Dear Anonymous Trader,

A trailing stop-on-quote order will allow you to set a limit on the maximum possible loss, without limiting the possible gain. To understand the concept of a trailing stop-on-quote order, let's first understand a basic stop-on-quote order. A stop-on-quote order will allow you to protect from losses by designating a minimum price to which you are willing to allow the stock to drop. Once this stop price is reached, your order would sell you out of the position.

A trailing stop is different in that you are not specifying a price, but instead you are stating in points or by percentage the protection gap you would like to maintain. As the stock price rises, your trailing stop-on-quote order price will maintain the gap you have specified and "trail" or adjust up as the stock price increases. However, your trailing stop price will never adjust down. So, if the stock price decreases, the trailing stop price will remain the same and could potentially cause your order to execute if the stock drops to your price. This allows your order to adjust for gains, but also protect from losses without having to continually modify the order.

There are a few things you should be aware of regarding trailing stop-on-quote orders. These orders are considered "not held," which means they are not sent to a market center for execution until your trailing stop price has been reached. At that time, your order is triggered and sent to a market center for execution as a market order and will be filled at the current market price. The current market price could be different than your trailing stop price, especially if the stock price is moving quickly.

Although we strive to provide our clients with the most accurate services, it is possible to experience delays, omissions or inaccuracies in the trailing stop order service. Misquotes or other errors in quote data received could cause an order to be erroneously delivered to a market center, or not delivered at all. For more information on trailing stop orders, including risk disclosure and disclaimers, please visit our Help Center.

Sincerely,
Amy Godwin

Amy is a Training Specialist at Scottrade Service Center

Dear Johnathan,

You can use the ETF Screener to create a list of funds that meet your criteria. Click on the Research button on your ScottradeELITE toolbar to access this feature. By specifying asset type, total return performance, P/E ratio, Lipper Leader Ratings and more, you can narrow your search to a short list of ETFs. From this list, you can click on each symbol to access comprehensive fund information.

Additional ETF information is available through ETF Research and ETF News & Commentary. Links to both of these features are also located under the Research button within ScottradeELITE. ETF Research features the Lipper Leader Scorecard and Lipper Peer Scanner. News & Commentary brings you up to date on the latest ETF news provided by Reuters and the aggregate news wires. And finally, you can access Scottrade's ETF Education Center from the left of the browser window. The Education Center can help you learn more about ETFs and how to apply them to your portfolio.

I hope you find this information helpful. If you have any questions, please contact your local Scottrade Branch office.

Sincerely,
Kristin McDougall

Kristin McDougall is Manager of Customer Education at Scottrade.

Dear Trader,

Stochastic RSI (Relative Strength Index) is an indicator of an indicator. This indicator was developed by Tushard Chande and Stanley Kroll. They explained that RSI will often trade between particular ranges without ever reaching an overbought or oversold level. People looking to enter positions based on these criteria would often find themselves on the sidelines waiting to make a move. By applying a Stochastic reading to RSI, they increased the sensitivity of a RSI reading. The mathematical result was an oscillator that fluctuated between 0 and 1. This allowed them to react faster to opportunities that were coming from a traditional RSI.

The Stochastic RSI scale from 0 to 1 has three main points of interest.

• Many consider moves below .20 indicate the stock is oversold and moves above this line could be seen as bullish trends.
  
  
• Moves above .80 may indicate that the stock is overbought. If the indicator drops back below .80, it could be seen as bearish.
  
  
• The centerline (.50) is used by some people as a way to verify a signal. Depending on the direction of the trend, the centerline is often used to validate the movement.

Because of the sensitivity of Stochastic RSI, there will be times of both failures and strong trends that hold. Many people find moves just below .80 and see a bearish trend emerge, only to have the stock move back above .80. This is deemed a failed signal.

There are also times when Stochastic RSI holds an overbought or oversold signal for long periods of time. Many traders consider moves such as these strong trends.

Stochastic RSI is designed to predict readings in RSI before the actual RSI reaches these extremities. As with other indicators, Stochastic RSI should not be used as a stand alone tool. However, it can be used with other indicators and strategies of technical analysis to help find opportunities you may have otherwise missed.

Sincerely,
Brett Breer

Brett Breer is an Equity Desk Trader for Scottrade, Inc.

Yes, there are. The Philadelphia Stock Exchange (PHLX) has recently introduced a new product called World Currency Options. These new options are settled in U.S. dollars and trade just like index options: the owner of an in-the-money option receives the cash value at expiration. There is no delivery of an underlying currency upon exercise or assignment of the option, unlike the physically settled PHLX currency options.

World Currency Options are available on the British Pound (XDB) and the Euro (XDE). The PHLX plans to expand its offerings to include the most actively traded currencies: the Australian Dollar, Canadian Dollar, Japanese Yen and Swiss Franc.

The underlying contract size of both the British Pound and Euro options is 10,000 units of currency. That means the owner of an option has the right to buy (call owner) or sell (put owner) 10,000 British pound or Euro. Remember, these are settled in U.S. dollars, so no foreign currency exchange actually takes place.

Currency is normally quoted in terms of cost per unit. For example, the current quote on the Euro is 1.3424, meaning that one Euro costs 1.3424 U.S. Dollars. World Currency Options quotes are given in terms of cost per 100 units; in this example, the quote for XDE (the World Currency Options Euro index) would read 134.24. The World Currency Option British Pound index (XDB) is quoted in the same manor.

Like stock options, the multiplier for World Currency Options is $100, even though the underlying contract is for 10,000 units of currency instead of 100 shares of stock. This means that the strike price is multiplied by $100 to determine the total dollar value. For example, 1 XDE Jan 133 call would be $13,300 (133 x $100) for 10,000 units.

World Currency Options are similar to other index options available at Scottrade; however, the settlement value for expiring contracts is defined by the exchange as follows:

Based on the 12:00 noon (Eastern Time) Buying Rate, as determined by the Federal Reserve Bank of New York on the last trading day prior to expiration (usually a Friday). If the Noon Buying Rate is not announced by 2:00 p.m. (Eastern Time), the closing settlement value will be the mostly recently announced Noon Buying Rate, unless the Exchange determines to apply an alternative closing settlement value as a result of extraordinary circumstances. Consult PHLX Rule 1057 for further information.

In other words, the settlement value of these options is based on their price at noon; however, they continue to trade until 4:00 p.m. EST. Other options do not continue to trade after the settlement value is known - keep this in mind if you choose to trade these contracts on the Friday before expiration.

Additional information about the PHLX World Currency Options may be obtained on the Philadelphia Stock Exchange Web site: www.phlx.com.

Sincerely,
Brian Falls

Brian Falls manages opt

Dear Average,

The 200 day moving average is a number closely watched by many traders. Some believe this number provides important insight into things to come. "Crossed Above (Below) 200 Day Moving Average Breakout" is a preconfigured alert window available on Trade-Ideas within ScottradeELITE specifically designed to find stocks that have just gone above (below) their 200 day moving average.

How Crossed Above 200 Day Moving Average Breakout is Modeled:
This strategy features one main alert - the "Crossed Above 200 Day Moving Average" alert. It is triggered when a stock crosses its 200 day moving average and the moving average is confirmed by volume.

Trade-Ideas includes two preset filters to help ensure you get quality trading opportunities streamed directly to your ScottradeELITE platform. The preset filters include the following:

1. Minimum Position in Range filter set at the 60th percentile - This filter is set so that you will only get an alert if the breakout happens in the upper 40% of the stock's daily trading range.
2. Minimum Up from the Close filter set to $0.10 - This filter is set so the stock is at least positive when you are alerted the breakout has occurred.

The settings for "Crossed Below 200 Day Moving Average" are the exact opposite. Hopefully, this will give you an idea of how to set up your own trading strategy. The indicators, alerts, and all other features of Trade-Ideas and ScottradeELITE are for research purposes only and should not be construed as investment advice. Good Luck Trading!

David M. Aferiat, Managing Partner with Trade-Ideas, answers a question regarding modeling specific trading strategy within Trade-Ideas.