a huge amount of patience and restraint.

The argument for day trading is that it's an efficient and cost-effective way to capture opportunities that are rare. Many opportunities in day trading can be found in the statistics of the market's daily movements. Trading volume on major exchanges is highest on days when new data is released.

Wrapping Up

If you’d like to enter a more active form of trading, consider the Tradier platform. We offer Commission-free stock and options trading, with no per contract fee, as well as giving you the freedom to choose your own trading platform and free API access to your account. Learn more here.


Market Report Quiet markets bring new highs
By Todd Horwitz on Aug 15, 2021 at 8:51:11 AM

Market Report Quiet markets bring new highs

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Markets are in the heart of the dog days of summer. They are as quiet as it gets and making new highs. Although the Russel continues to struggle in the middle of a range. Dow, S+P and Nasdaq are at or on new highs.

The next couple of weeks should see the markets slow even more. As we approach the Labor Day Holiday there is no major news on the horizon except for the FED Meeting in Jackson Hole, Wyoming.

All expectations are that the FED will stay the course which could keep the rally rolling. The biggest problem appears to be the duration spreads and their relationship to the equity markets. They are the widest in 20 years.

Call buying remains on top of the option world with a collapsing VIX. Markets are starting to see some Put buying but Put selling outweighs the effect on volatility. Rounding out the top five are Bear calls and Bull put spreads.

Tech continues to dominate the rally with AAPL, TSLA, NVDA, DKNG and AMD leading the way. The bears are pushing on the SPY, TLT, GDXJ, GOLD and XLE. Basically, we are seeing Bonds and metals pressured.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


eDeltaPro to open access to their new platform!
By - Dan Raju, CEO at Tradier on Aug 9, 2021 at 4:30:17 PM

Great Platform. Great Community, Great Team and most importantly they want to make a difference for the Active Trader community - Dan Raju | CEO | Tradier

https://www.edeltapro.com/

Tradier-edeltapro-Dan-Raju


Market Report New Highs, Small Caps Joining the Party
By Todd Horwitz on Aug 8, 2021 at 2:08:45 PM

 Market Report New Highs, Small Caps Joining the Party

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Apparently, there is nothing that can stop the bull market run. Good news is good bad news is better. This is the type of action we can expect with cheap money. The chase for yield will continue with the only asset class that provides any right now, equities.

We must also remember that we are in the dog days of summer which means low volume, small orders, and drifting markets. Lesson number one for all traders, never sell a dull market. Markets always have new money buyers flowing in from pension funds, IRA’s and other sources which makes dull markets dangerous for bears.

The options continue to point to a continuation of this never-ending rally will call buyers leading the way once again. The rest of the top five overall options strategies at Bull Puts, Bull Put Spreads and Bull Call Spreads. There has been some Put buying but not enough to pressure the markets.

Tech has taken over the bull market with QQQ, TSLA, QQQ, FB and AAPL leading the way. On the bear side we see action in AMAT, MRNA, PLUG, NKE and MU. Its summer and quiet, be patient enough to wait for your opportunity

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


Bundling Execution: Capped by Ad-Supported and Paywall Model Limitations, Financial Content Creators are Monetizing their Retail Bases with an Emerging New Model
By - Dan Raju, CEO at Tradier on Aug 6, 2021 at 7:45:39 AM

    Content creators have anchored, inspired, and engaged over 15 million new U.S. retail investors to trade online in the last year, yet they are getting the raw end of the bargain. Creators and publishers deliver news, signals, analyses, perspectives, and education, doing a great job offering value to retail investors. It is with their efforts and success that I have seen retail investors being touted as a force to be reckon with in the financial markets.

   Despite this, publisher segments have been struggling to keep their revenue sources vibrant. Thanks to the changing behavior of online investors and pressures on traditional advertiser-supported (CPC/CPM/CPA), pay-wall subscription and affiliate-based revenue models, the insatiable appetite of online investors discovering value from free content has forced publishers to innovate a newer model. This is the model of “bundled execution.” Content creators are collaborating with brokerage API’s and bundling the capability of trading from within their own content, becoming a premium one-stop destination for both insights and action.

   Ad-supported models have been a source of revenue for content publishers and platforms for nearly two decades. Publishers frequently give away their content for free and rely on click-through and conversion-to-sales rates that advertisers pay as a source of revenue. While this is an easy way to get started and create revenues for content publishers, in most cases, it is non-sustainable as the primary revenue stream considering the vast amount of production costs and time involved to create engaging content. To generate any measurable revenue, publishers need to convince millions of users to access their content in an environment where most users find ads repulsive. This approach is heavily rigged to primarily create revenues for the search giants and ad platforms rather than the true value creators, the hard-working content publisher.


   Leveraging paywalls and selling subscriptions have also been the primary model of monetization for content publishers over the last decade, particularly for trade signal creators and newsletters. This model intends to create a consistent revenue stream and can easily be up-sold to an existing base. The downfall of this model is a high churn rate— with plenty of free content available, users tend to discontinue their subscriptions at alarming rates, diminishing subscription returns. This model also faces challenges of content piracy and redistribution. Publishers are often forced to spend large marketing dollars to keep up with the churn in addition to the already growing creation costs.

   Affiliate revenue channels have been available for over a decade but have only recently begun to be used in large part by publishers. This model pushes publishers to act as affiliate marketers for a third-party product where publishers receive a percentage, or a fixed fee referral, from key sales indicated by the third party. While it has the potential for higher returns on each conversion, it is an unpredictable revenue stream, forcing content publishers to abandon their core competency of creating compelling content. In many cases, it negatively affects the content publisher's ability to convert their users into their own paid customers.

   Despite the drawbacks, content publishers continue to adapt and innovate. At their core, they are "creators." Financial content creators have begun to find success through “bundled execution,” attracting additional subscribers, keeping churn rates low, and unlocking the ability to charge a higher subscription rate. Retail investors are in a perennial search for compelling analysis to drive their execution objectives. Publishers who create engaging and actionable content for retail investors are offering seamless trade executions through brokerage partnerships. This innovative approach has shown substantial benefits to small and mid-size publishers that struggle to tamp down churn and bring in enough subscription revenue. As these successes become more apparent, larger publishers are shifting to adopt this strategy.

   With the advent and wide-scale adoption of cloud technologies, APIs are making it possible to trade from any third-party platform, including content publishing venues. Content publishers work with execution venues and custodians to integrate the ability for a retail investor to not only consume content, but also act or initiate trades without ever leaving the publisher's website. Publishers can integrate this capability seamlessly with minimal technical lift or capital expenditure. Publishers are collaborating with brokerage firms who offer APIs and with heavily discounted or zero fees, provided customers have a subscription with the publishers.


This structure enables the publisher to become a "one-stop-shop" by offering exceptional content and the ability to act instantly and seamlessly. This creates a positive impact for the publisher that establishes a sticky customer relationship, emphasizes key differentiators for their content, and adds significant value proposition to their content-subscription offering. With traders boosting legacy ad and affiliate models, publishers are continuing to see improvements in churn rates by offering discounted per-trade or per-contract pricing through brokerage partners.


Market Report Sleepy Markets take a breather
By Todd Horwitz on Aug 1, 2021 at 6:23:17 AM

 Market Report Sleepy Markets take a breather

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Markets made a fresh set of all time new highs last week but closed lower. The Russell which has been down trending managed to bounce. Overall, it was a sleepy, low volume market. We are in the dog days of summer, markets traded as expected.

The FOMC concluded their meeting Wednesday, basically staying the course. They have started to admit that inflation may be worse than they thought. We have written a couple of times that a big decision could come out of the Jackson Hole meeting.

Although Call buying continues to lead the way, some bearish strategies are moving to the top of the list. Put buying is number two with Bull Put spreads, Bear calls and spreads. Money still wants to go where its treated best and that is still equities.

Big tech kicked off their earnings last week with good numbers but little movement. TLT which is more of a safety moved to the top of the bullish symbols. Tech followed with AAPL, FB, AMD, and TSLA. ETFs led the bearish symbols, QQQ, IWM, XLE, FAS and SLV.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


Funny Tradier Brokerage Ad
By - Dan Raju, CEO at Tradier on Jul 28, 2021 at 4:04:44 PM

Active Options Traders have a great selection of the platform's

 

 

 


Behind Finance: Herd Mentality in Trading
By - Dan Raju, CEO at Tradier on Jul 27, 2021 at 1:50:29 PM

Stock-market-price-display-abstract-B4N7HDE

How often do you make trading decisions based largely on the hype of what other people are doing? Even experienced traders are susceptible to following the crowd more than logic at times. In the trading world, this is described as herd mentality. It is often difficult to ignore exciting, over-hyped trends, especially in a volatile market. Nonetheless, separating your logical trading decisions from your emotions is crucial to a strong trading strategy. Read on to learn how herd mentality affects both your decisions and the overall market—and how you can build resilience into your trading style.

 

What is Herd Mentality?

 

The term herd mentality refers to the tendency of people to follow what others in their group are doing, especially in response to an inciting factor like a threat or surprise. Herd mentality is a survival instinct and it isn’t always a bad one. Sometimes it helps us make productive decisions on the fly. For example, if you’re driving and notice that all the cars ahead of you are merging into another lane due to a traffic accident up ahead, most likely you will do the same and avoid having to do it at the last possible minute—aka, when you come up right on the accident and have no choice but to change lanes.

You followed herd mentality to make that decision by assuming that the cars ahead of you knew what they were doing. In this case they were right, so you were right. The “herd” doesn’t always know what they are doing, however. In fact, most people in situations driven by herd mentality aren’t acting based on their own knowledge or experience at all. Instead, they’re choosing what other people are choosing simply because others are choosing to do it.

 

How Herd Instinct Affects You as a Trader

 

Herd mentality is often strong enough to convince you that your own perceptions are flawed and that others know the way. Because of this, trends and hype can do more to validate your decisions than experience or thorough analysis.

 

The financial market involves so much risk, uncertainty, and change that it is a prime opportunity for herd mentality to thrive. While paying attention to trends and data is a necessary part of any successful trader’s strategy, herd mentality favors the trend above all else. For example, when more people start selling their shares, others assume they have a good reason to do so. This puts pressure on them to sell as well. Like a stampede, the number of people following the herd quickly multiplies—and then you have a case of panic selling.

 

How Herd Mentality Influences the Market

 

The problem with a stampede is that it can cause more harm than the original threat. Indeed, the danger may not even be real. We've seen this happen in the financial market many times. A news report of low company earnings, a failed product, or a lawsuit can trigger worries that the stock value will fall. The rumor mill starts turning, and some traders decide to sell. Before long, there is an enormous sell-off and people are left with losses they could have avoided if they had held their shares.

 

A market bubble is another result of herd mentality. Because people are eager to imitate group actions that seem beneficial, they'll hop onto the bandwagon for rising stocks. The dotcom bubble is a perfect example of this. Traders in the late 1990s were irrationally excited about newly public Internet companies. As more and more investors bought shares, the stock values skyrocketed beyond the actual earnings of those companies. Once the capital dried up, the bubble burst, and investors were left with massive losses.

 

Historic Herd Mentality Effects on the Market

 

One historic example of how herd instinct leads to bubbles is Tulipmania, which happened in 17th-century Holland. Tulips were a rare and highly valued commodity at this time. Wealthy merchants who wanted to prove their clout began purchasing tulips in insane numbers. This drove up the flowers' price to exceed even the cost of some houses! Tulip investors hoarded their wares in hopes of amassing wealth. Of course, the upward trend did not last, and tulip prices dropped to normal levels within a week leaving the investors at a significant loss.

 

A more recent example is the GameStop (GME) short squeeze. In January 2021, members of the subreddit r/WallStreetBets purchased shares of GME stock, contributing to an artificial raise in the price of GME stock. Their outcome disrupted hedge fund investors who were betting on a downward trend. This would have led to sizable profits once the value plummeted, but individual  investors一most likely following herd mentality一created a GME bubble and shifted the market significantly. Unfortunately, the trend drew a lot of investors to pour money into the stock, only to lose it when the bubble finally popped.

 

Panic sell-offs and overconfident investment bubbles have happened for centuries and will continue to happen. They are a major side effect of herd instinct in trading. In 2021, cryptocurrency markets are deeply affected by herd behavior. Between fall 2020 and spring 2021, Bitcoin's value grew 600%, but then plummeted by early summer. Crypto is an emerging and volatile market, which makes it extremely difficult to predict. So, many investors follow the crowd, which creates bubbles that pop quickly.

 

Conclusion: Always Do Your Own Research

 

The best way to avoid the negative effects of bubbles and sell-offs is to do your due diligence. When others start buying a trendy new stock or selling out of fear, think before making a transaction. Review the data. And always do your research before attempting to short-sell a stock or join in a buying craze.

Individual decision-making is always more advisable than the herd mentality. Set aside your concerns about missing out on a hot new stock. With clear investment goals, you can trade with greater clarity and confidence — and not fall sway to panic buying or selling.


Market Report Markets come roaring back
By Todd Horwitz on Jul 25, 2021 at 5:35:27 AM

Market Report: Markets come roaring back

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

When the markets closed on Friday July 16th with a big sell off at the close it brought the question, is the rally over? On Monday July 19th markets tanked early in the day taking the Dow lower by almost 1000 points. However, by Friday we saw new highs in the Dow, S+P and Nasdaq.

It appears markets are not ready to go down, we have seen Lumbar fall 70%, Housing markets slow and inflation at levels not seen for 30 years. For now, nothing matters but cheap money and chasing yield which will continue until it doesn’t.

One thing that investors and traders must recognize is despite economic warnings, inflation and other concerns markets will move in the path of least resistance. Money has no conscious and will continue to go where its treated best

The option markets continue to signal new highs should continue Call buyers lead the way closely followed by Put and Put spread sellers. The VIX continues to fall as complacency reigns. It appears that there are no concerns for the mass, the rally should continue.

Tech stocks continue to lead the way with AAPL, SQ, NVDA, TSLA and AMZN were the leaders in bullish options trades. The bears are selling SPY, AG, X, JWN and BAC. In other words, Tech and the Nasdaq lead the way.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


Mid-Year Market Trends to Watch
By - Dan Raju, CEO at Tradier on Jul 21, 2021 at 9:11:27 AM

Investment-stockbroker-stock-trading-TR5GP7U

 

Despite much of the nation returning back to normal, so far 2021 has proven to be unique in its own right. Many markets have either started to rebound, or in the case of the United States, have bounced back resoundingly. Much of this rebound can be attributed to factors such as people returning to work, consumers exercising pent-up demand, and global supply chain issues being resolved. However, there are factors that may hinder these gains as well. Now that we’re halfway through the year of recovery, let’s look at what trends we may see when it comes to the market.

 

Rising Inflation 

 

Many are anticipating inflation and its accompanying side effects in the latter half of 2021. The country’s breakeven inflation rates have continued to grow higher since January and investors saw the US dollar rise 2.5% in June. Gas prices and grocery bills are predicted to stay high for the rest of the year. Inflation will be a chief issue to contend with in the second half of 2021, and investor sentiment will be largely determined by how the Federal Reserve System addresses the growing inflation with its monetary policies in the coming months.

 

Easing Investor Optimism 

 

Some argue that investor optimism will likely ease up in the second half of the year,  even when considering the outperformance and market highs at the start of the year. Earlier in 2021, government stimulus checks and pent-up consumer demand fueled US economic growth. The GameStop (GME) short squeeze in January kicked off the trend of growing interest in stock buying and selling from a broader demographic of investors. While these trends aren’t likely going away any time soon, some analysts suggest that there was an overbuying of stocks in the first half of the year that won’t continue into the second half of 2021. As with any trend, of course, only time will tell on this one. 

 

Increased Small Business Hiring

 

Market trends for the rest of this year will also be influenced by the labor market. Small businesses took a massive hit in 2020. Labor shortages that existed in certain industries, such as the construction industry, were only exacerbated by COVID-19. As corporate earnings surged in the beginning of this year, some feared that small businesses would be left in the dust. Fortunately, small businesses are experiencing their own slice of recovery. Small business hiring has skyrocketed in recent months, according to recent data from Charles Schwab, and with many state-based stimulus packages expiring soon, some are predicting that our current overall ‘labor shortage’ will ease up sooner rather than later. 

 

The State of the Supply Chain 

 

A final trend to consider that will affect markets will be the fixing of global supply chains. In 2020, many global and national suppliers simply shut down, which hurt businesses and the economy on a grand scale. Early in 2021, a six-day long blockage in the Suez Canal disrupted countless domestic and global businesses, impeding an estimated $9.6 billion worth of trade each day. Now that much of the global economy is in recovery, we can hope that a “rebalancing” occurs within the global supply chain -- which will carry a ripple of positive effects to the US markets. 

 

Ultimately, only time will tell when it comes to how the markets will evolve over the rest of 2021. Continued economic growth and market stability for the foreseeable future would certainly be a welcome trend for investors and analysts alike.



© 2013 Tradier Inc. All rights reserved.
Blog powered by TypePad. Theme is Flatly. Member since Nov. 2013.