24
In the past, a DRIP made sense for small long-term investors because reinvesting dividends in an average brokerage account wasn't trivial. The brokerage would only let you buy an integer number of shares and it would charge a commission on the trade so unless you were getting a large amount in dividends, it wasn't financially reasonable to immediately ...
23
The tail absolutely wags the dog in the equities markets. For a long time and this has been an active area of discussion.
More pragmatically, market microstructure - such as an index or even hedging against an index in the options market - can drive market direction in periods of low liquidity, as in when there are not larger counteracting forces such as a ...
22
Per definition not - the Index is only a published number and when you add the price of certain things and report this number, the number can not change the price of the items.
Now, if you have financial products that trade of the price of the index - futures, ETF - then yes, someone going long a large amount WILL change the index because unless someone ...
12
The index is an average of the stocks in the index. A very simplistic index consisting of 3 stocks might be calculated as:
(share 1 price + share 2 price + share 3 price) / 3 = index price
In practice the calculation will be more complicated, but the principle stands that you put in a set of share prices and get out an index price. By that definition, the ...
10
Here's what happens in the U.S. I assume that it's the same where you are and I'll describe it as such.
If you place a limit order to buy fewer shares than the size available at the ask price of €30 then you'll buy shares at €30.
If you place a limit order to buy more shares than the size available at the ask price of €30 then you'll buy some shares at €...
8
I ran the numbers in Excel. Here are the assumptions I made:
You started investing in SPY on the day that it launched (January 29, 1993).
Your broker allowed dollar-based investing.
On each trading day, you deposited $10, and invested it according to one of two strategies:
Strategy A: You bought $10 of SPY at the closing price, regardless of what that ...
7
Do I have to pay taxes on my capital gains when they're still less than my carryover capital losses?
Your $5k capital gain will be offset by the carryover loss and you will pay no taxes. IOW, the $5k will reduce your carryover loss to $12k and you will be able to utilize another $3k deduction as well.
7
2020 - Settlement is an administrative operation and may depend on market (i.e. you give a US example, it is different in other countries). You SELL them on T - the fact that the paperwork transfer takes +2 should not matter.
7
The day that you purchase shares begins the count toward long term. In your example, the first purchase is more than a year and receives LTCG status and the second purchase is less than a year and receives STCG status.
When you decide to sell a portion of your positions, there are several choices.
FIFO stands for first in, first out (you sell the shares ...
7
You're correct that the stock market is not an example of compound interest.
You're incorrect, though, that $100 at 10% growth every year for 10 years is $200. It is, in fact, $259.37 due to the fact that there is compound growth due to capital gains and reinvested dividends: every year the previous value grows by 10%.
Thus, at the end of every year, when ...
6
It's no surprise but there are contradictory articles about this on the net for U.S. taxation. Some suggest that the trade must settle this year in order to be claimed this year.
I consider Fairmark.com to be a reliable source of tax information. Here's their take on tax selling rules:
When determining what year you sold your stock, the trade date is what ...
6
There's a separate calendar for each purchase. Thus when you sell on 01-May-2020, you'll pay Long Term Capital Gain tax on the one you held more than a year, and Short Term Capital Gain tax on the one you held less than a year.
6
No. The warning says you are placing a pre-market order that is eligible for trading until two minutes before the market opens.
They are warning you because pre-market trading carries additional risks, like reduced liquidity and increased volatility, and they want to be sure you are aware of what you are doing.
5
how does a person make a profit when buying stock?
You don't. Profit is made when you sell at a higher price than what you bought it at.
Consider the man with an apple cart selling apples. Does he make a profit when he buys the apples from a wholesaler? Of course not. He (hopefully) makes a profit when he sells the apples for more than it cost him to ...
5
Common fallacy ...
Every new trader "invents" this idea.
You'll simply get closed out as stocks move down.
So,
I [buy a stock] and each time the stock goes up (even if only 1 moves each month) 2% I sell that stock ...
It's completely commonplace that you buy a stock, and from that day forward it goes only down, whatsoever.
In your example just ...
5
Ameritrade is going to report the purchase of 10 shares at $70 and the sale of 10 shares at $80 to the IRS.
You cannot designate that the shares sold in your Ameritrade account were from your Robinhood account.
If you wanted the cost basis of the sold shares to have been from the $50 basis in your Robinhood account then you should have sold the 10 shares in ...
5
Ben Miller provided a lot of good information in his answer. I'd add a few additional points:
A day trade is a round trip in an equity or option on the same day (buy then sell or short then cover).
Making a day trade isn't a problem. You'll be considered a pattern day trader if you trade four or more times in a rolling five business day period (and your ...
4
Take your question "is that $10 for holding 200 shares of stock " to its logical conclusion.
In that scenario, someone who owned 2 million shares of stock in the company would get the same dividend as someone who owns a single share of stock. In that light, you see that it can't be true.
Thus, the correct answer is "$10 per share of stock&...
4
First, I will point you to FINRA's page Day-Trading Margin Requirements: Know the Rules. It covers all of your questions and more.
To answer each of your questions:
A day trade is when you buy and sell the same stock on the same day, or if you sell short and then buy on the same day. If you open a position for Stock A and then close at least part of that ...
answered Jan 12 at 22:00
Ben Miller - Remember Monica
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3
My question is how does a person make a profit when buying stock?
By selling higher than he bought or buying lower than he sold (for short).
You are nice to point out you know what bit and ask are, with example - but are you also aware that the price MOVES with time normally? So, you could sell higher than buying when the price moves up enough for an active ...
3
https://www.irs.gov/pub/irs-pdf/f8949.pdf
From the instructions for form 8949:
Column (c)—Date Sold or Disposed Of
Enter in this column the date you sold or disposed of the property. Use the trade date for stocks and bonds traded on an exchange or over-the-counter market. For a short sale, enter the date you delivered the property to the broker or lender to ...
3
There can be plenty of non-posted liquidity. So OTC orders that didn't match posted limit orders can occur, but so can trades between the posted spreads that just happened faster than the visual representation of the Level 2 will show.
The NBBO is 180 - 185 and someone sent an order for 183.75 and someone saw that order coming to the exchange - who also didn'...
3
The SEC has quite a few researchers and data scientists who have implemented models to screen for suspicious behavior. If anyone regularly profits, say, on a much higher percentage of trades than usual, then they will be flagged. It won't matter if it's a retail trader or an institutional trader. Many people go to extreme lengths to disguise the thread that ...
3
It may exist but I do not know of any web sites that provide the one, five and ten year return for any stock of your choosing.
You can create a spreadsheet that does this but you'd have to capture historical data as well as the dividend dates and amounts and that would be quite onerous.
In lieu of the above, I think that the best approach would be a DRIP ...
3
Just to add one more argument to Justin Cave's great answer: there is no tax advantage of using dividend reinvestment plans (DRIPs) instead of using one's brokerage account own "reinvest dividends" checkbox.
From Wikipedia:
The investor must still pay tax annually on his or her dividend income, whether it is received as cash or reinvested.
3
Making 1% a day is quite possible for a few days or even a few weeks if you're on a have a hot streak, and you're trading a small amount of money. But doing that consistently is impossible. No one makes 250% a year (trading a fixed amount) or 1,100% if you're compounding the 1% gains as well).
Here's a simple example to demonstrate the problem with your ...
3
Here's a very similar question that was asked a few days ago: 2% gain-and-out trading plan on the stock market. Read the answers and the comments to get an idea of the feasibility of your idea.
Now let's say that stock is VOO, (stock that usually moves up and down 10 times a month). How many times a month can I do this? Is there a limit to this?
There's ...
3
If you diversify within a single sector, you reduce your risk than any single company in that sector will have a significant impact on your returns. However, if the sector as a whole goes up or down that will impact your returns.
The question you have to answer is why you think that a single sector is better than other sectors - more so than how the market ...
3
Still a good read even if the guy is already dead for over 30 years: https://www.amazon.com/Intelligent-Investor-Book-Practical-Counsel/dp/0060155477 Warren Buffet was Graham's student.
The conclusion of the book is fairly straight forward. For an individual investor, it's pretty easy to match the average market return. It's almost impossible to do better ...
3
As others have mentioned, the index itself is an imaginary construct derived from the prices of its constituent stocks. Therefore the index can't be changed externally and therefore have an effect on those stock prices.
However, as also mentioned, there exist actual commercial products such as ETFs which actually buy stocks in an attempt to simulate indices. ...
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