Technical Analysis.

Frequently Asked Questions

System FAQs ||| Strategy FAQs ||| Technical FAQs

We receive a great number of questions dealing with our trading system. In order to help you better understand our trading system and approach, we have selected and addressed the most commonly asked questions below. We hope this will help you in your trading.

Trading System

• Should I Trade Options?
   
• Should I paper trade before trading options?
   
• Why do you trade QQQQ options?
   
• Why buy expensive options that expire in 2-3 month?
   
• I trade the S&P 500 / SPDRs. So how does this information apply to me?
   
• Your trade horizon appears to focus only on the short- and mid-term. What about the long-term? Do your indicators work for long-term time frames?
   
• Your trade record looks impressive. Where can I get more information on trading with volume indicators?
   
• All your trades appear to be options trades; however, since I do not trade options, what benefit can I get from your volume indicators?

Should I Trade Options?

Because of the high degree of risk involved, only very experienced traders should trade options. You can always trade index shares instead of options and still make a decent profit, although the returns will not be as large.

Should I paper trade before trading options?

Yes! We strongly suggest paper trading to anyone new to our trading system. Try it for a while, at least until you are comfortable with our signals.

Why do you trade QQQQ options?

We generally trade options - particularly QQQQ (NASDAQ 100 index shares) options - because they offer a high potential rate of return and are less risky than NASDAQ 100 index futures. In addition to QQQQ options, there are a number of other trading vehicles that are tied to the NASDAQ 100. You may wish to trade NASDAQ 100 index futures, QQQQ stock, or even NASDAQ 100 options on futures.

Why buy expensive options that expire in 2 - 3 months?

Even though 2-3 month’s call and put options are more expensive, they tend to react less to market swings (lower volatility), and they don't devalue as quickly as options expiring in the current month. By trading options that do not expire for at least 2 months, you can protect yourself from unforeseen, short-term market fluctuations. An added benefit of longer-term options is that if an (up) trend continues on a long-term basis, you can hold them for longer periods, as they will increase substantially in value.

I trade the S&P 500 / SPDRs. So how does this information apply to me?

The S&P 500 index and the NASDAQ 100 index generally display similar reactions to volume events. If you overlay a short-term chart of the two indexes, you will see that their general dynamics are identical or very similar. Because of this, you can trade S&P 500 index shares (or S&P 500 index options) as an alternative to trading the QQQQ.

Your trade horizon appears to focus only on the short-and mid-term. What about the long-term? Do your indicators work for long-term time frames?

Yes, they work on longer time frames just as well. In fact, our indicators work on any time frame. In our “Best Trades” feature, we generally show short-term trades, as these trades are based on options, and it is our strong opinion that the short-term time frame is the best way to trade options. If you are more interested in trading the mid- and long-term, visit the "Charts Example" section on www.MarketVolume.com. You will find several examples there that apply to mid-and long-term trades.

Your trade record looks impressive. Where can I get more information on trading with volume indicators?

Click on the following link (Click here) – it will take you to a section entitled "Charts Examples " on our website MarketVolume.com. We devote an entire section to trading with our volume indicators. In addition, we would also like to recommend an introductory article on the relationship between volume and index movements (Click here to read this article).

All your trades appear to be options trades; however, since I do not trade options, what benefits I can get from your volume indicators?

Even if you do not trade options, you can still benefit greatly from our volume indicators! You can use them to trade various indexes, for example. We apply our volume indicators to the major U.S. indexes, because indexes best describe the mood of the market as a whole. Regardless of what you trade, a particular index or sub-index, stocks, options, or even futures, most trading vehicles tend to move in concert with the broad market. As a rule, the market will dictate the direction of a particular security – it is never the other way around. It therefore makes sense to get a good grasp on what is happening at the index or stock exchange level, and we have found volume analytics to be an excellent vehicle to make that determination.