Board 8 > Stock Topic 4

(+) Yeah! (+)

And the Dow is still down for the year! Even after a +42% move from the bottom...

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SuperNiceDog posted...

And the Dow is still down for the year! Even after a +42% move from the bottom...

Math is weird. A 50% drop followed by a 50% rise actually is still a 25% drop. (100 to 50 to 75).

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Colegreen_c12 posted...

Math is weird. A 50% drop followed by a 50% rise actually is still a 25% drop. (100 to 50 to 75).

Yes, this is why levered ETFs like NUGT experience such extreme time decay. They are designed to double the daily performance of the underlying stocks. So if the underlying stocks are +5%, NUGT is supposed to be +10%. And if -5%, then -10%.

Suppose the underlying stocks are up 10% one day, and down 9% the next day. If you had bought them, starting from 100, after day 1 you would be at 110, and after day 2 you would be at 100.1, for a gain of 10 cents.

Now, suppose you bought NUGT instead. On day 1, it gains 20% and you are at 120. On day 2 it falls 18% and you are at...98.4. So instead of gaining 20 cents as you would expect, you lost $1.6.

This effect compounds exponentially over time and you get the result that while you would turned a profit buying gold mining stocks and holding them for years, by buying the 2x leveraged ETF you end up losing 99.9% of your investment.

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Serious considerations:

Buy $20,000 WMG at 359pm
Buy $20,000 ZI at 930am

I am staying away from GNUS because I missed out and am annoyed by it.

yea I am staying away from GNUS also. One thing I've learned from many years of investing is... you have to ride your winners as long as possible. Don't go for a quick 2% profit. So many times I've sold my winning positions too early in the past. Now I gamble and ride them as long as I can.

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I made 50 dollars which is going forward to okita alter reparations fund

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Bought $20k of WMG. Anyone else get in?

i was a coward. a relative called me up telling me to swap everything into money markets by EOD and i missed it

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Make sure you guys all buy ZI at 930am sharp. I reckon itll jump from $20 to $22 in literally thirty seconds. Thats what happened to WMG.

So do stop limits activate if they're reached during the after hours? I'm assuming no? I'm using Ameritrade if they're different on different apps/sites.

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I dont believe so. You have to set things up separately for it to go through after hours.

They do not. Due to how after hours trades are facilitated its going to be the same on every platform.

GNUS was negative 8% after hours at 6:00pm. Now its positive 10%. After hours is always complete insanity.

I am a very stable genius.

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Also until 930 I assume this isn't real lol

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Im just hoping WMG goes up at least 2%.

Did no one else buy WMG? It seems like a fantastic option. Or were you all too busy salivating over GNUS?

I got about $1K into it.

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Okay, finally on my work break and...can anyone tell me what all this means? This is why I didn't want to margin trade! Literally all I've read on it was like double your gains, double your losses, but I couldn't resist scooping up more GNUS earlier today. And I actually have no idea why my cash balance is still 4k and I didn't go to that before it started taking out on margin. I think maybe it just hadn't transferred from my bank yet?

It looks like it's positions - margin balance + cash = my total account value. But is there anything to worry about with the margin balance? Like is there interest rate on it? Or is there only interest rates on losses for it and not gains?

Btw that was 11k of my own money in there so I made 14k in one day. My entire savings from my job this year is 12k.... I make $15.22 an hour. Today has been unreal.

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It looks like you've used 8K (12K - 4K) on margin to buy stocks. So I believe you'll be charged interest until that's settled.


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Margins are risky because if you pick a bad investment, you can owe more money than you have in your account. I would sell whatever margins you have ASAP if theyre for a gain, which as Menji said, youd be paying interest on anyway.

It sounds like itll probably be worth it since GNUS appears to be up a lot tomorrow AM, but still.

StartTheMachine posted...

Okay, finally on my work break and...can anyone tell me what all this means? This is why I didn't want to margin trade! Literally all I've read on it was like double your gains, double your losses, but I couldn't resist scooping up more GNUS earlier today. And I actually have no idea why my cash balance is still 4k and I didn't go to that before it started taking out on margin. I think maybe it just hadn't transferred from my bank yet?

It looks like it's positions - margin balance + cash = my total account value. But is there anything to worry about with the margin balance? Like is there interest rate on it? Or is there only interest rates on losses for it and not gains?

Btw that was 11k of my own money in there so I made 14k in one day. My entire savings from my job this year is 12k.... I make $15.22 an hour. Today has been unreal.

Congratulations on the big win! Be careful though. With margin you can lose more than 100% of your investment. If the position value falls below the margin loan, the brokerage will demand that you send more money right away, and if you don't, they sell your stocks and use it to repay the margin loan. If the value of the stock falls very quickly (for instance, if a stock gaps down overnight), you can end up not only losing your whole investment but owing the brokerage money.

I'm saying this because the fact that you made 14k off of 11k in a day means that you opened a very high risk position (that succeeded). If it's possible to get a +14k result it's also possible to get a -14k result, which would probably be quite crushing.

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In other news, LK is now 89% above the bottom. And still 95% down from the top. Here is a story of one person who put his whole life savings of 260k on LK in January. I think there was a guy in the US who did something similar and after the fraud story broke, he went to a bunch of Starbucks and poured hot coffee on himself (I guess trying to get a lawsuit out of it like the famous McDonald's hot coffee lawsuit).

https://www.marketwatch.com/story/italian-trader-loses-his-entire-life-savings-on-one-insanely-risky-position-2020-06-03?siteid=yhoof2&yptr=yahoo

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Lmao about the guy spilling coffee on himself. Terrible fortune.

I don't use a margin account, but don't most people in this topic just use it to get around the notification that they could get a trade penalty if they sell stock bought with unsettled funds?

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Yes, including me. But I only invest the money I own.

That's the only way I'd do it. I'd definitely be careful Blur.

Also remember to save some of that gain for taxes!

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oh shit it says I'm in a "margin call"

TD Ameritrade posted...

A potential maintenance call means action may be required if your account goes into a call. Your account will go into a maintenance call if its value drops below our maintenance requirements due to changes in the market value of a security or when you exceed your buying power. If your account goes into a maintenance call, you can meet it by depositing funds, selling stock, or depositing securities. In a call, TD Ameritrade may forcibly liquidate all or part of your account without prior notice, regardless of your intent to satisfy a margin call, in order to protect your interests or ours.

Uhhh...About to sell some shares!

red sox 777 posted...

Congratulations on the big win! Be careful though. With margin you can lose more than 100% of your investment. If the position value falls below the margin loan, the brokerage will demand that you send more money right away, and if you don't, they sell your stocks and use it to repay the margin loan. If the value of the stock falls very quickly (for instance, if a stock gaps down overnight), you can end up not only losing your whole investment but owing the brokerage money.

I'm saying this because the fact that you made 14k off of 11k in a day means that you opened a very high risk position (that succeeded). If it's possible to get a +14k result it's also possible to get a -14k result, which would probably be quite crushing.

I'm pretty confused about how this works though. When I bought shares this morning, I'm pretty positive that I bought 3,000 shares with NO margins. The only shares I bought with margins were 600 at 7.77 and 200 at 7.30 or something around there. How the heck is my margin so high?

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Can I not put the cash towards the margin balance? I'm so confused about how to pay it off. That's why I kept depositing money in my account too and it hasn't gone through. But that notification message obviously scares the bejeejus out of me and I don't want to lose my winnings.

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I think youre fine. Just sell at least the 600 shares in the morning, hopefully it maintains its green status.

StartTheMachine posted...

I'm pretty confused about how this works though. When I bought shares this morning, I'm pretty positive that I bought 3,000 shares with NO margins. The only shares I bought with margins were 600 at 7.77 and 200 at 7.30 or something around there. How the heck is my margin so high?

Could be you bought some 3,000 with unsettled funds (from your recent deposits).

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Ohhh, funds aren't "settled" after immediately selling? Like when an order is filled if you reinvest it in another stock too quick, it won't settle?

I do not understand how to read the maintenance requirements. I'll post a screenshot.It sounds like I could sell some shares after hours with an additional ameritrade app called thinkorswim. May try that.

But goddamnit why does it take so long for funds to clear from banks? Got all this money in "uncleared deposits" that's already out of my bank account but not considered "cleared" yet. Wtf.

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Yeah, that topic was discussed in topic 2 or 3. Youll be fine if you sell unsettled funds once or twice.

Okay, I got in over my head too quick it sounds like, but now I get it. Funds aren't settled for two days after a trade.

Just got off the phone with an Ameritrade customer service rep and he helped me understand margin a lot, and what it means to be at a margin/maintenance call. They have the power to sell my shares if they see the stock slipping, but they'd only sell enough shares to make up for the margin I owe. And sell, not like, take my money, so that calmed my nerves a whole lot. But they can sell whenever they want.

He basically said to watch the pre-market and sell enough to make up that margin when I can. He said I'll likely be low on the list because there are people who go through margin trading accounts with much higher value than mine and they go solely on account value, not on the volatility of the stocks they're invested in or anything. Also, the interest on margin -- which is accrued based on the share value you bought a stock at as well as days you have a position in the stock but NOT for every share you own -- isn't bad at all. I can see why people trade on it; it's just the losses are so insanely risky. It worked out for me this time but I may be margin free in the future.

Thanks for calming my anxiety while I waited though Moonroof. I consider you an expert (sorry Chris, but you too!) solely because you helped me make my first few Gs on Bank of America Stock. And you're playing with soooo much more money than I have. Did you make a lot of that trading or do you just make bank on your day job?

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No problem. Id recommend just reading with money that you actually own moving forward. Sounds like youre intending on doing that anyway.

I have been working since 21 and Im 30 now. Ive just saved a ton over the years. I get paid pretty well too. I only started investing a few months ago, Ive learned a lot in that short time though. Im way more conservative than I need to be, but I dont need extra money so it works for me.

Ahhh, must feel good to get into trading with that much money in savings!

Aaaand the GNUS rocket continues its ascent. Pre-market almost hit 10 at one point already. I need an inhaler.

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It doesn't for him. He feels the pressure super hard and every downward trend weighs on his heart.

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Okay so more about gnus.

It will have toys in Walmart. It will stream on Amazon and Apple. Like uhh yeah no wonder the stock is surging

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My biggest pleasures are getting you guys money.

https://gamefaqs.gamespot.com/boards/8-gamefaqs-contests/78744726

LK popping today: +24% and back above $3 we go!