Tag: investing tricks

  • 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.Ā 

    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.Ā 

    So, you’ll have to trade under the rule known asĀ  ā€œpattern day trading ruleā€. 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.Ā 

    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.Ā 

    The day trading rule operates by identifying some traders as ā€œpattern day traderā€. 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,Ā 

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

    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.Ā 

    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 ā€œpattern day trading ruleā€.

    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.Ā 

    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.

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  • How Long It Takes to Have Enough to Buy a Home

    How Long It Takes to Have Enough to Buy a Home

    4 min read

    How Long It Takes to Have Enough to Buy a Home

    To have enough to buy a home is everyone’s dream. This is a tricky time for millennials who want to buy a home. Some research, for example in Canada, shows that young people need between 13 to 29 years to purchase their first home. That’s too much.Ā 

    While millennials over the world are striving to get on the property, about 70% of Chinese millennials reached the milestone. 

    Mexico is the next with 46% of millennials homeowners, the following is France with 41%.

    For the majority of millennials, owning house persist too expensive and they can’t save enough for a deposit. Property prices have increased in the last several years and the rise in salary did not follow this

    Almost 2/3 of millennials declared they would need higher incomes to buy a home. 

    According to Forbes, China has seven of the world’s 10 most expensive cities for buying such a property.

    So how have so many millennials in China have enough to buy a home?

    There are no secrets. For most of them, a parent’s help was crucial. Also, they have some benefits for married couples. For sons in China, parents will do almost everything to help them get married.

    Thanks to the One-Child Policy, next year will be 30 million men more than women who are looking for marriage partners. Parents in China want to improve the chances for their sons and support them financially to have enough to buy a home. Speaking about, gender equality. But it isn’t the subject of this article.

    We want to show you how to ensure your deposit in order to buy a house, to have enough to buy a home.

    There are some other ways to get on the property on your own.

    Let us ask you something.

    1) Are you able to save each year?

    2) When you save, where you put your money?

    The message of the following story is: start saving early and try to save often. We want to show you the influence of compounding.

    Let’s estimate how long it will take you to become a millionaire. Yes, why not?

    We will start with the Rule of 1.5, likewise recognized as Felixā€™s Corollary. 

    This rule says that for a flow of investments where the number of years times the interest equals 72, the final value will equal approximately 1.5 times the amount invested. 

    Say, investing $10,000 per year for 8 years at 9% interest.

    8 x 9 = 72 

    The value of the investments at the end of year 8 will be about $120,000.

    Or make it simpler

    $10,000 x 8 x 1.5 = $120,000

    It’s so far from being a millionaire but…

    We will use Felixā€™s Corollary again. All we need to do is decide how long it will take you to save $720,000 at a contracted interest rate. 

    To explain why $720,000. Because $720,000 times 1.5 equals $1,080,000. This describes why we didnā€™t use $1,000,000. 

    This is easier than it looks, you will see.

    Say, with a saving of $90,000 per year you will need 8 years to acquire $720,000. 

    And at 9% annual interest, you would save $1,080,000 over 8 years. Of course, most of you donā€™t have $90,000 per year to put on savings. 

    That’s why most of us are not able to collect a million dollars in 8 years. 

    So letā€™s expand it to 16 years. 

    Now, what do we lack to be a millionaire? Again implementing a 9% rate of return? Yes! Here is where the rule 72 again in the scene. Using the Rule of 72, we know that whatever we have saved over the first 8 years will double over the next 8 years because 72 divided by our interest rate of 9% equals 8.

    So we can break the 16 year savings period into 3 equal portions: 

    1) the amount we save over the first 8 years; 

    2) the doubling of this amount over the next 8 years; 

    3) the amount we save the second 8 years. 

    And here it is: $720,000 divided by 3 equals $240,000. That is the amount we need to save each of the two 8 year periods. That is $30,000 per year if my math is good. And it is, so you just follow the rest of this. That means $2,500 per month, which is a reasonable saving for some people.

    But you want to determine what it will take to be a millionaire in 24 years. All you have to do is just divide $720,000 by 7 and then again by 8. 

    So, $720,000 divided by 8 equals 90,000 divided by 7 equals about $12,800. Right? Hence, investing just a bit over $1,000 per month at 9% interest during 24 years period will make you a millionaire.

    Invest in stocks with little money to have enough to buy a home

    But, how to know when to get in a position in investing?

    Investing takes time to grow. It requires a relatively moderate risk and moderate returns in the short run. But investing may produce bigger returns by placing both, interests and dividends to hold for a longer period of time. So, you are taking a long position while investing. 

    You would like to hold your stock for several years and have a decent return. In most circumstances, you should take the profit when a stock grows 20% to 25% of the buy price.

    When to get out in the investment

    The general rule of investing is never getting out of your investment just because the stock price is dropping. The rule “buy high/sell low” isn’t valuable while investing. Otherwise, you will never earn money in the stock market.

    A selling an investment too quickly can hurt your portfolio.

    Have Enough to Buy a Home

    Can you “ensure” some positions?

    All beginners, no matter how smart they are, have illusions, so they have losses. You have to keep your losses small, donā€™t let them scare you and survive.

    The rules for managing the risk that weā€™ll show you may feel disturbing for beginners because they have small accounts. Well, the proper risk control may limits trade size. I know that. But it is important for you to know that it is a protection in the first place.

    The crucial rule of risk control is the 2% rule: never risk more than 2% of your account investment on any opened trade.

    Start by writing down three numbers for every trade: your entry, target and stop. Without them, a trade may become a gamble.

    I want to share with you one of the best advice I got when I become an investor.

    If you see your stock rises by 40% you should sell 20% of your position. When the stock later increases 49% more, sell the other 20%. That will provide you to have 125% of your primary position.

    You have 100% of the initial position. And it grows 40%:

    100%*1.4=140%

    You sell 20% of it, which means that now in your hands you have 80% left:

    140%*0.8=112%

    Stocks rise for another 40% progressively:

    112%*1.4=156.8%

    Now you sell 20% of the stock you have in your hands:

    156.8%*0.8=125.44%

    You end up with 125.44% value of the initial position.


    The bottom line

    To know how to structure your portfolio just implement this rule:100 minus your age.

    This rule is used for asset allocation. Subtract your age from 100 to find how much of your portfolio should be allocated to equities

    If you are at your 30s you should have 70% in equities and 30% in debt. 

    Investing doesn’t have to be difficult if you start early, understand investment opportunities, and invest in different assets to minimize risk. And provides you to have enough to buy a home.

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