The mania of meme stocks that started in January with GameStop Corp, shows no signs of slowing down.
The 8th of June saw meme stocks, such as Wendy’s, Clover Health, and AMC Entertainment, go up for a second consecutive day, thanks to the innuendos caused on social media that led to the Wall Street rumblings ever since the start of 2021.
The universe of futures presents highly leveraged opportunities. However, if you are a trader considering futures trading, you should have a fundamental understanding of the way that futures are taxed. In this blog, we will be covering exactly that.
Compared to equity traders, future traders benefit from a more favorable treatment of taxes. According to section 1256 of the IRC (Internal Revenue Code), ‘any futures contract traded on a U.S exchange, foreign currency contract, dealer equities option, dealer securities futures contract, or non-equity options contract are taxed at 60% of the long-term capital gains rates and short-term capital gains rates at 40% - regardless of how long the trade was held.’ Since the highest capital gains rate for the long-term is 20%, while the maximum short-term rate stands at 20%, the average maximum combined tax rate would be 26.8%.
Even if you are relatively new to trading, there is a fair chance that someone has brought a Virtual Private Server (VPS) to your attention and that it is highly beneficial for trading. Even though a VPS is usually associated with website hosting, it does have several advantages when it comes to trading – stocks, futures and forex trading, in particular.
A VPS (Virtual Private Server) is a unique kind of server belonging to a computer which contains multiple other VPSs. Even though these servers are housed on the same system, each one can function independently.
To put it simply, inflation is defined as the rate of increase in the general price levels of goods and services in a particular economy. The two main types of inflation are:
This inflation type stems from an increase in credit and money supply, and the consequent rise in demand for goods and services. This increase in demand is greater and faster than the resulting increase in production capacity, thereby leading to product and service shortages and higher prices.
Often, investors are curious about the differences between hedge funds and mutual funds. Both have similarities in that they make use of diversification to achieve returns and are constructed from pool funds, meaning the funds' capital is derived from multiple investors which is then used by the manager (or managers) for investing in securities that fulfill specific criteria or requirements.
Having said that, there are some marked differences between mutual funds and hedge funds, and those are exactly what we will be discussing in this article.
Today the ES (S&P Futures) contract dropped over 50 points as of 1:45pm EST and has left many scratching their heads in awe. If you were watching the news this morning which preceded the large decline, you’d hear that many talking heads were impressed with the presidential speech to the United Nations. So how is it that the US financial markets have shown a momentum decline?
The simple answer is; it doesn’t matter! In our daily training room, we discussed our wants (new highs) and why we would NOT enter based on this information. Furthermore, we discussed our methodical approach which dictated the only option was to sell the market at that time.
I cannot count the times that I've been asked the question "If too many people learn supply and demand trading rules, will it stop working?". The simple answer is absolutely not but let's look at a few of the many reasons.
Each individual trader is unique and has their own personality of trading. Some may trade very short-term and others may prefer to hold their trades. While both of these individuals may be using similar rules for supply and demand trading, their orders will almost always be different because of the data they are analyzing.
Trying to find levels of supply and demand on a price chart is not an easy task. Especially given the fact that most individuals have their own unique personality for trading, such as risk management, time frame, asset class, confirmation type (if any), confluence measures and others. Below I will address two ways that will hopefully assist in how to locate these areas to generate a zone.
Looking for trading setups is not the same as looking for high probability trading setups. For instance, there are many levels of support and resistance on any given price chart that may have visual appeal, however the order flow at this location may not be massive (either not originally there or retested and filled). While there is no true way to predict or even determine the amount of remaining orders at a level, it makes a lot of sense to put the probability in favor to the best of our ability. The first way to achieve that is looking for an area with a vertical (strong) departure. When referring to demand the move should be to the upside and vise versa for supply. The more vertical price leaves the area in question, the greater the possibility is that many orders were left unfilled and still wish to be executed. Those orders can be used for future confluence purposes and increase the chances of another turning point from this precise location. Another factor of significance is the distance of the departure; to put it simply the further price gravitates away from the origin, the stronger the imbalance (in theory).
There are endless ways of thinking about the financial markets; for the sole purpose of this article I would like to focus in on only two, specifically regarding technical (trading) vs fundamental analysis (investing).
Many investors focus on longer term ROI (return on investment) and are not as active in the management of their position(s). By having a more hands-off approach, many of the day to day emotions are alleviated or at least reduced. This is due to the removal of the “noise/volatility” that each instrument produces, even down to a microscopic level. While the type of analysis is based on the individual or entity’s personal approach, commonly there is a good bit of fundamental analysis involved. So instead of looking at technical indicators and/or price action, there may be more economic, financial and quantitative determinations to base the investment decisions on, and measure its intrinsic value.
The issue of cash holdings generates debate between investors and operators. While some consider it an essential component of a well-planned investment strategy, others believe that it is not necessary to maintain cash within an investment portfolio.
Before we go into the issue of cash in the context of an investment strategy, it is essential to assess its role in terms of personal financial planning. It is usually recommended to have the cash available to finance immediate personal expenses. For people who may face sudden expenses in areas such as health or other emergencies, it is advisable to plan and keep funds available in the form of liquid cash.
Investors can use Fibonacci ratios in predicting future price movements. The ratios are derived from the Fibonacci series, which were named after an Italian mathematician named Leonardo Fibonacci who lived around 13th century AD.
Every term in the Fibonacci series represents a sum of the preceding two numbers (1, 1, 2, 3, 5, 8,13,…). An interesting feature of the Fibonacci series is that each number after 1 is about 0.6 times greater than the following number. The ratio between the two numbers in the Fibonacci series is termed as the golden ratio.
Hedge Funds are private capital reserves for investment with the flexibility to buy or sell a wide range of assets. It is basically a name for an investment company. The purpose of a hedge fund is to maximize investor returns and reduce risk, hence the word ‘hedge’. It aims to benefit from market failures rather than relying purely on economic growth for performance. These funds are very illiquid, in particular by limitations on redemption and ceilings for withdrawal.
There is no universal formula, and the types of investment strategies pursued by individual Hedge Funds are extremely diverse.
Technological advancements have contributed a lot to the evolution of the trading landscape. The way stock trading is done today represents a radical shift compared to the bygone era when brokers screamed and made hand gestures on the trading floor.
Majority of trades today take place electronically with the push of a button at both the institutional and the individual level. Billions of dollars exchange hands in cyberspace within milliseconds. In this article, we will look at how stock exchanges have evolved and the manner in which stock trading has progressed from in-person to electronic within a span of a few decades.
A stock portfolio watch list consists of a basket of stocks that investors can watch like a hawk. The watch list provides timely information on different financial securities that can be used in making smart financial decisions.
By creating a stock watch list, you will be able to monitor changes in price every single trading day. You can even receive emails on major price movements and relevant breaking news relating to the stock. The watch list can help you keep up-to-date with the performance of your stock portfolio.
Investors use indicators to gauge the value and growth potential of an investment instrument. It can be anything that can help in predicting future financial value of a financial asset. While the concept is simple enough, it’s surprising that a number of investors don’t know the correct manner to use indicators to predict the trends.
In the context of financial investment, indicators can generally be grouped into two types: leading and lagging indicators.
Today around 73 percent of equity trading in the US is being carried out using high-frequency trading. High-frequency trading seems mysterious, and somewhat scary, particularly for beginner investors. The words ‘high frequency’ itself conjures an image of bespectacled individuals in gray suits sitting in front of a large computer screen and engaged in a trading frenzy.
But the reality is far from this.
Most new investors consider investing to be a walk in the park. Being overconfident in their ability to invest, they end up making costly mistakes that result in loss of thousands of dollars. The reality is that investing in the corporate world is like sailing on a boat in an ocean full of sharks that can gobble you up if you make a mistake and slip from the boat.
Here are 5 things that you should know if you are starting the journey anew in the cold and somewhat frightful world of investment.
The most common problem traders face when reading technical charts is determining the right profit- taking and stop loss points. The market ‘noise’ caused due to short-term volatility most often triggers a panic response due to which traders exit the trade prematurely. By cutting out of winning trades early, they are not able to make the most of the opportunity, and capitalize on a larger return.
Wouldn’t it be great if the technical chart could filter the market noise caused due to price fluctuations allowing you to make optimal trading decisions?
The saying, “Don’t put all your eggs in one basket” has long been considered an effective risk management technique. By diversifying the portfolio, the investment amount is spread out among different assets resulting in higher long-term returns for less risk as compared to committing the amount in a single asset.
As obvious as it may seem to appear, a lot of day traders do not consider investing in alternative markets. This is due to either lack of knowledge about the benefits of diversification or fear of applying a day trading strategy on anything other than the stocks.
Every active trader looks to maximize investment gains. And one way to achieve this aim is by ensuring that Uncle Sam gets to take a minimum share of the revenues. While there are several strategies you can implement to reduce the tax burden, one effective strategy that not many traders may not know about, is by creating a limited liability company (LLC).
Apart from saving on taxes, there are many other benefits for traders to carry on the investment activities as a registered entity, which we will briefly discuss in this article.
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