Recent content by garfangle

You should not follow any recommendation made by an analyst on the future outcome of a stock's price or earnings because that is not what they get paid for or get fired over. The bulk of what a Wall Street analyst does is to research a company and provide insights as to its business and future...

Gold and its ETF offshoots like GLD are popular with both retail investors and hedge funds like Paulson & Co. However, since gold doesn't throw off any income it cannot be analyzed like a company nor can it be evaluated like an industrial metal like copper because its use as jewelery is only a...

Market makers make their coin on the spread, but most traders employed by mutual funds and hedge funds are not trying to make money from the bid-ask spread, but rather buy low-sell high investing. A WST with access to tens of millions of dollars can afford to be wrong many times in hopes of...

For the self-trader it is tough to make money, yet when they see those who inhabit Wall Street making millions it is tough to reconcile why they are successful and you are not. So, here are some reasons why Wall Street traders (WST) win and the Average Joe trader (AJT) loses (or does not do as...

yeah, the economy still sucks and the Fed confirmed it. (sarcasm)

I know CNBC promotes its Fast Money show as a way to follow the actions of its trading hosts, but I wonder how credible they are when they discuss their positions. It doesn't seem possible for them to have daily opinions on dozens of stocks in the news during the week and to make authentic...

Another benefit of the average up strategy (AUS) is that your break even price is lower than the current price (assuming it initially rises) whereas in an v. average down strategy (ADS) your break even price is higher than the current price. Meaning that in an AUS to arrive at the break even...

A reason why traders blow up is because they average down their trades, when they should instead average up. It is tempting to accumulate more stock when the price falls, but this strategy is wrong because human psychology cannot handle the pain of severe drawdowns. Also, you cannot...

I am discussing the tradeoffs. You have to be aware of them and not assume using spreads get you something for nothing.

One reason to own spreads instead of direct calls or puts is to reduce your cost of option buying. A call option with a month to expiration and average volatility might cost you $2, but a vertical spread might reduce it to $1.00 when you buy a lower priced call ($2) and sell a higher priced...