Category: Stocks

Stocks are maybe the best way to build wealth. Holding them means that someone owns a share in the company that issued the stock. Exactly this Traders-Paradise wants to explain to its visitors.
The majority of traders trade them, ordinary people are investing in them and they are building their future based on stock quality. If the stock is good, it will increase your capital.
In this category, Traders-Paradise explains what are stocks and why people should invest in them. Our experts’ team explains how to effectively buy an ownership share in the company. You can read what is beneficial, how much you can earn by trading them, and how much by holding them in the long run. Also, Traders-Paradise provides readers a full insight into stocks’ nature, how volatile they can be, why stocks are the best way to build and grow the wealth.
Here we explain what is the primary reason that investors own stock. Just to mention, the returns are potentially great.
Also, we explain how stocks work.
Readers will also find is it better and wise to buy stock in just one company or that could have a negative influence on their investment portfolios. Also, we explain how to structure your stock portfolio when you hold shares of companies from various industries and geographies.

How stocks differ?
Most investors hold common stock, but there are many kinds of them, for example, preferred stocks. Traders-Paradise explains all the benefits from any kind of them, how to profit by trading them. So, here you’ll find trading and investing strategies, all calculations, and methods to evaluate the value of your holdings.

  • Full in-depth analysis report on stocks: AMED, ACHC, OSH, CHE, THC, AGL, UHS, DVA, TDOC

    Full in-depth analysis report on stocks: AMED, ACHC, OSH, CHE, THC, AGL, UHS, DVA, TDOC

    Hello and welcome to this full in-depth competitor analysis report on Amedisys Inc, Acadia Healthcare Company Inc, Oak Street Health Inc, Encompass Health Corp, Chemed Corporation, Tenet Healthcare Corp, Agilon Health Inc, Universal Health Services Inc., Davita Inc, Teladoc Health Inc for date 2022-04-02


    14:30

    April 02, 2022

    I am Traders-Paradise.com’s analyst bot.

    Yes, that’s right. Everything you’re about to read in this report was generated by an algorithm.

    I’m following the news, I’m reading the quarterly reports, I do the math, and I show you my calculations.

    All the data shown is real and recent (to the date of this post. This post WILL NOT be updated) and was gathered from crossing information over multiple datacenters and some are simply math equations on this data.

    This data is supposed to help you, the trader, in making smarter trades. That is how my developer uses me.

    At the end of this post you can see my, the analyst bot, assumptions.

    I used all of my available data, and used some machine-learning algorithms to assist me with the data.

    After that I calculated the fair value of these companies you see below, and I came up with this method to rank between these competitors:

    Green = Good business/underpriced. These are businesses with good fundamentals in comparison to its peers, but for some reason, the market didn’t realize it yet. Or there are other problems.

    Orange = Currently valued. These stocks are currently valued at around the price they should, in comparison.

    Note: None of the written below or above isn’t a guarantee for success. Use at your own risk.


    Full in-depth report on competitor companies (peer analysis)


    Ever wanted to analyze Amedisys Inc and didn’t know how? Maybe wanted to learn more about Oak Street Health Inc this post will also cover Tenet Healthcare Corp and their peers.

    This report will walk you through the hard work of analyzing data. In fact, even retrieve data isn’t a simple task. That’s why this analyst is made. To help you, the trader, in gaining access to top-notch accurate and recent data. You cannot find this kind of tables anywhere else. All of the following companies has been recognized as players in the same area field that the other companies in the list play in.

    This data is free. Use on your own discretion.


      Want me to generate a report specially for you?
      
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      Submit a company name or its symbol, and I'll generate it for you. 
      
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      I will send you an email when it's ready.
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      This report will use the public and known data for the companies stated in the following list:

        Amedisys Inc
    • Symbol: AMED
    • Sector: Health
    • Market Cap: 5.65 BN
      • Acadia Healthcare Company Inc
    • Symbol: ACHC
    • Sector: Health
    • Market Cap: 6.04 BN
      • Oak Street Health Inc
    • Symbol: OSH
    • Sector: Health
    • Market Cap: 6.70 BN
      • Encompass Health Corp
    • Symbol:
    • Sector:
    • Market Cap: 7.12 BN
      • Chemed Corporation
    • Symbol: CHE
    • Sector: Health
    • Market Cap: 7.67 BN
      • Tenet Healthcare Corp
    • Symbol: THC
    • Sector: Health
    • Market Cap: 9.47 BN
      • Agilon Health Inc
    • Symbol: AGL
    • Sector: Health
    • Market Cap: 10.45 BN
      • Universal Health Services Inc.
    • Symbol: UHS
    • Sector: Health
    • Market Cap: 10.79 BN
      • Davita Inc
    • Symbol: DVA
    • Sector: Health
    • Market Cap: 10.99 BN
      • Teladoc Health Inc
    • Symbol: TDOC
    • Sector: Health
    • Market Cap: 11.83 BN
    • Symbol = The company’s stock symbol.

      Sector = The sector of which the company work in. Most of the time we compare between same sector, but sometime we take for comparison a company from a different sector but close enough bossiness to be able to add for comparison.

      Market Cap = The total value of the company. All the shares available multiplied by the most recent price of its stock.


      Most recent and current stats for each company

      Note that current stats does not update.

      Data Collected = All of the data in this report was collected to this date, and is valid to this date only. Data does not update.

      Price of Last Trade = The last price in $USD this company’s stock has traded.

      Daily Change = The first in $USD change from previous day and the second in actual percentage of the price.

      Short Interest Ratio = The short interest ratio represent the number of shares shorted divided by the stock’s average trading volume. Rule of thumb indicates the the lower the short interest ratio meaning that not many are willing to bet against the stock. But, in some cases, you might see a ‘short-sqeeze’ meaning people are buying the stock hence driving it up while the shorts see their trades lose, forcing them to buy back the stock at a lose and continue the buying circle driving the price much higher.

      Data Collected:Company namePrice of Last TradeDaily Change (in $)Daily Change (in %)Short Interest Ratio:
      Apr 01 Amedisys Inc 173.85+1.56(0.91%) 3.1%
      Apr 01 Acadia Healthcare Company, Inc. 67.18+1.65(2.52%) 6.2%
      Apr 01 Oak Street Health, Inc. 27.83+0.95(3.53%) 5.6%
      Apr 01 Chemed Corp 511.96+5.41(1.07%) 4.05%
      Apr 01 Tenet Healthcare Corporation 86.75+0.79(0.92%) 4.21%
      Apr 01 agilon health, inc. 26.05+0.7(2.76%) 7.58%
      Apr 01 Universal Health Services, Inc. 144.18-0.77(-0.53%) 3.12%
      Apr 01 DaVita Inc. 114.15+1.04(0.92%) 5.18%
      Apr 01 Teladoc Health, Inc. 73.77+1.64(2.27%) 4.32%

      Important fundamentals stats about the companies

      Bottom line: How these companies’ sales and profit preform in comparison to their competitors


      Company nameRevenueNet incomeEPS
      Amedisys Inc 2.21 bn 0.2 bn 6.34
      Acadia Healthcare Company Inc 2.31 bn 0.2 bn 2.1
      Oak Street Health Inc 1.43 bn -0.4 bn -1.84
      Encompass Health Corp 5.12 bn 0.41 bn 4.1
      Chemed Corporation 2.14 bn 0.26 bn 16.88
      Tenet Healthcare Corp 19.48 bn 0.91 bn 8.41
      Agilon Health Inc 1.83 bn -0.4 bn -1.07
      Universal Health Services Inc. 12.64 bn 0.98 bn 11.82
      Davita Inc 11.62 bn 0.97 bn 8.88
      Teladoc Health Inc 2.02 bn -0.42 bn -2.77

      Revenues = How much money did the company gain in the previous 12 months, according to official statement the company itself gave on its reports.

      Net income = How much they are left with, after all the expenses.

      EPS = Earning per share (EPS) is is calculated as a company’s profit divided by the total outstanding shares. A high EPS indicates that the company is more profitable and has more profits to distribute to shareholders.


      Employees stats

      Employees are both the most expensive part of the total expenses of a company, and at the same time – its most valuable asset.

      Company nameEmployeesRevenue per employee in $USD
      Amedisys Inc 21.00k 105,433.9
      Acadia Healthcare Company Inc 15.90k 145,559.4
      Oak Street Health Inc 3.80k 377,000.0
      Encompass Health Corp 28.00k 182,914.3
      Chemed Corporation 14.14k 151,323.5
      Tenet Healthcare Corp 76.84k 253,592.1
      Agilon Health Inc 648.00 2,829,566.0
      Universal Health Services Inc. 68.30k 185,096.9
      Davita Inc 69.00k 168,388.4
      Teladoc Health Inc 5.10k 398,570.0

      Employees = Number of total employees as found on several public resources.

      Revenue per employee = In general, how much money every employee is generating to the company. The higher is better.


      Advanced stats

      A more in-depth perspective on the companies

      Company nameAsset turnoverTotal debt to capitalReturn on avg assetsNet profit margin
      Amedisys Inc 1.29 % 0.3131 % 12.28 9.49 %
      Acadia Healthcare Company Inc 0.4108 % 0.3671 % 3.70 9.0 %
      Oak Street Health Inc 1.09 % 0.9415 % -31.62 -28.93 %
      Encompass Health Corp 0.7695 % 0.578 % 7.78 10.11 %
      Chemed Corporation 1.54 % 0.2401 % 19.34 12.55 %
      Tenet Healthcare Corp 0.7126 % 0.7861 % 5.40 7.58 %
      Agilon Health Inc — % 0.0425 % -22.11 %
      Universal Health Services Inc. 0.9516 % 0.4034 % 7.43 7.81 %
      Davita Inc 0.6813 % 0.7898 % 7.11 10.43 %
      Teladoc Health Inc 0.1146 % 0.0722 % -2.42 -21.09 %

      Asset turnover = This ratio of total sales to average assets can offer an understanding to how effectively companies are using their assets to generate sales and make more money. Usually, higher is better.

      Total debt to capital = the D/E Ratio shows the weight of total debt and liabilities against total shareholders’ equity. usually, lowers is better.

      Return on avg assets = The return on average assets is useful in measuring profits against the assets used by a company for generating profits. Usually, higher is better.

      Net profit margin = measures how much net income or profit is generated as a percentage of revenue. Usually, higher is better.


      According to the data above, our analyst bot has ranked these companies

      Ranking companies isn’t an easy task. Much can vary, much can change, no one can predict the future.

      That’s why I, the analyst bot, try to take as many variables as I can (in the algorithmic limitations) and try to use it to value and rank the companies in this report.

      With that being said, I urge you to look at this results in an educational way as this is not meant to be a trading recommendation of any sort.


      In the score metric, it considered lower to be of better performance.

      Company nameScore:Results:

      Amedisys Inc

      137

      Valued

      Acadia Healthcare Company Inc

      139

      Valued

      Oak Street Health Inc

      231

      Valued

      Encompass Health Corp

      96

      Under Valued

      Chemed Corporation

      171

      Valued

      Tenet Healthcare Corp

      66

      Under Valued

      Agilon Health Inc

      264

      Valued

      Universal Health Services Inc.

      78

      Under Valued

      Davita Inc

      81

      Under Valued

      Teladoc Health Inc

      267

      Valued


  • How to recognize early warning signs to exit the trade

    How to recognize early warning signs to exit the trade

    recognize early warning signs to exit the trade
    What can make or destroy the trade is the right exit point. Don’t hold on to trades in the hope of making just a few more dollars when the market is moving against you.

    By Guy Avtalyon

    As a trader, you’ll often consider possible profit when you have to decide about exits, but can you recognize early warning signs to exit the trade? Traders Paradise wrote many times about the importance of exit strategies in trading stocks, forex, or currency. And I have to repeat if you think about the level where you enter the trade without thinking about your exits, it’s more likely you’ll end up in losses.

    Some early indicators can warn you it’s time to exit the trade.

    I know it’s sexier to buy stocks. We all like it. The feeling is wonderful after you spent so much time examining stock, analyzing it to find the perfect one. How would you feel if your stock is not performing well? What about your attitudes? Do you feel like a loser?  No one likes to watch the stock go down. Even if it is obvious that the stock is performing badly, most of us would hold it and wait for better times. What is behind this attitude? We want to avoid the feeling of loss, the experience of losing something. Contrary, when the stock price increases, most traders will sell the stock to lock-in profit and lose the possibility of further gains.

    Anyway, it’s important to sell stock at a specific moment to prevent further losses, and you have to recognize early warning signs to exit the trade. But what they are and how to recognize them?

    Recognize early warning signs to exit the trade

    Getting out of the trade isn’t complicated, but it requires research of price action, finding and noticing signs that could predict a reversal or changes in trend. 

    You have to know that markets tend to trend between 15 and 20 percent of the time. Strong trends are helping in the consolidation of recent price changes. They are helping in taking profits, lower the volatility. But what if a trading range becomes bottom or top and exits in the opposite direction of the previous trend swing?

    This could be one of the early warning signs to exit the trade. When you’re watching the price action and notice a failed breakout or breakdown, the best strategy is to exit the trade.

    Failed breakouts or breakdowns are signs to exit the trade with profit or loss. You can re-enter the trade when the price surpasses the breakout high or low of the breakdown. That could be a logical move after recovery because the possibility of the underlying trend to resume is great. It’s also possible the price moves to the other side of the trading range and forms a strong trend in the opposite direction.

    High-volume days as an early warning sign 

    Well, to notice these kinds of early warning signs to exit the trade, you’ll need to track the average daily volume. For example, observe the last 50 sessions. It’s easy to notice trading days with four times or higher volumes. That’s a good sign if it happens in the direction of the position you are holding but take it as a warning sign if it is opposite from your position. This is exceptionally valid if the opposing swing breaks an important support or resistance level.

    High-volumes that oppose the direction of your position could ruin patterns. They are often a signal to exit the trade and to take the profit in an uptrend.

    Also, pay attention to peak days that can stop trends. They could show four or five times average daily volume in price bars that reach new highs in an uptrend or new lows in a downtrend. The top bar shows up at the end of a price swing after RSI indicators scored uptrend or downtrend levels.

    Moving average and trends can help to recognize early warning signs

    Take a look at these three lines: 20-day EMA, 50-day, and 200-day EMA. It could be a difficult position if, for example, 20-day EMA descends through the 200-day EMA. Also, when 20-day EMA ascends through the 200-day EMA. The first example signals the danger for long positions, while the second is important for short sales.

    Price actions are also early warning signs to exit the trade when the intermediate moving average is higher to sideways on long positions. The change from lower to sideways on short sales also is a warning. Don’t hold or wait for the moving average to change the slope. Exit the trade.

    Be adaptable, not emotional. 

    The market isn’t always moving in your favor. So, never force your initial targets further away. This could lead you to loss or fewer profits than you awaited. But before you exit the trade, you have to understand whether your decision is a product of emotions or logic. If you move your target far away from your initial plan, you’re actually showing greed. Don’t do that. You must have a strategy and stick to it. Your strategy must be well pre-planned. If the market moves against your stop-losses, you have to exit the trade. Move your stop-losses only to reduce possible loss. If you exit the trade before the stop-loss target, you’ll probably miss the possibility of making a profit when the market shifts and starts to move in your favor.

    When you enter the trade, make adjustments only if necessary. The most important is to keep the balance and reduce the risk.

    Honestly, there is no best strategy to exit a trade. One strategy could work properly for some trades but lead to a great loss in others. But one thing is true, so many researches showed that you’d end up in losses more often if you fail to stick to your strategy.

    Risk is an integral part of trading. You have to watch market movements and set proper risk management strategies. The exit strategy is an important part of them. Moreover, the exit strategy can decide your profitability in the market.

  • Is “Buy and Hold” Investing Strategy A Good Choice?

    Is “Buy and Hold” Investing Strategy A Good Choice?

    Is "Buy and Hold" Investing Strategy A Good Choice?
    Everyone would like to earn a lot, but everyone has a different way to do so. Why long-term investing is still the best chance?

    By Gorica Gligorijevic

    I’ve heard some people saying that the “buy and hold” investing strategy is dead. That was quite interesting because they said that in the context of coronavirus pandemic. This pandemic is changing the world and us personally for sure, but why are they so convinced that long-term investing is dead? I have to disagree. The strategy “buy and hold” will never die, and here is why. 

    But let’s have a more in-depth look at new investors’ psychology first. Who are they? They are under 40, worried for their capital, fearful of the future. The majority prefer short-term trading more than long-term investing because the current economic situation is so unpredictable. People are losing their jobs; unemployment is growing. On the other side of this is a great potential to profit from trading stocks. Their price fluctuates, changing every day, every hour, which is a great opportunity for profiting in trading.

    For example, let’s go back to February this year. Stocks dropped by more than 30 percent of their value after February 19th and touched the bottom in March. That was the sharpest downturn ever seen before. But what did happen in September? The major indexes are closed to record levels. That was a great rebound. Someone would say it was an excellent opportunity for traders, and such would be right. But what about buy and hold investing? How is it still a profitable strategy? Let’s not listening to the naysayers and try not to underestimate the investing strategy that rolls the capital. 

    You can find empirical proof that demonstrates the long-term advantage of the “buy and hold” investing over any other strategy. 

    But to appropriately benefit from this strategy, you’ll need to secure against main pitfalls that may appear.

    “Buy and hold” investing strategy doesn’t mean “buy and forget.”

    Traders-Paradise already wrote about the importance of maintaining the investment portfolio. As an investor, you MUST stay engaged with it. Long-term investing will not allow you to forget the improvements in your portfolio. For example, asset allocation is necessary from time to time. 

    It would be best if you stayed fully tuned into what’s happening in each of your holdings. By no means you cant allow to neglect it. You have to know what is going on with each of your holdings, and you must be ready to make all necessary adjustments according to current market conditions.

    Don’t buy what you know.

    It’s a stupid mantra and might lead you to significant losses. Many new investors load up on stocks from the companies whose products they use in everyday life. That’s completely wrong, especially if you keep them forever or at least several years despite the low earnings. I know that people are usually emotionally involved in their favorite products, but it doesn’t mean you have to buy their stocks if you like something to use. Just buy the favorite product and think twice about buying stocks. It would be best if you based your decision to buy stocks on the evaluation, a due diligence method that provides you a firm grasp of the company’s prospects. For example, what is the company’s competitive position? Do you know anything about that? What is the precise value of the company’s stock? 

    It is vital to avoid a blind spot when it comes to stocks that you think you know. I know you will ignore the negatives of the company because you fall in love with the stock. Nothing is wrong with love in your private life. It’s nice. But investing based on emotions is a dead-end path. It is more likely you’ll end up in losses.

    Have a plan

    Keep in mind, never buy stocks randomly to fill your portfolio. It would help if you built your investment portfolio based on an investment outlook. Always be ready to adjust your portfolio according to changes in the perspective. That means you’ll need a plan.

    I am not proposing an elaborate and exact outlook for growth in the next quarter, but you definitely need to understand the market. In light of the current pandemic, we all can see companies suffering due to social-distancing policies – for example, hotels, airlines, etc. But what we have to take into consideration? Fiscal and monetary stimulus. That could provide the economy to bounce back. This downturn or pandemic will not last forever, or we will learn to live with it and find beneficial opportunities to invest in. If you’re worried about what the shape of the recovery will be, forget it. In long-term investment, it doesn’t matter.

    What matters is the recovery will come and if you’re investing now, estimate the possibility for the company to withstand the next few months of this agony.

    And you must be flexible enough to adapt your positions if your outlook changes. That’s all. Can you see how the buy and hold investing strategy is the safest choice?

    The buy and hold investing strategy is the right choice forever. Please keep each of these in mind while creating your stock portfolio to boost your odds of profiting.

  • Is trading stocks without margin a better choice?

    Is trading stocks without margin a better choice?

    Is trading stocks without margin a better choice?
    Trading stocks with margin can help you increase profits, but it can also increase losses. You can end up losing even more than what you invested. 

    By Guy Avtalyon

    Before we analyze why trading stocks without margin could be a better idea for you, let’s see how you can trade without margin. I think it’s a proper way and order.

    Let me explain to you one important thing. Nothing is wrong with trading on margin, it can increase your profits, but you have to be a very disciplined and skilled trader if you want to do that. Margin trading can increase your losses if you misuse it or use it at the wrong time. For example, it’s completely wrong to trade on margin if you’re greed or desperate. Honestly, trading stocks without margin could be a better idea for you.

    What are your options for trading stocks without margin?

    Of course, if you’re a day trader or want to become that, margin trading might be the only choice. But even then, you can trade stocks without margin, and here are some tips on how to do that.

    It is allowed to have four trades per week (three trades per five days is the PDT rule), and you can still avoid the brokerage firm to tag you as a day trader. For example, if you have sufficient cash, you don’t need a margin. Meaning you don’t need to borrow money from your broker. You need to open several accounts, for example, four with a balance of $6,000. That will give you a chance to place 16 trades per week.

    For me, it’s absurd, but you might be able to maintain four accounts every day. In my opinion, it’s too many accounts to manage at the same time. But, who knows, maybe you’re capable of doing so. There are some other possibilities, but I wouldn’t waste your time on them as they are not working in reality. 

    What is essential in trading stocks without margin? 

    Keep in mind; you do not need to make it all in one day. Instead, think about trading stocks as a permanent and long-lasting job. Let me explain to you one idea. Let’s say you have a $25,000 account and want to use that cash for trading stocks? I can hear your question: Why should I trade $100,000 if I can use the full advantage of $400,000? How can I earn? 

    So, you may think it’s a stupid idea. Just read the rest of this post, and at the end of it, we’ll be on the same page.

    I want you to honestly ask yourself the question: Why do I want to earn quickly? No, you don’t need to tell me. Just be honest with yourself. Why is it so hard for you to recognize time as an advantage? Can you trade slower? Of course, you can!

    Trading with cash carries a lot of advantages.

    For example, it gives you a chance to become a moneymaker, and I’ll show you how to do that. You’ll become one of 10% elite traders.

    Without any doubt, trading stocks with a margin when the market is going against you is the most stressful situation. Let’s say you’re holding a long position on the stock with a 60% cash requirement. At the same time, you hold two more positions that also go against you.

    What are you going to do? Get panicked? Are you confident with your stop-loss orders? Will you stick with them? Are you going to follow and respect your strategy?

    If you’re trading for some time, you noticed the markets fall faster than they go higher. It’s fear. The fear can shift into a panic very fast. What could get you more pain in such circumstances is a margin. Your hard-earned profit could quickly vanish in minutes. Instead of holding a position, it’s much better to sell winning stocks and exit with profit. 

    Also, brokerages will never give you money for free; they will charge you interest. They are profiting from lending you cash. So, that’s the reason why they will always offer you to trade stocks with margin. What is best for you to do is to decline such an offer. If you’re honest enough, you will never find a reason to put yourself in a situation to pay interest and have more losses. 

    You’ll end up in debt. Instead, put some more effort into earning cash and trade stocks without margin.

    Can you trade stocks without margin?

    You can trade stocks without margin only if you have enough capital to open trades. In other words, you must have a sufficient deposit on your trading account. 

    Trading with margin can be dangerous for beginners. But the fact is that the PDT rule isn’t implemented in cash accounts. That’s the point. If you use your cash account, you can make as many trades as you want, but the catch is that it has to be settled cash. But it isn’t a problem necessarily. If you treat trading stocks as a long-term job and not a quick profit scheme, your cash account provides you a straightforward way to make money from your trades. Also, one of the advantages is that you don’t need to worry about PDT. Sounds fair enough.

    Trading tricks 

    If you don’t have $25,000 to trade stocks, you still have alternative trading strategies. I’ll be honest with you, and they are far from perfect. One is to have four trades per week instead of three trades in five days. Also, you can trade stock on the foreign markets. After you do some in-depth research, I’m sure you’ll find the differences and benefits. You’ll find the market that fits your trading needs.

    You might also choose swing trading to enter trades that you can hold for longer than one day. This way isn’t a classic trick, it’s more strategy, but it’s a good opportunity for the traders who can’t meet the $25,000 requirement. 

    Also, you can open more than one account with different brokers. You’ll trade small and produce smaller income, but you’ll have more trades and the possibility to earn practically more.

    Frankly, all these tricks are far better than the trading stock with margin.

    Let’s say you have $15,000 in your margin account, and you want to buy a stock that costs twice more than you currently have. Your broker is willing to give you a margin. After you buy stocks worth $30,000, you’ll own them, but also, you’ll owe your broker $15,000. You’ll make a profit if the stock price increases. Your profit would be bigger than if you bought stock with your money, that’s true. But if the price decreases, your loss would be more significant with margin trading than if you purchased stock with cash.

    Anyway, borrowing from brokers isn’t always straightforward; borrowing from brokers is as binding as banks.

    Can you see why trading stocks without margin is a better choice?

  • How to trade stocks during the recession?

    How to trade stocks during the recession?

    How to trade stocks during the recession?
    Generally, trading is unquestionably one of the most difficult things but it is maybe the best opportunity to make money.

    By Gorica Gligorijevic

    I’ve been examining for some time now how to trade stocks during recession. Don’t doubt we are in a recession now because we are. Well, this recession isn’t like we know from our previous experiences. The one we are talking about is caused by a pandemic. 

    I know that many experts will argue that the recession would come anyway. That might be true but this one came due to the coronavirus pandemic and thus, it’s somehow different but speaking about how to trade stocks, the principle could be the same. That’s my opinion.

    First of all, let’s make clear one important thing. We all know that the most important market gains occur during short periods of time. What does it mean? It means the market profits aren’t equally spread throughout time.

    How should traders trade stocks during recession? 

    Stock trading in a recession could be very different since there are several opposing schools of thought. Some experts would suggest traders should go short. That is true due to the fact that some companies’ profits could be hurt and lower share prices.

    Yet, there is another group that deems the recession is a “lagging indicator” thus their opinion is contrarian.

    The first school advises traders to be cautious in these circumstances. This means traders should take little or no trading activities. In general, they suggest traders stay away until the end of the recession.

    Is a recession time to buy? 

    Yes, I know that many people have lost a lot but, on the other hand, many profited. So, I concluded that loss and profits during the recession depend on the strategy you use and the assets you trade.

    Take the risk and go short 

    This could be a possible best way to earn a lot of money during the recession when the market downturns. Well, if a downturn never comes you’ll not make money. 

    In a recession, traders usually go short. They short their stocks, some will sell their call options or buy puts.

    These trading activities show that traders expect the price will go down. If that happens traders will increase their gains. The most important for every trader is to set a stop-loss level and take profit level. That will trigger your risk management rules if the price changes direction and goes against your position. These settings will provide you to close the position in small losses. 

    In fact, gains from short positions happen faster.

    Short your stocks if you feel you have an advantage and if you want more direct exposure. Stocks with high beta could be the worst players during recession. These companies have weak balance sheets and the lowest earnings. Such companies could easily be from the tech or biotech sector, but always they are small-caps. 

    They are dropping faster due to traders’ expectations they will no longer exist.

    What else can you do?

    You can go long volatility if you buy a volatility ETF such as VXX. It showed great results in 2018 and in 2019 with sell-offs. If you chose this strategy to trade stocks during recession, keep in mind that you shouldn’t go long volatility for a long time. That could lead you to “decay”.

    Go long volatility for a short time, for example, it could be a month or two but no longer.

    Also, go long gold because it has tendencies to perform very well during recession. Well, gold cannot give you dividends or generate earning but it is a tradable commodity. In the dire economic circumstances, this asset always becomes more valuable. With some gold ETF, you could earn a lot.

    How to make money during recession?

    You couldn’t be more wrong if you think it’s impossible. Pay attention to how long you’re shorting the market. Bear in mind, when you’re buying volatility in the market it can last just one week. On the other hand, if you’re shorting index funds such as the S&P 500, you can do that for up to two years. 

    The point is to have discipline and short for a short time. Otherwise, you’re more likely to lose your money due to your faulty timing. To be honest, the simplest way to make money during a recession is to go long cash or cash equivalents. For example, some low-risk investments could be the right choice.

    Interest rates are currently ultra-low right. You can invest in treasury notes, treasury bills, bonds, money market mutual funds, fixed annuities, preferred stocks, common stocks that pay dividends, or index funds.

    Always have cash reserves. Remember, the latest mentioned are investing opportunities. If you want your money to earn a higher return on, you do have different options. Don’t be afraid to day trade, it can generate a lot of money right now.

    What’s the best strategy to trade stocks during a recession?

    Learning to trade is unquestionably one of the most difficult things. It can be terrifying and frustrating in the beginning. I want to say to new traders that attempt to enter this field, never try to figure out everything at once. You’ll be overwhelmed by the information and that can only confuse you. Make small progress every day, trade a little each day, and learn.

    Remember, it is 100 percent sure that it is possible to make a  lot of money during recession. The thing needed for trading is here – the price fluctuation. So, it is almost the same when there are no recessions or downturns. For stock trading price fluctuation is essential. 

    You must have a strong risk management strategy, and not more than two trading strategies. Never be impatient, just wait for A+ setups. You must have a trading plan, it’s impossible to just jump in a trade.

    Trade smart!

  • How to Get Rich Trading Stocks?

    How to Get Rich Trading Stocks?

    How to Get Rich Trading Stocks?
    Many people get rich through the stock market. You too can get rich trading stocks if you do what is necessary.

    By Guy Avtalyon

    How to get rich trading stocks? Trading is very hard and stressful for some traders. But, on the other hand, if it isn’t it couldn’t be so possibly beneficial. Let’s see how to get rich trading stocks.

    Can trading stocks make you rich?

    In the long run, it is possible if you start to invest while you’re young, have long-term goals. But for that to achieve you’ll need a decent capital and have to add more money continuously. The good news is, you don’t need to be an expert before you start investing. But investing is much more, not just simply buying a stock. You want to know how to become rich by trading stocks. And the short answer is – yes. Here are several tricks about how to get rich trading stocks.

    Why it’s possible to get rich trading stocks

    First of all, it isn’t easy so you’ll need to recognize the difficulties. When you accept this fact you are ready to develop the skills necessary to overcome them. Keep in mind, trading isn’t a lottery game. Yes, you can find a lot of stories telling how some traders become rich overnight. They did it, that’s true but very rare. The real successes come from trading day after day. The possibility of losing is big but if you’re disciplined the reward will come. So, persistence is extremely important. That will be the first hint on how to get rich trading stocks.

    Forget luck. Trading should be constant and systematic with strong risk management. Your utmost goal is to protect your trading capital and reduce the risk of trading in each trade.

    What to do to get rich trading stocks?

    You must have a focus on hot stocks. Pay attention to those that are hitting new highs. You must be ready for that. Follow and examine their patterns. Don’t waste your time to find some exotic one, just focus on those that are already raising. I suppose you have a trading plan, it is necessary. Stick with it and stay in the stock until it reaches a new high. Don’t pay attention to stocks that are dropping at this moment. When he stock hit the new high, sell it.

    Short selling to get rich in trading stocks 

    You don’t need a bull market to get rich. This is a misconception. Try to recognize the opportunity for short selling. Trading isn’t investing, so you don’t need to hold a stock for years no matter how much you love it. You’re trading because you want to profit in a short time. Follow the example of day traders. Their earnings come from short selling.

    What to do if you have a losing trade?

    Cut your losses promptly and put your ego aside. Yes, you will have losing trades. But never try to sit at the corner and let your feelings overflow you. Losing trades are just the steps to success. Instead, when you face a setback, cut your losses quickly, and go back to the track. Do it immediately. Never sit on your failures. Look to the future straight. You have to put into the calculation losing trades. Just plan them. But plan to move on when it happens. Exit the losing trades on time and quickly enter the position on the new one. Keep your trading journal.

    Take partial profits 

    Listen, there is no possibility to earn if you don’t take the profit. Take even partial profit. Also, take your profit quickly at the moment you’re sure there is a profit. This is very important. You have to know that the stock market is changing very fast. If you miss a chance to take the profit you’ll end up in losses. Take the profit any time you can. No matter how small it is. The point is to avoid losses. You’ll feel better even with small gains, much better than with losses. Your confidence will grow. That’s how to get rich trading stocks. 

    Use trading stocks app

    This world is changing so fast and we all have to know how to benefit from that change. So, we all have to change our habits and old fashioned approaches. Individual traders have zero chances in the stock market if they never adopt some of the new technologies. Don’t let you be afraid of them. Trading apps are your friends. They can provide you to trade easier and smoothly. You can enter and exit the position on your phone. But before you use any of the present apps examine them, read reviews, go to forums, ask people, talk. Start to use the new app with a small amount to test it first.

    Avoid illiquid stocks 

    Yes, I know, illiquid stocks make big promises but how much they can grow. Is there any uptrend? How to earn if the changes are modest? You need high traded stocks, not some lazy sleeper. If you want to earn a serious amount you’ll need to trade high liquid stocks. So, the point is not to believe in the stock’s fairy tales. Sometimes there will be a lot of hype and big promises around some stock. Try not to listen to them. Avoid that noise. Stay focused on the stock’s action. Examine the stock historical performance, how it actually was acting in a particular situation, what causes it to rise or drop. By examining this you’ll know what to expect in the future.

    Well, not exactly, because the past performances will never guarantee future actions, but you’ll have an insight into stock nature. So, you’ll be able to make decisions with more accuracy.

    Diversification and trading with leverage 

    Let me explain something. If you’re an investor, reasonable diversification is good. But if you want to get rich trading stocks and earn a lot, you should avoid diversification. Trade only one or two stocks and use not more than 30% of your investment at a time. That’s the way to earn millions by trading stocks. This is confirmed for so many times. You may think it is easy to stay away and not invest more money when the stock price is following an uptrend. No, it isn’t. But you must be disciplined. You have to stick to your trading plan and never go across it.

    As I said, diversification is good for investors but for traders can be dangerous because you’ll have to be focused on price action. How can you do that if you have many stocks? You’ll simply fail.

    Buy bottom, sell top isn’t always a right fit 

    This old mantra among beginner traders is canceled. I know you might believe I’m crazy but think. It is hard to take the maximum profits. Instead, choose to match the movement of the stock price. That doesn’t have to be the top and bottom. You can enter the trade in the middle and exit a bit below the top and take the main profits. In this approach, you’ll have reduced risk because you enter the trade in an uptrend and also exit while an uptrend is present. No, you’ll not miss the big profit. You’ll miss losses if you do so.

    But you have to plan this. For long-term success in trading stocks, the trading plan is alpha and omega. Never enter the trade without a specific trading plan. Before you enter the position you must know what is a  risk/reward ratio you expect from each trade. Stick to that no matter what others think or do. Never change your trading plan in the middle of the game. That’s how to get rich trading stocks.

    Have a plan, plan your failures

    Getting rich in the stock market can look like a discouraging task for some of you. But it hasn’t to be. Honestly, it is so easy to achieve if you follow these rules. If you have some doubts, if you don’t believe you can make money In the stock market, well, it’s more likely you’ll never do. But if you create a plan, plan and understand the setbacks, and have proper risk management you have great chances to get rich trading stocks. Moreover, you can become a millionaire.

    To get rich trading stocks you must understand and adopt the idea that you will lose money on a regular basis. When you adopt that thought, you’ll be in positions to become successful at it. Never take the stock market for granted, always be on guard. Keep in mind that the stock market will steal your capital if you give it a chance. The odds of getting rich can be against you only if you fail to recognize the possibilities.

  • How to Increase the Number of Trades Per Day?

    How to Increase the Number of Trades Per Day?

    How to Increase the Number of Trades Per Day?
    Your strategy limits how often you day trade, overtrading can happen when you take more trades than your strategy allows.

    By Guy Avtalyon

    I heard so many times this question: How to increase the number of trades per day. I’ll tell you something that may surprise you. You don’t have to trade every day, not even every week. So how to make consistent gains? Actually, you can generate even better profits if you don’t trade frequently. For that to achieve you don’t need to manage numerous open positions and spend days in front of your computer. 

    Surely, you’re waiting for me to tell you about the special secret.

    If you stay long enough, you’ll see!

    Firstly, you can trade stocks on how often you want but in a non-margin account. Of course, you don’t have a non-margin account otherwise you wouldn’t ask this question. 

    So, you’ll have to trade under the rule known as  “pattern day trading rule”. What does it mean? The number of your trades is limited if you don’t use your cash account. On the other hand, if you use cash or a non-margin account you can trade as many times as you want. However, if you use a margin account it is allowed to trade three times every day for a five day period. If you are smart you can extend this number to four. For example, to avoid this rule you can buy the stock at the end of the trading day and sell it the day after. In this way, you’ll hold stock for less than one day but you’ll have more trades. 

    How often to trade stocks?

    This Day Trading Rule will limit you. Keep in mind that the number of trades means the number of transactions, not the number of different companies you trade. 

    The day trading rule operates by identifying some traders as “pattern day trader”. Such traders must have deposited $25,000 in their accounts. The good news is that you don’t need to cover this amount in cash only, you can use other securities also. But if you don’t use a margin account this rule cannot be applied to you. If you’re in cash, 

    you don’t need to comply with this rule, of course. 

    But, what is smart to do? What is the reasonable number of trades per day? How to increase the number of trades per day? First of all, if you have less than $25 000 the reasonable decision is not to use a margin account. In this way, you’ll reduce the risk. If you’re a beginner it is smart not to use leverage. Just take care that some mistakes can wipe you out completely and trading with leverage is one of them.

    However, it is a completely different situation if you have experience but not enough capital. If you want to avoid the day trading pattern rule you should do the following.

    Tricks on how to increase the number of trades per day and more often trade stocks

    Open added accounts. This is the easiest way. For example, you can open three different accounts to execute day trading. This strategy is one of the tricks actually. I already mentioned that the rule can limit the number of transactions per account. But if you have several accounts you can trade more often and you’ll not be flagged as a pattern day trader. You can make 15-days transactions from 15 different accounts.

    Well, the problem could be how to open multiple accounts in your name. Well, don’t do it. Open different accounts in the name of your family members, for example. It is completely legal for you and your family members to have trading accounts with the same broker. 

    Well, if you don’t trust your family, there is still a chance to open multiple accounts with different brokers. That’s how you can overcome the problem of “pattern day trading rule”.

    But be careful, this can’t last forever. It’s a matter of time when the brokers will start to control you. The consequences aren’t pleasant. They could increase the minimum collateral limit even if you use your cash account or other non-margin accounts. Their limitations can be tied to social security numbers or they can request to connect the biometric information for using these accounts.

    Therefore, if you want to be a daytrader and break the limited number of trades per day you’ll need to have some other tricks in the pocket.

    Trade in the markets outside your country

    The day trading pattern rule is required by American regulators like FINRA and the SEC. Hence, this obligation does not surely hold true in stock exchanges out of the US. You can look at some foreign markets and exchanges. Many of them don’t have such rigorous demands. Well, you can’t just jump into another market, you’ll need to examine it first. For example, things like taxes and legal issues, liquidity and risk matters, etc.

    So, you may find another way often to trade stocks when you want a day trade but your capital is below $25.000 which is required in the US. These that I presented you are just a few strategies on how to avoid pattern day trading rule.

    But frankly, this rule is helpful to both traders and brokers. It decreases the risk for both sides. 

    The pattern day trading rule appeals to traders that use a margin account and only on the territory of the US. If you trade out the US market you don’t need to respect this rule. Also, you don’t need to follow this rule if you’re a cash-based trader.

    How to increase the number of trades per day? I hope you got some clues now. Just, keep in mind any combination of selling, buying, or shorting a stock within one day can be recognized as day trading.

    Keep the balance in the number of trades

    Day trading is the most fascinating and queried trading style. In day trading you have to close all positions before the end of the trading day. The benefit is that you’ll avoid the overnight gaps. But is it a real benefit? No matter how day trading may look lucrative it has drawbacks too. Let’s ask the stats for help. The stats say that almost all returns in the stock market over the 20 years and more, come from overnight gaps. If you remove the risk and you don’t want to have a market gap against you, you’ll reduce the profit chances. Some traders wrongly believe that under-trading is better than overtrading. This is a mistaken opinion. If you have a winning strategy, then by bounding trades, you decrease your chances of success. Think about that.

    Article source

  • How to Find a Stock Worth Trading?

    How to Find a Stock Worth Trading?

    How to Find a Stock Worth Trading?
    To find a stock worth buying several parameters should be estimated and examined. Here is what really matters.

    By Guy Avtalyon

    If you want to know how to find a stock worth trading, think about the stock’s valuation, strategy, plans for diversification, and your appetite for risk.

    The first consideration on how to find a stock worth trading should be the company’s earnings. Profitability is important because when you buy a stock, you’re buying a part of the company. Calculate its P/E ratio, just divide the share price by a company’s annual net income. 

    For example, if a stock trades at $30 and has an annual net income of $3 the P/E ratio is 10. The general rule of thumb: if the stock’s P/E ratio is higher than the broader market P/E, it is considered expensive and vice versa.

    But the P/E ratio isn’t a perfect measure. For example, a small, fast-growing company may have an extremely high P/E ratio but earnings are poor while the stock price can be high. You have to gauge if there is any potential for strong growth and if there is, such stock may not seem expensive.

    So, look for trends in a company’s earnings growth. Find do the earnings regularly increase. If you have a confirmation for that, get it as a good indication that the company is operating well. There is no need for an incredible increase, even a small increase can be an indicator of a positive outlook, but only if it is consistent over a long time.

    Volatility matters

    The volatility in the stock market is natural. The companies are losing value in the markets from time to time but also could increase the value. Every trade you make in the stock market is actually kind of betting on the market direction, on the volatility, or both.

    For stocks trading, volatility is good for the long term because you have to make a profit. And you can do that only if the stock price fluctuates. If you really want to find a stock worth trading, seek the high volatile stocks.

    If the stock has a high volatility the value could be spread over a large span of values. This means the price of the stock could fluctuate drastically in a short time, which is ideal for fast-moving trading. Contrary, if the volatility is low, the stock’s price will stay almost steady which offers fewer chances for a quick profit.

    Beta as a measure of volatility

    Use beta as a measure to unveil how volatile the particular stock is.

    The beta can predict the total volatility of a stock’s returns against the returns of a related benchmark, for example, the S&P 500. If you find that beta value is, let’s say 1,3 that means the stock price moved about 130% for each 100% in the related benchmark index. Hence, if the beta value is 0.6 that would mean that stock has moved just 60% for each 100%  in the related benchmark.

    Trade volume matters

    Volume is the total number of shares traded in a market during a particular period. Each transaction adds to the total volume. For example, if during one trading day there are 100 transactions, the trade volume for that day would be 100. How to find a stock worth trading when using trade volume? Volume works as a great indicator that adds weight to the market move. For example, if some sudden spike appears, the strength of that movement depends on the volume during the time observed. 

    When picking a stock worth trading, pay attention to how great is volume. The greater volume, the more important the move is.

    How to find a stock worth trading?

    So finding a stock worth trading is a matter of combing for stock with large volume, a current spike in volume, and a beta higher than 1.0. The stock that lacks these elements will be very difficult to trade successfully.

    The way you use these factors will affect your possible profit. The trading style depends on your trading strategies. You have to find a stock whose price changes to profit from that fluctuation. It is impossible to profit from trading stocks if there are no changes in price. Also, the same comes if the volume is low. The low volume shows a lack of buyers and sellers. How to profit from that?

    Stock Price

    You may consider the stock price. Some companies could distribute additional shares and increase the number of available shares but lower the price per share in the market. Some will never do that. It is considered better for investors because such stock could rise more in price and worth more after some time. Anyway, the stock price will show you how many shares of a particular stock you can buy for the capital you have. Pay attention to stock price historical performances. That will give you a clue how the stock is possible to play in the future and is your chosen stock worth buying.

    But active traders will prefer, for example, stocks in play but they’ll need to carefully watch the news because such stocks are not the same every day. 

    How to find a stock in play worth trading?

    These stocks are suitable for day traders because they are changing dramatically sometimes during the trading day. Also, they carry enough volatility to generate favorable risk and reward trading ratios.
    Day traders will normally look for stocks that have big price changes during the one trading day. These stocks are not a good choice for investors with a long time investment horizon.
    Active traders expect more action. They exit the trade much before the end of the trading day, sometimes a few minutes after they enter the trade. These trending stocks can be found on many broker’s trading platforms. There you’ll find stock worth trading.

    Bottom line

    Trading, even if it is considered as a risky strategy, can be highly profitable. Of course, if you know how to find stock worth trading. As we mentioned above, pay attention to trading volume, volatility, liquidity, and price. All of these criteria together will help you to find the stock worth trading.  

  • Is Trading Stocks A Zero-Sum game?

    Is Trading Stocks A Zero-Sum game?

    Is Trading Stocks A Zero-Sum game
    Trading stocks is not a zero-sum game and both sides can be winners.

    By Guy Avtalyon

    Is trading stocks a zero-sum game is sometimes more rhetorical question than it is related to trading. But shouldn’t be. In stock trading, we have two different sides. One is represented by winners, the other includes losers. On any transaction in the stock market, the chances of winning and losing are near even. So, who are the winners and losers of this zero-sum game?

    Winners have better portfolios, they are usually long-term traders, they can sustain seldom losses because their investment horizon is larger. On the other hand, traders that frequently place trades, have losses more often. So, the profits and losses of all traders should sum to zero if trading stocks is a zero-sum game, right? 

    Trading stocks is mathematically a zero-sum game is a logical conclusion. However, it is more complicated.

    Who wins and who loses when trading stocks?

    Trading is a zero-sum game only when you measure gains and losses relative to the market average. In the zero-sum game, there is always one winner and one loser. The amount that one trader profit has to be equal to the amount the other loses. That would mean the winners can profit only the amount that losers are ready to lose.  

    This is true, but we come to something known as market capitalization. That’s the number of company’s shares outstanding and times by its market price per share. The volume of transactions is comparably small related to shares outstanding. The stock price could appreciate or depreciate only if traded below or above the market price. When traders hold their positions no one could lose or win. But when traders choose to exit their positions, some will be winners while the other will be losers. Yes, to this point everything is clear but trading isn’t a poker game where the winner takes it all. It is the opposite a bit. 

    Is trading stocks a zero-sum game?

    The stock market is an open system. The presumption that trading stocks is a zero-sum game comes from another presumption that the stock market is established by a constant and non-changeable number of securities traded. That would mean no stocks or other assets enter, no exit. As we know the reality is different. Publicly traded companies can issue more stocks and also they can buy back their shares to increase the price while diminishing the number. Also, some companies declare bankruptcy and become not publicly traded or bought by other companies. So, the stock market is a kinda living being. It isn’t constant or fixed.

    Trading stocks is a zero-sum game if one trader gains only what the other loses, both expressed in money. When both buyer and seller strive for the same thing, we can say it is a zero-sum game. But trading stocks is connected with liquidity, risk management, etc. It isn’t just about money. There is something in the character and outlook of the participants. If they are similar the aims will be similar too, and the trading could become a zero-sum game.

    Trading stocks is zero-sum only when the competition is excellent, only when it is perfect. That would mean the traders on both sides, buyers and sellers, have the same information and make decisions that lead in the same direction to the same conclusion. For example, the ABC company’s stock price is going to drop. Buyers and sellers both have that information and buyers would like to buy that stock at a lower price while the sellers would like to sell it at a higher price. When their particular interests match each other the trade occurs. Only then, we can talk about trading stocks as a zero-sum game.

    Is day trading a zero-sum game?

    Day trading could be a zero-sum game. Here we can find an equal number of winners and losers. The most popular markets among day traders are options and futures markets which are zero-sum markets. How does this work?

    Let’s say you\re the one who holds the option that makes a profit. On the other side is the trader who wrote the option. The second trader, the seller of that option will lose the same amount. 

    Who are the winners and who are the losers in a zero-sum market? 

    You may think that all depends on luck. But you’re wrong. The real winners are traders with discipline. The winners have a trading plan, they know where and when to set limits, and never trade based on emotions. Instead, they use accurate data. So, the futures and options markets are zero-sum game markets. 

    But when we come to the stock market it could be real nonsense to claim it is a zero-sum game.

    Where is the difference?

    Let’s say, for example, if the economy is growing, companies’ profits rise, what is going to happen? How could this condition influence the stock price? Of course, the stock price will increase. In such circumstances, we will have more winners than losers among traders. Especially among long-term participants. Of course, some days it is possible to see more losers. That is the reason why some people understand the stock market as a zero-sum game.

    Trading stocks isn’t a zero-sum game

    All trades in the stock market are based on future expectations. Every single trader has different risk tolerances. The market always counts on it. If part of traders are selling their stocks that does not necessarily mean they are losers. Every trader has a particular and different goal when trading. For example, one can decide to hold the position until making a particular profit. So, what does a trader have to do when reaching it? Such a trader will exit the position to book profit, it’s so natural. The trader who is buying that stock may end in losses since there is no guarantee he/she will profit also. But what if the second trader proceeds profiting? Can you see, both sides, seller and buyer are winners.

    Bottom line

    So, trading a stock market is a more win-win situation than a zero-sum game. When trading stocks always keep in mind that some stocks pay dividends. That is an important factor when discussing stock trading as a zero-sum game. It isn’t rare for investors to get more money from dividends, even more than their initial investment was. The stock trading isn’t just a relation among sellers and buyers, it is more. That’s why we can’t say stock trading is a zero-sum game.

  • Trading Stocks As A Business – Why And How?

    Trading Stocks As A Business – Why And How?

    Trading Stocks As A Business - Why And How?
    Trading stocks and trading stocks as a business are completely different approaches. Even, it isn’t the same money.

    By Guy Avtalyom

    Trading stocks as a business depends on your ability to trade different securities. In other words, how much are you ready to trade stocks, bonds, stock options, futures, or precious metals. Trading stocks as a business means you must consistently be profitable. You’ll have to have an income from your profits. In case you have any drops in your investments, that will have a negative influence on your income. There are some things you’ll have to take into consideration before you make any choice on trading stocks as a business.

    Increase the capital for trading stocks as a business

    First of all, you’ll need to have the amount you must require to start trading stocks as a business. If you don’t have an adequate amount you’re not comfortable in your business. You will not know whether you are right or not. Build a trading fund and open an unconnected, separated bank account for it. You’ll need to secure a fund that is separate from savings. It is a smart decision to protect your and your family’s financial security.

    Before start trading stocks as a business

    Trading offers a high level of flexibility, also it offers incomparable financial returns. The downside is that it also comes with real financial risks. If you are considering trading stocks as a business, you’ll need to well prepare yourself with the resources and mindset. It is just like any other business. You’ll need a lot of planning and preparation if you want day trading stocks. Trading stocks every day is the way to build trading stocks as a business. 

    Stock trading essentially relies on your abilities and skills to trade. In essence, you’re fighting for your personal interest. This type of business requires you to perfectly analyze things. If you do not pay attention to your matter when trade, you’re not doing business, it’s more recreation. Also, you’ll have to be patient in this business. Yes, this is a very profitable business and can lead you towards great wealth. To achieve this, patience is needed. You’ll have to analyze the daily stock changes and sometimes it will take more time to make a profit.

    Pay off debt before start trading stocks as a business

    Pay off debt as much as possible. If debt lies in your head, you’ll be stressed. Stress in trading stocks for a living isn’t your friend. This kind of pressure can influence your trading decisions. For example, you may seek to get a bit more out of each transaction. Debts can push you to make choices that aren’t in line with your trading criteria. So, the best start in trading stocks as a business is without debts. The wrong decision is to start this business thinking that you’ll profit enough from trading to pay it back. Some people did it but it is very rare. Always keep in mind that business should never be based on assumptions but on the plan.

    Trading stocks as a  business from your home can help you gain financial independence.

    Choose your trading strategy

    Write it down. You can find many trading strategies on the market. The other solution is to create your own trading strategies. Just be conscious to add the criteria and parameters on how you pick stocks. If you know when to buy and when to sell, you’ll know how to create your strategy for trading stocks as a business. That will be your business operating system, nothing else you’ll need.

    Buy and sell following your strategies, and be disciplined with your budget limits. You” experience many ups and downs, but never leave or change your original parameters. In other words, you’ll need discipline. Otherwise, you’ll suffer great losses.

    Discount trading account

    It is recommended to open an online discount trading account. It isn’t hard to find an online brokerage that offers trades with low-cost fees. Connect your trading account to the bank account you already opened for trading. Your discount broker will carry out buy and sell orders at a lower commission rate. Don’t expect investment advice on your behalf. These brokers aren’t full-service types. Most discount brokers work through online platforms and are very accessible.

    Of course, you may choose a full-service broker. Your choice will depend on your goals, experience, financial status. Pay attention to how much much you’ll have to pay for commissions. Full-service brokers will take a healthy part out of your investment and trading returns. So, discount brokers could be a better choice.

    Do everything like it is a business

    For trading stocks as a  business, you’ll need to establish trading budgets, and stick to it. Further, limit your investment in any individual stock. Your budgets should have trading limits per day and week and you’ll have to track it. The best way is to create a spreadsheet. Add to it the date when you bought and sold the stocks, what was the price, how much any of these transactions cost you. Also, use some good and trusty software that will manage all of this information for filing taxes.

    How to make money by trading stocks as a business?

    More and more people seek a home-based business to boost their income. These jobs offer flexibility and financial freedom. Men and women who have children at home or full-time jobs can trade – it is just a matter of obtaining the right opportunity. Trading from home is a good option for many people who have examined trading stocks as a business. Hence, if you want to start this business from home, it’s important to take time to plan and examine it in more detail.

    Keep in mind, it doesn’t matter how experienced you are. You’ll need advice from some experts. Some will do short consultation for free, some will charge you. In any case, that might save you money and your investments. Your full-time job as a trader will demand a proper set up for your trading entity. So, you’ll need experts to help with that to do. Some brokers have packages that contain offers that the average investors don’t have access to. For example, they could offer you operating documents, consultation, bookkeeping, etc.

    Trading business from home

    To determine if you are in the stocks trading as a business, for the US residents the IRS will consider three factors. First, they will check if you attempt to profit from the daily market changes in the stock prices. Second, the IRS will examine how considerable is your trading activity, and the third criterion is your trading must be continuous and regular. There is no one sure-fire strategy to avoid trading tax law. You must manage your trading as a business. You’ll have to learn how to document your trading time, expenses, and some other things.

    Special rules

    To be in business as a trader in stocks you must meet some conditions as we mentioned above. If you don’t meet them, your stock trading will not be qualified as a business, you’ll be an investor. The point is that a trader must keep detailed records and make a difference between the stocks owned for investment and the stocks in the trading business.

    Can trading stocks be a business?

    Trading stocks as a business can certainly be a business. In many cases, you can profit from it. The main thing is to consistently profit from trading. That isn’t easy. Even if you think you’ll do it well, there is a chance to fail if you don’t have a realistic plan, both for your trade and your business. The plan isn’t just to make money, it’s more a consequence. It has to be your goal. But how to make money, the ways you’ll do it, the strategy you’ll use, a trading plan that shows how much money you plan to earn per day, week or month, could be a plan. 

    Your trading stocks as a business depends on the business plan and trading plan both. All you have to do is to develop and execute both.

    The goal of full-time stock trading 

    First of all, take it very seriously. Trading stocks as a business isn’t a hobby. If you want to enter the stock trading as a business that means you’re going to trade for a living. So, you have to treat it as you own the company. In every business education is important, so you’ll need to understand the whole industry. You have to know how it works, you can’t judge based on several trades you made. Like it is important for any business, you’ll need tools and you’ll need to know how to use them. Otherwise, tools will be useless. Also, you’ll need a bit more advanced computer. Nothing fancy, but something that can handle the demands of a trading stocks business. You’ll also need charts, scanners, and lots of data that you cannot wait or get delayed. It’s all up to you, you can set your business up for bankruptcy. But it isn’t a goal. The goal is to consistently make a profit and to live comfortably.

    Bottom line

    Be reasonable. What do you really think about stock trading? Is it a business for you? If it is just a hobby, it’s okay, but don’t call it a business. Further, think about your strategy. Do you set your trades randomly? What causes you to make a particular trade? What tools do you hold in your trading toolbox?
    If you struggle with emotions, the right solution is to learn how to read charts. Of course, you’ll need to know technical analysis. Trading stocks as a business is possible if you’re honest with yourself and have the answers to all these questions.