Understanding how to profit during a bear market is a key competency for every trader who wants to succeed when markets decline. In a declining market, simply holding stocks might not work, but alternative tactics like short selling can produce profits.
When discussing settlement terms, the other term for cash payment settlement option is often cash-based closing, meaning the profit or loss is paid in cash.
An options trading course can cover advanced strategies such as call vs put options. A call contract gives the ability to acquire an asset at a set price, while a put option gives the opportunity to sell it.
In trading terminology, understanding buy to open and buy to close is important. Buy to open means starting a new contract, while Purchasing to exit means ending an existing short.
The iron condor options setup is a limited-risk/limited-reward structure using multiple calls and puts, aiming to earn premium in a sideways market.
In market orders, bid compared to ask reflects the buy and sell prices. The bid price is what a trader offers to buy, and the offer is what is required to sell.
For options, sell to open vs sell to close is another distinction. Selling to create a position means starting exposure by selling, while Selling to exit means ending a long trade.
Option rolling is moving a position forward by shifting strike or expiration to capture more profit.
A trailing stop loss is a moving stop order that locks in profits by moving with the market. This is not to be confused with a fixed stop, since it adjusts without manual input.
Chart patterns like the two-peak pattern signal possible trend change after two highs at the same level. Recognizing it can help traders exit early. can i trade options after hours
Overall, understanding these concepts — from call and put comparison to the meaning of trailing stop loss — gives investors tools to navigate complex markets.