Trading strategies
Explore practical techniques to help you plan, analyse and improve your trades.
Our library of trading strategy articles is designed to help you strengthen your market approach. Discover how different strategies can be applied across asset classes, and how to adapt to changing market conditions.


Volatility doesn't discriminate. But it can punish the unprepared.
Stops getting hit on moves that reverse within minutes. Premiums on short-dated options climbing. And the yen no longer behaving as the reliable hedge it once was.
For traders across Asia, navigating this environment means asking harder questions about risk, timing, and the assumptions baked into strategies built for calmer markets.
1. How do I trade VIX CFDs during a geopolitical shock?
The CBOE Volatility Index (VIX) measures the market’s expectation of 30-day implied volatility on the S&P 500. It is often called the “fear gauge.” During geopolitical shocks such as the current Iran escalations, sanctions announcements, and surprise central bank actions, the VIX can spike sharply and quickly.
What makes VIX CFDs different in a shock
VIX itself is not directly tradeable. VIX CFDs are typically priced off VIX futures, which means they carry contango drag in normal conditions.
During a geopolitical shock, several things can happen at once
- Spot VIX may spike immediately while near-term futures lag, creating a disconnect.
- Spreads on VIX CFDs can widen significantly as liquidity thins.
- Margin requirements may change intraday as broker risk models adjust.
- VIX tends to mean-revert after spikes, so timing and duration are critical.
What this means for Asian-hours traders
Asian market hours mean many geopolitical events can break while local traders are active or just starting their session.
A shock that hits during Tokyo hours may already be priced into VIX futures before Sydney opens.
Some traders use VIX CFD positions as a short-term hedge against equity portfolios rather than a directional trade. Others trade the reversion (the move back toward historical averages once the initial spike fades). Both approaches carry distinct risks, and neither guarantees a specific outcome.

2. Why are my 0DTE options premiums so expensive right now?
Zero days-to-expiry (0DTE) options expire on the same day they are traded. They have become one of the fastest-growing segments of the options market, now representing more than 57% of daily S&P 500 options volume according to Cboe global markets data.
For Asian-based participants accessing US options markets, elevated premiums during volatile periods can feel like mispricing, but usually reflects structural pricing factors.
Why premiums spike
Options pricing is driven by intrinsic value and time value. For 0DTE options, there is almost no time value left, which might suggest they should be cheap but the implied volatility component compensates for that.
When uncertainty increases, sellers may demand greater compensation for the risk of sharp intraday moves.
This can be reflected in
- Higher implied volatility inputs.
- Wider bid-ask spreads.
- Faster adjustments in delta and gamma hedging.
In higher-VIX environments, hedging flows can contribute to short-term feedback loops in the underlying index. This can amplify price swings, particularly around key levels.
What this means for Asian-hours traders
Many 0DTE options contracts see their most active pricing and hedging flows during US trading hours. Entering positions during the Asian session may mean facing stale pricing or wider spreads.
If you are seeing expensive premiums, it may reflect the market accurately pricing the risk of a large same-day move. Whether that premium is worth paying depends on your view of the likely intraday range and your risk tolerance, not on the absolute dollar figure alone.

3. How do I adjust my algorithmic trading bot for a high-VIX environment?
Many algorithmic trading systems are built on parameters calibrated during lower-volatility regimes. When VIX spikes, those parameters can become outdated quickly.
The regime mismatch problem
Most trading algorithms use historical data to set position sizes, stop distances, and entry thresholds. That data reflects the conditions during which the system was tested. If VIX moves from 15 to 35, the statistical assumptions underpinning those settings may no longer hold.
Common failure modes in high-VIX environments include
- Stops triggered repeatedly by noise before the intended directional move occurs.
- Position sizing based on fixed-dollar risk, which becomes relatively small compared to actual intraday ranges.
- Correlation assumptions between assets breaking down.
- Slippage on execution that erodes edge.
Approaches some algorithmic traders consider
Rather than running a single fixed set of parameters, some systems incorporate a volatility regime filter. This is a real-time check on VIX or ATR that triggers a switch to different settings when conditions shift.
Approach adjustments that some traders review in high-VIX environments
- Widen stop distances proportionally to ATR to reduce noise-driven exits.
- Reduce position size to maintain constant dollar risk relative to wider expected ranges.
- Add a VIX threshold above which the system pauses or moves to paper trading mode.
- Reduce the number of simultaneous positions, as correlations tend to rise during market stress.
No adjustment eliminates risk. Backtesting new parameters on historical high-VIX periods can provide some indication of likely performance, though past conditions are not a reliable guide to future outcomes.
4. Is the Japanese Yen (JPY) still a reliable safe-haven trade?
During periods of global risk aversion, capital has historically flowed into JPY as investors unwind carry trades and seek lower-volatility holdings. However, the reliability of this dynamic has become more conditional.
Why has the yen historically moved as a safe haven?
Japan’s historically low interest rates made JPY the funding currency of choice for carry trades and when risk-off sentiment hits, those trades unwind quickly, creating demand for yen.
Additionally, Japan’s large net foreign asset position means Japanese investors tend to repatriate capital during crises, further supporting JPY.
What has changed
The Bank of Japan’s shift away from ultra-loose monetary policy in recent years has complicated the traditional safe-haven dynamic.
As Japanese interest rates rise:
- The scale of carry trade positioning may change.
- USD/JPY can become more sensitive to interest rate spreads.
- BoJ communication and domestic inflation data may influence JPY independently of global risk appetite.
The yen can still behave as a safe haven, particularly during sharp equity sell-offs. But it may respond more slowly or inconsistently compared to earlier cycles when the policy divergence between Japan and the rest of the world was more extreme.
What to watch
For traders monitoring JPY as a safe-haven signal, BoJ meeting dates, Japanese CPI releases, and real-time US-Japan rate spread data have become more relevant inputs than they were a few years ago.

5. How do I avoid ‘whipsawing’ on energy CFDs?
Whipsawing describes the experience of entering a trade in one direction, getting stopped out as the price reverses, then watching the price move back in the original direction.
Energy CFDs, particularly crude oil, are especially prone to this in volatile markets. And for traders in Asia, the combination of thin liquidity during local hours and sensitivity to geopolitical headlines can make this particularly challenging.
Why energy CFDs whipsaw
Crude oil is sensitive to a wide range of headline drivers: OPEC+ production decisions, US inventory data, geopolitical supply disruptions, and currency moves.
In high-volatility environments, the market can react strongly to each headline before reversing when the next one arrives.
- Price spikes on a headline, stops are triggered on short positions.
- Traders re-enter long, expecting continuation.
- A second headline or profit-taking reverses the move.
- Long stops are hit. The cycle repeats.
Approaches traders may consider to manage whipsaw risk
Some traders choose to change their risk controls in volatile conditions (for example, reviewing stop placement relative to volatility measures). However these may increase losses; execution and slippage risks can rise sharply in fast markets
Other approaches that some traders review:
- Avoid trading crude oil CFDs in the 30 minutes before and after major scheduled data releases.
- Use a longer timeframe chart to identify the prevailing trend before entering on a shorter timeframe, reducing the chance of trading against larger institutional flows.
- Scale into positions in stages rather than committing full size on initial entry.
- Monitor open interest and volume to distinguish between moves with genuine participation and low-liquidity fakeouts.
Whipsawing cannot be eliminated entirely in volatile energy markets. The goal of risk management in these conditions is not to predict which moves will hold, but to ensure that losses on false moves are smaller than gains when a genuine directional move follows.
Practical considerations for volatile Asian markets
Asian markets carry structural characteristics that interact with volatility differently from US or European markets:
- Thinner liquidity during local hours can exaggerate moves on thin volume, particularly in energy and FX CFDs.
- Events in China, including PMI releases, trade data, and PBOC policy signals, can move regional indices.
- BoJ policy decisions have become a more active driver of JPY and Nikkei volatility in recent years.
- Overnight gaps from US session moves are a persistent structural risk for traders unable to monitor positions around the clock.
- Margin requirements on leveraged products can change at short notice during high-VIX periods.
Frequently asked questions about volatility in Asian markets
What does a high VIX reading mean for Asian equity indices?
VIX measures expected volatility on the S&P 500, but elevated readings typically reflect global risk aversion that flows across markets. Asian indices such as the Nikkei 225, Hang Seng, and ASX 200 can often see increased volatility and negative correlation with sharp VIX spikes.
Can 0DTE options be traded during Asian hours?
Access depends on the platform and the specific instrument. US equity index 0DTE options are most actively priced during US trading hours. Asian traders may face wider spreads and less representative pricing outside those hours.
Are algorithmic trading strategies inherently riskier in high-volatility conditions?
Strategies calibrated during low-volatility periods may perform differently in high-VIX environments. Regular review of parameters against current market conditions is prudent for any systematic approach.
Has the JPY safe-haven trade changed permanently?
The Bank of Japan’s policy normalisation has introduced new dynamics, but JPY has continued to strengthen during some risk-off episodes. It may be more conditional on the nature of the shock and the BoJ’s concurrent posture.
What is the best way to set stops on energy CFDs in high-volatility conditions?
There is no universally best method. Many traders reference ATR to calibrate stop distances to prevailing conditions rather than using fixed levels. This does not guarantee exit at the desired price and does not eliminate whipsaw risk.

In the dynamic world of options trading, investors are often seeking strategies that provide a blend of income generation and risk management. One such strategy that has gained popularity is the "covered call." Covered calls offer a unique approach to enhance portfolio returns while potentially mitigating downside risk. In this comprehensive guide, we will delve deep into the concept of covered calls, exploring their mechanics, benefits, and potential drawbacks.
A covered call, also known as a "buy-write" strategy, is an options trading strategy that combines the ownership of an underlying asset, such as stocks, with the sale of a call option on that same asset. This strategy is employed when an investor holds a bullish or neutral view on the underlying asset's price, believing it will either rise slightly or remain relatively stable. To initiate a covered call, an investor first acquires a certain quantity of the underlying asset, usually 100 shares per call option contract.
Once the asset is in their possession, they then sell a call option with a strike price and expiration date of their choosing. By doing so, they collect a premium from the sale of the call option. The covered call strategy essentially involves two key components: the underlying asset and the call option.
Here's how it works: Acquisition of the Underlying Asset: The investor begins by purchasing a specific number of shares of an underlying asset. This asset could be stocks, ETFs, or other securities. Selling a Call Option: After acquiring the underlying asset, the investor proceeds to sell a call option on those shares.
The call option specifies the strike price at which the shares can be purchased and an expiration date, after which the option becomes invalid. Premium Collection: In exchange for selling the call option, the investor receives a premium, which is essentially income generated from the transaction. Obligation to Sell: By selling the call option, the investor obligates themselves to sell the underlying asset at the strike price if the option is exercised by the call option buyer.
This obligation remains in effect until the option's expiration date. Covered calls offer several advantages for investors seeking a balanced approach to trading options. The primary benefit of a covered call strategy is the immediate income generated from selling call options.
This income can boost the overall return on the underlying asset, providing a steady stream of cash flow. Additionally, the premium collected from selling the call option can offset the initial cost of acquiring the underlying asset. This effectively lowers the investor's cost basis in the asset, reducing potential losses in the event of a price decline.
Since the investor already owns the underlying asset, the premium received from selling the call option provides a cushion against potential price declines. This can help mitigate losses compared to simply holding the asset. Furthermore, covered calls can boost overall returns, especially in sideways or slightly bullish markets.
If the underlying asset's price remains stable or rises modestly, the investor retains the premium and profits from any increase in the asset's value up to the strike price. While covered calls offer numerous advantages, they also come with certain risks and limitations. One of the main drawbacks of covered calls is that they cap the investor's potential profit.
If the underlying asset experiences a significant price surge, the investor is obligated to sell it at the predetermined strike price, missing out on potential gains beyond that level. There is always the risk that the call option may be exercised by the buyer. If this happens, the investor must sell the underlying asset at the strike price, potentially missing out on further price appreciation.
By committing to the covered call strategy, investors tie up their capital in the underlying asset and limit their ability to adapt to changing market conditions or opportunities. Options contracts lose value as they approach their expiration date, a phenomenon known as time decay. This can erode the profitability of the covered call strategy if the underlying asset's price remains relatively unchanged.
The decision to employ covered calls should be based on a careful assessment of an investor's financial goals, risk tolerance, and market outlook. Covered calls are most suitable in the following scenarios: Bullish or Neutral Outlook: Covered calls are effective when an investor expects the underlying asset's price to rise slightly or remain relatively stable. In strongly bearish or highly volatile markets, this strategy may not be as effective.
Desire for Income: Investors seeking regular income from their investments can benefit from covered calls, as they generate premiums that contribute to cash flow. Portfolio Diversification: Covered calls can serve as a diversification tool within a portfolio, helping to balance risk and returns, particularly when combined with other strategies. Hedging Positions: Investors can use covered calls to hedge existing positions, protecting themselves against potential losses or generating additional income.
Before implementing a covered call strategy, investors should consider the following key factors: Selecting the Right Strike Price: Careful consideration should be given to choosing the strike price of the call option. It should align with the investor's outlook for the underlying asset's price movement. Expiration Date: Investors must determine an appropriate expiration date for the call option, keeping in mind their investment horizon and objectives.
Risk Management: Adequate risk management measures, such as setting stop-loss orders or having an exit strategy, should be in place to protect against unexpected market movements. Tax Implications: The tax treatment of income generated from covered calls may vary depending on the investor's jurisdiction. Consultation with a tax advisor is recommended.
In conclusion, covered calls offer a compelling strategy for investors looking to balance risk and reward in their portfolios. By combining the ownership of an underlying asset with the sale of call options, investors can generate income, reduce their cost basis, and provide downside protection. However, it's crucial to understand the potential limitations and risks associated with this strategy and to use it judiciously based on individual financial objectives and market conditions.
As with any investment strategy, thorough research, ongoing monitoring, and risk management are essential elements of a successful covered call approach in options trading.

In the dynamic world of financial markets, understanding the intricacies of various trading instruments is crucial for investors seeking to make informed decisions. Contracts for Difference (CFDs) have gained significant popularity among traders, offering the opportunity to speculate on price movements across a wide range of assets. Among the essential concepts in CFD trading is 'Yield,' a term that holds considerable importance for both novice and experienced traders.
In this article, we will delve deep into the concept of Yield in CFD trading, exploring its definition, calculation, and practical implications. What is Yield in CFD Trading? Yield, in the context of CFD trading, refers to the potential return on investment generated from a CFD position.
It is a critical metric for traders as it allows them to assess the profitability of their trades and make informed decisions. Yield can be expressed as a percentage and is often used to evaluate the performance of various trading strategies. Understanding the Calculation of Yield To calculate the yield of a CFD position, you need to consider two key components: Price Change: The first component of yield calculation involves measuring the change in the price of the underlying asset.
This can be either a price increase (if you are long) or a price decrease (if you are short) since you opened your CFD position. The magnitude of this price change directly impacts your potential yield. Position Size: The second component is the size of your CFD position.
This refers to the number of CFDs you hold in your trading account. The larger your position size, the more significant the potential yield, but it also increases the associated risk. The formula to calculate yield is as follows: Yield = (Price Change * Position Size / Initial Investment) * 100 The resulting value is expressed as a percentage and represents the yield on your CFD trade.
It is essential to remember that yield can be both positive (indicating a profit) and negative (indicating a loss), depending on the direction of price movement and the size of your position. Interpreting Yield Now that we have a clear understanding of how to calculate yield, let's explore its practical implications for CFD traders: Profit Potential: A positive yield signifies that your CFD trade has generated a profit. The higher the yield, the more significant the profit relative to your initial investment.
Traders often aim to maximize their yield by correctly predicting price movements and using leverage wisely. Risk Assessment: Yield is not only a measure of profitability but also a crucial tool for risk assessment. A negative yield indicates a loss on your CFD position.
Understanding the magnitude of this loss relative to your initial investment helps you manage risk and implement risk mitigation strategies. Trading Strategy Evaluation: Traders can use yield to assess the performance of their trading strategies. By analyzing the historical yield of different strategies, traders can identify which approaches are more successful and refine their trading techniques accordingly.
Leverage Consideration: Yield is directly affected by leverage. While leverage can amplify potential profits, it also increases the risk of substantial losses. Traders must strike a balance between yield and risk when using leverage in CFD trading.
Position Sizing: Yield calculation also highlights the importance of proper position sizing. Traders should consider their risk tolerance and overall portfolio size when determining the size of their CFD positions to achieve a desired yield while managing risk effectively. Factors Influencing Yield Several factors can influence the yield of a CFD position, making it a dynamic metric that requires continuous monitoring and adjustment: Market Volatility: Highly volatile markets can result in more significant price swings, which can lead to both higher yields and increased risks.
Traders should adapt their strategies to different market conditions. Leverage: The use of leverage can significantly impact yield. While it can magnify profits, it also increases potential losses.
Traders should be cautious when employing leverage and understand its implications on yield. Asset Selection: Different assets exhibit varying levels of volatility and price movements. The choice of underlying assets for CFD trading plays a crucial role in determining the potential yield of a trade.
Trading Timeframe: The duration of a CFD trade can influence yield. Short-term trades may yield quick profits but come with higher trading costs, while long-term trades can offer more significant gains but require patience and risk management. Market Analysis: The accuracy of your market analysis and trading decisions can significantly impact yield.
Traders who employ robust analytical tools and stay informed about market news tend to make more informed and profitable trades. Conclusion Yield is a fundamental concept in CFD trading, providing traders with a clear measure of the potential return on their investments. Understanding how to calculate and interpret yield is essential for making informed trading decisions and managing risk effectively.
By considering factors such as market volatility, leverage, asset selection, trading timeframe, and market analysis, traders can optimize their CFD trading strategies to achieve their desired yield while safeguarding their capital. In the ever-evolving world of financial markets, mastering the concept of yield is a crucial step toward becoming a successful CFD trader.

In the world of Contract for Difference (CFD) trading, success often hinges on one's ability to strategically execute trades. To achieve this, traders frequently use various order types to manage their positions effectively. One such order type is the 'Working Order,' which plays a pivotal role in maximizing trading opportunities while minimizing risk.
In this article, we'll delve into the intricacies of working orders, how they function, and their significance in the CFD trading landscape. A working order is essentially a trading instruction given to GO Markets to execute a trade at a specific price point or under certain market conditions. Unlike market orders, which are executed instantly at the current market price, working orders allow traders to set specific parameters for trade execution.
This flexibility is a valuable tool for traders aiming to enter or exit positions at precise price levels. The primary purpose of a working order is to automate the trading process, freeing traders from the constant need to monitor the market. By setting predetermined conditions for trade execution, traders can engage in other activities without the fear of missing out on profitable opportunities or being adversely affected by market fluctuations.
One common type of working order is the limit order. A limit order instructs GO Markets to buy or sell an asset at a specified price or better. For instance, if a trader wishes to buy shares of a CFD at a lower price, they can place a limit order below the current market price.
Conversely, if they want to sell at a higher price, they can set a limit order above the current market price. The trade will only be executed when the market reaches the specified price or better. Another popular type of working order is the stop order.
A stop order, also known as a stop-loss order, is designed to limit potential losses or protect profits. A trader can place a stop order to buy or sell an asset when it reaches a certain price level. For example, if a trader holds a long CFD position but wants to limit potential losses, they can set a stop-loss order at a specific price below the current market price.
If the market reaches that price, the stop order becomes active, automatically triggering the sale of the CFD. Understanding the mechanics of working orders is crucial for traders looking to manage risk effectively. One of the key benefits of working orders is their ability to help traders stick to a well-thought-out trading plan.
By setting predetermined entry and exit points, traders can avoid impulsive decision-making driven by emotions, which often leads to costly mistakes. Moreover, working orders can be used to capitalize on market volatility. In fast-moving markets, prices can change rapidly, making it challenging to execute trades at desired levels.
With working orders in place, traders can take advantage of price fluctuations without constantly monitoring the market. This level of automation not only saves time but also reduces the stress associated with day-to-day trading. Traders have the flexibility to customize their working orders to suit their specific trading objectives.
This customization includes specifying order duration. There are two primary order duration options: day orders and good 'til canceled (GTC) orders. Day orders, as the name suggests, are valid for the trading day on which they are placed.
If the specified conditions are not met by the end of the trading day, the order expires, and traders need to re-enter it if they wish to keep the trade active. On the other hand, GTC orders remain active until they are executed or manually canceled by the trader. This means that GTC orders can span multiple trading days or even weeks, allowing traders to patiently wait for their desired price levels to be reached.
Working orders can also be contingent on other factors, such as time or the behavior of other assets. For instance, traders can use contingent orders to link their CFD trades with specific events. If a particular stock index reaches a certain level, it may trigger the execution of a working order for a related CFD position.
Traders should be aware that while working orders provide valuable tools for managing trades, they also come with certain risks. Market conditions can change rapidly, and prices may gap or move significantly from the specified order level, especially during periods of high volatility. In such cases, the working order may not be executed at the desired price, potentially resulting in unexpected losses.
Furthermore, it's essential for traders to monitor their working orders regularly. Market conditions can shift quickly, and it may be necessary to adjust or cancel working orders if they are no longer aligned with the trader's strategy. Neglecting to review and manage working orders can lead to unintended consequences in a dynamic market environment.
In conclusion, working orders are a valuable tool in CFD trading, offering traders the ability to automate their trade execution based on specific conditions or price levels. These orders, including limit and stop orders, help traders implement disciplined trading strategies, manage risk, and capitalize on market opportunities. However, traders should approach working orders with a clear understanding of their risks and continuously monitor their positions to ensure they align with their trading objectives.
By harnessing the power of working orders effectively, traders can enhance their trading experience and potentially achieve better results in the competitive world of CFD trading.

Options trading is a complex and fascinating arena that offers traders a wide array of strategies and opportunities to profit from price movements in various financial assets. One fundamental concept that traders encounter frequently is the term "at the money," often abbreviated as "ATM." In this article, we will delve into the meaning of "at the money" in options trading, its significance, and how it influences trading decisions. Understanding "At the Money" In options trading, the phrase "at the money" refers to a specific situation where the price of the underlying asset is approximately equal to the strike price of the option.
In other words, when an option is considered "at the money," it means that the market price of the underlying asset and the strike price of the option are very close or nearly identical. To illustrate, let's say you hold a call option on Stock ABC with a strike price of $50. If the current market price of Stock ABC is hovering around $50, that call option would be described as "at the money." Similarly, if you have a put option with a $50 strike price and the market price of Stock ABC is also $50, that put option would be "at the money." Why "At the Money" Matters The designation of "at the money" is crucial because it has a significant impact on the pricing, behavior, and potential profitability of an option.
In fact, it serves as a dividing line between two other key options classifications: "in the money" (ITM) and "out of the money" (OTM). In the Money (ITM): An option is considered "in the money" when the market price of the underlying asset is favorable for the option holder's position. For call options, this means the market price is above the strike price.
For put options, it means the market price is below the strike price. Out of the Money (OTM): Conversely, an option is classified as "out of the money" when the market price of the underlying asset is not favorable for the option holder's position. In the case of call options, this means the market price is below the strike price, while for put options, it means the market price is above the strike price. "At the money" is the point where neither party (call option holder or put option holder) has a clear advantage.
It signifies a neutral position, where the cost of exercising the option is approximately equal to the current market value of the underlying asset. This neutrality is reflected in the option's premium or price, which tends to be lower than for options that are "in the money." Pricing of "At the Money" Options The pricing of options, including "at the money" options, is influenced by several factors, known as the option's "Greeks." The most important Greek that relates to the pricing of options at or near the money is the "Delta." Delta: Delta measures how much an option's price is expected to change in response to a $1 change in the underlying asset's price. For "at the money" options, the delta is typically around 0.50, meaning there is a 50% probability that the option will finish "in the money" by expiration.
For example, if you have an "at the money" call option with a delta of 0.50, and the underlying asset's price increases by $1, the option's price is expected to rise by approximately $0.50. Conversely, if the underlying asset's price decreases by $1, the option's price should decline by about $0.50. This delta value of 0.50 for "at the money" options highlights their near-neutral position in terms of potential profit or loss.
Traders often use delta as a way to gauge the likelihood of their option ending up "in the money" or "out of the money" and to manage their risk accordingly. Trading Strategies Involving "At the Money" Options Traders employ various strategies when dealing with "at the money" options, depending on their market outlook and risk tolerance. Here are a few common strategies: Long Straddle: This strategy involves buying both a call and a put option with the same strike price, typically "at the money." Traders use this strategy when they anticipate a significant price movement in either direction but are uncertain about the direction of the move.
The goal is to profit from the volatility that often accompanies such price swings. Covered Call Writing: In this strategy, investors who already own the underlying asset sell "at the money" call options. By doing so, they generate income from the premium received while also providing some downside protection if the stock price declines slightly.
If the stock rises significantly above the strike price, they may be required to sell the asset but will still profit from the premium received. Protective Put: Traders and investors can buy "at the money" put options as insurance against potential declines in the value of their holdings. If the underlying asset's price falls below the strike price, the put option can help offset the losses.
Risks and Considerations While "at the money" options can be a versatile part of an options trading strategy, it's essential to understand the risks involved. Options, in general, can expire worthless if not exercised, leading to a loss of the premium paid for the option. Additionally, the price movement required for "at the money" options to become profitable can be significant, as they are closer to the boundary between "in the money" and "out of the money." Traders should carefully assess the market conditions, implied volatility, and their risk tolerance when considering "at the money" options in their trading decisions.
In conclusion, "at the money" options play a crucial role in options trading, representing a neutral position where the market price of the underlying asset aligns closely with the option's strike price. Understanding the significance of "at the money" options, their pricing factors, and the various trading strategies that involve them can empower traders to make more informed decisions in the dynamic world of options trading. However, it's essential to remember that options trading carries inherent risks, and it's advisable to seek professional advice or conduct thorough research before engaging in options trading activities.

One Cancels the Other (OCO) is a trading strategy commonly used in financial markets, including options trading. It is a conditional order that allows traders to place two orders simultaneously, with one order serving as a hedge or protection against the other. The primary purpose of OCO orders is to manage risk and limit potential losses while still capitalizing on potential gains.
OCO orders are often used to set up two different types of orders, for example, a stop order and a limit order, for the same underlying security. Example: 1. Stop Order: This is an order to buy or sell an option when the market price reaches a specified trigger level, known as the "stop price." For example, if you hold a long call option and want to protect yourself from substantial losses if the market moves against you, you can place a stop order to sell that call option if the underlying stock's price falls below a certain level. 2.
Limit Order: This is an order to buy or sell an option at a specific price or better. In an OCO order, this order is typically placed at a more favorable price compared to the current market price. For example, if you hold a long call option and want to take profits when the market price reaches a certain level, you can place a limit order to sell that call option at that predetermined profit level.
The OCO order then links these two orders, stipulating that if one of them is executed, the other will be automatically canceled. Here's a breakdown of the scenarios: - If the market price reaches the stop price specified in the stop order, the stop order becomes a market order, and it is executed. At the same time, the limit order is canceled. - If the market price reaches the limit price specified in the limit order, the limit order is executed.
The stop order is then canceled. - If neither the stop nor the limit condition is met, both orders remain active until one of them is triggered or manually canceled by the trader. OCO orders can be useful for managing risk and protecting profits in options trading. They allow traders to set predefined exit points for their positions, reducing the need for constant monitoring of the markets.
Practical Considerations and Tips: While OCO and stop-limit orders offer numerous advantages to options traders, it's important to approach their use with a clear strategy and understanding of market conditions. Here are some practical considerations and tips for effectively implementing these orders: Define Your Objectives: Before placing OCO or stop-limit orders, have a clear understanding of your trading objectives. Are you looking to lock in profits, limit losses, or both?
Your objectives will determine how you configure these orders. Monitor Market Volatility: Be mindful of market volatility when setting stop and limit prices. Highly volatile markets may require wider price ranges to avoid premature order execution or missed opportunities.
Practice Risk Management: OCO and stop-limit orders are powerful risk management tools, but they are not foolproof. Always be prepared for unexpected market moves and consider using them in conjunction with other risk management strategies. Regularly Review and Adjust: Market conditions change, and so should your orders.
Regularly review and adjust your OCO and stop-limit orders to align with your evolving trading goals and market outlook. Stay Informed: Stay informed about market news and events that could impact your positions. Sudden developments may require immediate adjustments to your orders.


Gold has always been one of the most popular and highly traded markets for CFD traders, especially recently as its price has risen to test its all-time highs. It’s easy to see why, Gold has been a store of value throughout history, and with CFDs it’s possible to take a position in this exciting market, whether you think the price will head up or down. In this CFD gold trading Article we will look at the following: How to use CFDs to trade gold Fundamental forces that drive the price of gold Technical strategies for trading gold CFDs How to use CFDs to trade gold CFDs or Contracts For Difference allow you to speculate on the price of gold, without owning the underlying asset (No gold vaults needed!) A spot gold CFD tracks the price of the spot market being the cleanest and most efficient way to speculate on the price of gold.
They also allow you to take a position in both directions, you would enter a buy (Long) positions if you believed the price will rise, or a sell (Short) position if you believe the price will fall. With Long positions you are looking to buy and sell at a higher price at a later time to profit on the trade. With a Short position you are selling with the view to buy back at a later time to profit on the trade.
At GO Markets we offer our clients the worlds most popular gold trading platform in Metatrader 4 and 5, another advantage to these CFD trading platforms is the ability to automate gold trading strategies. Other advantages to trading gold CFDs with GO Markets: Trade 23 hours a day, unlike an ETF or gold miner listed on a stock exchange that is only open while that stock exchange is open. Leverage – the margin required to open the trade will be a fraction of the face value of the position depending on what leverage your account is set to.
Flexibility in position sizing starting from 1 ounce ($1USD per point movement in gold) unlike gold futures which have rigid contract sizes. Rolling contract, no expiries such as in options or futures to worry about. To Enter a position in Metatrader, you would bring up a deal ticket by clicking “New Order” then select your position size, any Stop Loss or Take Profit levels you want the position to automatically close at and hit Buy or Sell.
As with any instrument, make sure you are familiar with the lot sizing. 1 standard lot in gold (XAUUSD) is 100 ounces, or $100 USD a point so make sure you set the volume to a level commensurate to your account size and risk appetite. Now, the next question is how you decide on a buy or sell, lets look at the fundamentals of what drives gold and some technical analysis you can use to answer this question. Fundamental forces that drive the price of gold While no one reason can be fully attributed to movements in the price of gold, there are an important few fundamental drivers that will influence the price of gold and whose relationship has been time tested.
None of these on their own should be used as a sole reason to enter a position, but having the fundamentals on your side will certainly give you an advantage. The main fundamental drivers in my experience are (not an exhaustive list by any means!) The gold price relationship to US bond yields Safe haven flows Central Bank buying Real Yields and Gold The inverse relationship between bond yields and the price of gold is well established, especially the real yield on the US 10 year bond. The reason for this mainly is because the real yield (the real yield is calculated by subtracting inflation expectations from the actual yield of the US 10 year government bond) is seen as the “risk free” rate on an investment, the higher the “risk free” rate is, the less attractive a non-yield paying asset like gold is.
As both gold and bonds are seen as safe havens, they are competing for the same investors. See the screenshot below to illustrate this point. The gold line is the price of gold, the black line is the inverted real yield of 10 year treasuries.
This chart stretches back 16 years, but the close relationship has gone back much longer than that. This chart is showing that historically, gold is expensive at the moment as compared to real yields as can be seen by the growing gap between the two recently, this interesting decoupling has been mainly caused by our second fundamental driver – Safe haven flows. Safe Haven Flows Geopolitical strife with war in Ukraine and doubts over the health of the global economy got things started with the surge we have seen in gold prices in the last 5 months, but things went into overdrive in March 2023 when Signature bank and Credit Suisse collapsed, bring into question the integrity of the banking system and massive safe haven flows into gold which has pushed the price to within touching distance of hitting all-time highs.
With the banking crisis seemingly under control (for now maybe?) gold has lost some momentum, but the fact it is holding around these elevated prices indicates some investors may not think the crisis is over just yet. Central Bank Buying Central banks are some of the biggest buyers of gold on the open market, and 2022 saw the most central bank buying of gold on record. Whatever the reasons for this, such massive amounts of buying would be seen as a bullish sign for the gold price (if it continues) Technical strategies for trading gold CFDs While having a good understanding of the fundamentals (in my opinion) is important to help you choose the best trades most traders will use a combination of technical analysis and fundamentals with the aim for higher probability outcomes in their trades.
Some traders will use technical analysis exclusively without any interest in the fundamental drivers using things such as RSI oscillators, support and resistance areas and trend lines solely to decide on their trade direction. Which option is best is solely up to the trader, their time frames for the trades and risk appetite, all can work, and all can fail neither option can be seen as “better” than the other, it all depends on the individual trader. Technical analysis is an art in itself and there is a lot to learn on this subject, I encourage anyone interested to research the many weird and wonderful technical analysis strategies that are documented online.
But let’s take a look at a couple of popular technical indicators that gold traders use to make their trades. Support and Resistance Support and resistance are one of the most widely used and accurate (when used correctly) technical indicators that can be used by traders. Support and Resistance areas are points in the market where the price is held from going lower (Support) or going higher (Resistance), these are areas where buyers or sellers are entering the market as they see value in the asset at that price.
These levels can last a long time, or be temporary and can be used to predict turn arounds in the market, or a break of these levels could indicate a further push in that direction. Lets take a look at the recent Gold chart for examples below: From the above you can see that there are areas that Gold will find its price supported. or upside resisted as buyers and sellers battle it out. These areas are very important to keep in mind when deciding on trade direction.
Trend Channels Another simple, but effective and popular Technical Analysis tool is trend channels. These channels are a common sight on the gold chart and can give the trader some confidence in levels that will provide support or resistance, or a break of these channels can indicate a trend change. Example of trend channels on gold below: While technical analysis is useful for gold, it can be difficult to spend the time analysing all the patterns that may form, in that regard GO Markets clients have access to Trading Central which automatically detect technical set ups for our traders to add to their decision making.
Trading Central can be accessed by account holders through their Client Portal. Trading Central Pattern example below: Hopefully this article has given you an interest to learn more about trading gold with CFDs. Fell free to contact the GO Markets team if you have any questions on trading gold CFDs and opening an account with us.
