Examples

The following examples describe two different ways on how a trader, investor or a hedger could use this app. There probably are many other ways to make this app useful and we would love to receive your suggestions and know more about your experiences as well. Please treat the following examples for demonstration purposes and feel free to use reach@tradewithufos.com to connect with us and share your experiences and ideas.

Trading Directionally

The thought behind Trading Directionally is to enter a market ready to catch and ride a market move in a given direction and profit from it: Going Long would profit from an upwards move, where Going Short would profit from a downwards move.

In order to do so, the opening and closing time of the trade is critical since entering or exiting too soon or too late would end up in a problematic situation. The Un-Filled Orders (UFOs) concept behind the AutoUFOsapp could certainly be useful when aiming to identify the best moment to initiate a trade and when to finalise it and collect any profit that may have been produced.

Going Long

by Buying Low and Selling High in order to profit from a rising
market

Going Short

by Selling High and Buying Low in order to profit from a falling market

Trading Non-Directionally

The thought behind Trading Non-Directionally through Selling Options and keeping the Premium collected is based on identifying certain places on a price chart that are not likely to be reached and Sell Options with strike prices beyond those places.

The Options contracts sold would be Out of Money (OTM) and they would remain OTM until their expiration date as long as the Market price does not reach the Strike price of the Options sold within that given period of time.

If all of the above was true, the trader would have collected the Premium for selling those Options that would expire worthless, allowing the trader to keep that previously collected Premium.

The Un-FIlled Orders (UFOs) concept behind the AutoUFOsapp could be useful to theoretically identify certain places on a chart that are likely or unlikely to be reached anytime soon.

Keeping in mind the concept that when a market enters a UFO the expectation would be to see a reaction or a bounce from the price region adding duration to a trade. Think of a case where those UFOs are quite far from the current available price or cases where there are multiple UFOs upon UFOs. In this instance it would be reasonable to expect that a market with these characteristics is unlikely to surpass any of those UFOs anytime soon and therefore an Options trader could capitalise on a setup like this by Selling Options where price is unlikely to reach.

In addition to this, time passing would lead to a decay of the Options Premium helping this type of trade to accumulate profitability little by little, keeping in mind that nothing stops time from passing.

Furthermore, think in terms of probability and ask yourself the following question: what is higher probability? To determine with precision where a market is going turn and where it is headed to, or to determine where a market is not likely to go within a certain amount of time?

If you would rather choose the second case you may be interested in observing the following illustration that shows an advanced Options Strategy commonly known as Iron Condor where a profit would be produced from time passing while a Market trades within Range or sideways. In other words while a Market remains trading within a Range defined by Red UFOs and Green UFOs causing its price to remain range bound during a given period of time as a consequence of the potential bounces produced when its price travles from UFO to UFO (Green-to-Red or Red-to-Green).

Trading Non-Directionally

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