Where do traders store money

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Where to store money for a trader?

An analysis of the main issue of this review may be of interest today not only for professionals for whom trading is a favorite business and source of income, but also for ordinary citizens who have nothing to do with trade, financial assets, currency transactions, etc. Why? More about this later. I would like to start with one interesting nuance characteristic of some modern categories. Many of us notice him, but for some strange chance, he “slips” somewhere on the border of our consciousness and “dissolves” in megabytes of important information. Although the importance of the latter is sometimes in doubt.

Development of the global financial market: moving forward or …

It is about “development.” We will not delve into a detailed analysis of this philosophical category, we will highlight only one point. Development is a forward movement towards harmony and understanding. Let’s hope that Aristotle and Kant will forgive such a simplified interpretation. And already closer to the topic of the review, and what is the development of the global financial market? Here! Readers with an economic education are likely to understand the main point. Hundreds of new cryptocurrencies, binary options, the lack of a unified terminology and a distorted perception of new financial terms can hardly be called “development”.

Why such a complicated introduction that is not related to trading and money? All these are interconnected concepts. Such chaos has always been a harbinger of serious upheaval. The development of the German economy in the 30s. of the last century, which could not forget the defeat in World War I, led to the formation of National Socialism and the most terrible war in the history of mankind. The right direction of the “development” of the USSR led to the collapse of communism, a surge in crime, unemployment and drug addiction. Therefore, in order to ensure that the presented review does not turn into “another” collection of tips that does not have real practical value, we will conduct our analysis, taking into account the presented observations and the corresponding conclusions.

How to save your money: recommendations of experienced traders

The following tips are primarily aimed at traders, but for ordinary owners of financial resources, they will be useful. The first option, it is the most logical for professional participants in online trading – this is a bank account that is opened by the broker after registration and verification of the account. By the way, this option is suitable for almost any citizen of our country (if he has money).

Well-known brokers pay much attention to the security of their clients’ financial resources. In most cases, the money is stored in the accounts of reliable financial institutions. They are insured, the bank accrues interest on the amount that is not used for conducting trading operations, and the process of applying savings to purchase promising assets does not cause any difficulties. In order not to engage in the withdrawal of funds for personal purposes (the operation may take several hours / days), you can get a card of this bank with an overdraft with a grace period (1-3 months do not have to pay interest). For example, you need $ 1,000. You withdraw the indicated amount from an ATM (it should not exceed the established credit limit), and after a couple of weeks you return it, you don’t have to pay money for this operation. If you withdraw 1 thousand, you will have to wait a certain time and pay a commission.

Choosing a broker, a trader should consider the following indicators:

• Reputation and “age” of the company (do not use anonymous and suspicious reviews for these purposes, as a rule, their authors are professional copywriters).

• What currency does the service accept?

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• Who regulates its work?

• Cost of services provided.

• Minimum deposit and withdrawal amount of funds.

• Bonuses and additional services.

• In which countries the company operates.

• Conversion mechanism for applicable currencies.

Storage of funds that are not used for online trading

Some experienced traders, having earned a certain amount, decide to withdraw it from their account in a brokerage company. For example, when they understand that no one is safe from bankruptcy (including the most reliable brokers) or they have a desire to check other ways to earn money.

Here are the most common areas for investment.

Opinion of experienced traders and investors

Always at hand, with security systems – a fairly safe option The owner actually loses a certain amount on a monthly basis. No currency in the world is safe from inflation. When choosing a reliable bank – the money will be protected from intruders. Sometimes it allows you to earn a little. Often contracts are drawn up in such a way that early withdrawals result in a loss of a decent amount. The bank may lose the license, go bankrupt.

Investing in real projects

Such investments can bring stable and high returns. You can lose your savings

Acquisition of liquid assets (real estate, jewelry, etc.).

In a stable economy, they make good profits. This type of investment is unpredictable. Buying an apartment in an old house is a dangerous acquisition.

Mutual Investment Funds

Highly profitable investment. There is always a risk that company analysts make a mistake that will lead to a loss of cash

Currency selection

Studying the question of how to store funds that traders can use, it is necessary to pay attention to such an important indicator as the currency used for these purposes.

The main rule is the diversification of foreign exchange savings. Analysts advise giving up buying dollars (everyone understands that this is a financial pyramid, but no one can think of a way to get rid of $). The ambiguous economic situation in the EU also does not give any reason for an optimistic forecast for the euro.

Increasingly, analysts are paying attention to the Chinese yuan and the British pound. Despite the fact that most economists do not recommend contacting them, there is an opposite opinion on this issue.

Regarding the formation of the currency “basket”, financiers advise using Singapore dollars, Japanese yen and Swiss francs. But in this case, it is necessary to consider how traders will use their savings outside the site of brokerage companies.

Alternatives

But back to the beginning of the review. The high probability of serious changes in the global financial market makes it possible to assess the current situation from a different angle. Among the probable causes of the disaster, experts name a variety of factors. These include the collapse of the traditional financial system (it may make sense to buy cryptocurrency), the global political crisis in developed countries, large-scale military operations, etc. Without the necessary information, it is difficult to prepare an appropriate forecast. But in any case, all traders can be advised to conduct a detailed analysis of the events that will allow to quickly make a decision, in the case of some force major.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

How Much Money Do You Need to Start Day Trading?

Nov 21, 2020 5:13 PM EST

You’ll need money, and plenty of it, to get into the day trading market.

We’ll spell out exactly how much cash outlay you need to be a day trader below, but first let’s examine what a day trader does, and what day trading is in the daily financial trading markets.

By and large, day trading is the daily buying and selling of stocks (almost always growth stocks) in a “quick turnaround” fashion. The idea of day trading is to buy a stock, wait for an uptick or two in price, and sell it the same day (thus, the term “day trader.”) A day trader may also trade higher risk futures and foreign exchange currencies.

The U.S. government also has its own definition of what constitutes a day trader.

According to the U.S. Security and Exchange Commission, a day trade is “The purchasing and selling or the selling and purchasing of the same security on the same day in a margin account.

“This definition encompasses any security, including options,” the SEC notes. “Also, the selling short and purchasing to cover of the same security on the same day is considered a day trade. Exceptions to this definition include a long security position held overnight and sold the next day prior to any new purchase of the same security; or a short security position held overnight and purchased the next day prior to any new sale of the same security.”

No doubt, day trading is a high-risk profession and plenty of smart people don’t make it a year as a day trader, often “blowing out” in Wall Street parlance after a series of money-losing trades.

A recent study called “Day Trading for a Living” by the Saõ Paulo School of Economics in Brazil estimates it is “virtually impossible for an individual to day trade for a living, contrary to what experts claim.”

The researchers tracked day-trading trends among individuals who began to day trade between 2020 and 2020 in the Brazilian equity futures market, and who did so for at least 300 days. According to the report “97% of them lost money, only 0.4% earned more than a bank teller (US$54 per day), and the top individual earned only US$310 per day with great risk (a standard deviation of US$2,560). Additionally, we find no evidence of learning by day trading.”

Ask your average day trader and you might get a different opinion, but there’s no doubt that day trading is a tough, high-risk way to make a living.

Yet if you live and breathe growth stocks, and you have the discipline to buy when you should and sell when you should, day trading might be worth a shot.

In Day Trading Terms, What Is a Growth Stock?

Day traders make their bread and butter by leveraging stock market volatility, most often in the growth stock sector.

Growth stocks are stocks in companies that are just getting off the ground and that usually trade for low prices, but that generally bounce around, price-wise, during the trading day.

Growth stocks are companies that are often only a few years old and that offer new products, services and technologies that show promise of paying off commercially. But as young companies, growth stocks often tend to fluctuate more than traditional (and stable) larger stocks, like value stocks or mid-cap and large-cap stocks.

News of a lawsuit, a critical column in the financial and business media, or a downbeat earnings report can all negatively impact a growth stock, and do so quickly. Conversely, a good column in praise of the company, a lawsuit verdict in its favor, or a solid earnings report can make that same stock shoot upward, and just as quickly.

That potential volatility is why growth stocks are a day trader’s hunting ground.

When they start prowling the landscape for a good deal, here’s how day traders go about that growth stock hunt:

  • By dissecting industry trends before pulling a trigger on a specific stock.
  • By looking for young growth companies with buzz, and that show signs of connecting with consumers.
  • By analyzing companies with new technologies that have the potential to change an industry, much like Amazon (AMZN) – Get Report did to the retail industry starting in July, 1994.
  • By closely monitoring the initial public offering (IPO) market for burgeoning new growth stocks that are ready to pop.
  • By closely tracking companies that are buyout candidates, much like Instagram before it was bought out by Facebook (FB) – Get Report in 2020.
  • By pouring over financial statements and company quarterly earnings call transcripts to glean an opportunity worth buying.
  • By looking for new government rules and regulations that may help a company break out, like cannabis companies once states began allowing medical marijuana and cannabis products to be sold legally.

Primarily, day traders hunt for growth stocks that show signs their share price will rise and quickly — long-term and dividend plays aren’t invited to the day trader growth stock party.

That’s exactly what birthday traders send their days bagging and tagging, only to likely sell the same growth stock later the same day.

What Does It Cost to Day Trade Stocks?

Day trading isn’t cheap – not by a long shot.

Day traders working the U.S. stock market is required to have a minimum account balance of at least $25,000, according to rules issued by the U.S. Security and Exchange Commission.

If your day-trading account falls below the $25,000 threshold, you won’t be able to day trade stocks until the $25,000 minimum account balance is restored.

Thus, it’s highly advisable for newly-minted day traders to maintain an account balance well in excess of $25,000 – aim for at least $30,000 in your account when you begin day trading.

Note that to meet the minimum trading requirements to be a day trader in the U.S. you’ll need to have at least four day trades a week. That will officially classify you as an active day trader and will trigger the $25,000 account minimum requirement.

What Does It Cost to Day Trade Forex?

Trading Forex securities on a daily basis is, at first glance, decidedly less expensive that day trading U.S. stocks.

Basically, Forex brokers require day traders to hold a minimum of $100, with some countries allowing day traders to handle Forex trades for as little as $50 in their trading accounts. These figures will vary on a country-by-country basis, and on a broker-to-broker basis.

Yet only having $50 to start trading foreign currencies is likely a fool’s mission. The Forex market is fraught with risk, and it’s highly advisable for Forex day traders to risk no more than 1% of their entire Forex account on a single trade, to minimize the risk of excessive losses.

Thus, it’s better to start trading currencies with at least $1,000 or more to absorb potential losses in a highly volatile, 24-hour-a-day Forex trading market.

What Does It Cost to Trade Futures?

Like Forex trading, futures traders should know they’re engaging in a high-risk, high volatility trading market where contracts on commodities like oil and gas, and on stock market indexes are traded on a daily basis.

You won’t need $25,000 to start trading and there is no government-sanctioned minimum account balance to meet, but you’ll still need $10,000 or more to get started trading futures on a daily basis. (Most futures brokers expect day traders to have at least $1,000 to get started in their trading accounts, but those figures vary from broker to broker.)

Why $10,000? Because that’s the recommended amount of cash futures trading experts say you’ll need to absorb the potential risk of futures trading losses and have the flexibility needed to trade the futures market correctly – and without losing too much sleep at night.

The Takeaway on Day Trading Financial Needs

Day trading isn’t for the faint of heart, nor is it for the light of wallet.

Go into a day trading experience with your eyes open and plenty of cash to wall you off from excessive risk, in the stock market, futures market, and Forex market.

Make no mistake, you’ll be up to your eyeballs in trading risk as a day trader, and you’ll need the money, for better or for worse.

Average Income of a Day Trader

Average Income of a Day Trader

  • 1 What Is the Average Return a Day Trader Can Expect?
  • 2 How Much Does a Day Trader Make?
  • 3 Become a Currency Broker
  • 4 Become a Day Trader & Make a Comfortable Living to Support Yourself

A day trader is an individual who regularly buys and sells equities the same day. The occupation, if it is one, is apparently highly click-worthy. There are many confident online reports that a day trader can return profits of 10 percent each month, or no, wait, that’s 18 percent per month or . you get the idea. Pick a profit percentage. There’s someone online waiting to tell you that’s how much you can make. The reality is that all academic studies of the practice conclude that, with few exceptions, you can’t make money day trading at all. Since it’s always fun to dream, start with the myth.

The Myth

Many of the online articles are specific about the profit ratio you can expect when you become a day trader. For example, an article by Cory Mitchell that appears on the Vantage Point Trading site lays it out in detail and assumes beginning trading capital of $30,000:

“Assume you average five trades per day, so if you have 20 trading days in a month, you make 100 trades per month. You make $3,750, but you still have commissions and possibly some other fees. Your cost per trade is $5/contract (round-trip). Your commission costs are: 100 trades x $5 x 2 contracts = $1000.”

In Mitchell’s example, your net after commissions is $2,750. Since you started with $30,000, that’s a monthly return of a little over 9 percent. If you reinvest those profits on a monthly basis, at the end of one year, you’ll have a profit $55,944 and change. Not bad, and the best news is, you don’t even need to get dressed for work.

The Reality

Here’s a strong indication that the reality may be quite different from the myth.

According to a 2020 study of the Taiwanese stock market led by economist Brad Barber of the University of California, Davis, Graduate School of Management, and encompassing everyday trade in that market over a 14-year period, less than 1 percent of all participant traders made a profit. Putting it another way, 99 percent of all day traders lost money.

Yeah, but That’s Taiwan

Another study by Barber and fellow UC economist Terrance Odean analyzed the market returns of over 66,000 U.S. households trading the U.S. stock market over a five-year period from 1991 to 1996. They concluded that frequent traders (not day traders, necessarily, but including day traders and those who trade stocks frequently) underperformed investors who employed a buy and hold strategy by about a third. The more frequently a given participant traded, the more they underperformed the average return.

But That Was More Than 20 Years Ago

True, more recent studies, like the 2020 research study at the Cass Business School at City University of London concluded that monkeys throwing darts at the stock pages could achieve better results than stock traders. OK, they were digitally simulated monkeys, but still.

To give you a better idea of your chances as a “professional” day trader, consider that the regulatory North American Securities Administrators Association lists trading seminars – the online “trading colleges” that offer to teach you how to succeed as a day trader – as a top 10 threat to investors, along with Ponzi schemes and esoteric trading algorithms based on Fibonacci numbers.

Why Day Trading (Almost) Never Works

There’s a reason that day trading is hazardous to your wealth that’s agreed upon by behavioral market theorists like Robert Shiller and efficient market theorists like Eugene Fama, both Nobel Prize winners in economics. The short-term behavior of markets reflects billions of rapidly fluctuating values responsive to evolving conditions that approximate a random walk, and there’s no theory on Earth that can predict market behavior well enough to predict what will happen next consistently.

Yet, there’s that 1 percent. If day trading is such a bad idea, why doesn’t everyone lose money? This is a tantalizing question without a single answer. In most cases, it’s the phenomenon of the stopped clock, which, despite the fact that it isn’t working, still displays the correct time twice a day.

Even if it’s only 99 percent, not 100 percent certain that you’ll lose money attempting to day trade, why would you want to invest your money in an enterprise where the odds are 100-1 against you?

Research indicates that the average length of time between the opening and closing of a futures trading account is a little more than three months and that when the account closes, most participants have lost all their money.

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