Whats goin on, Benji here.
Today Im gonna show you how I managed to reach $5,000 in just a single day, trading Tesla stock.
Before I release my big secret, Id appreciate it if you gave this video a thumbs up & consider subscribing to the channel.
Last week being Thursday & Friday I made a total profit of $9,684 giver take.
Don’t mind the other numbers in the screenshot I know it might look scary, I talked about those ticker symbols on my last two podcasts If you want to learn more about that you can search the Benji Taught podcast and listen to me rant there. Theres a space in the name, I had a friend of mine search Benji and Taught together and you won’t find me that way. So its Benji & Taught separately.
So the last week I’ve been margin trading ticker symbol $TSLA better know as Tesla.
I’m borrowing money in order to purchase more shares, aka Leveraging My Position. This is certainly not something I would recommend a beginner trader to do unless you were using a paper trading account. Paper trading is using fictional monies to get some practice in. TDAmeritrade which is the brokerage I choose to trade with, has a paper trading platform you can try. Nonetheless this is a risky method so be careful. Aside from the risk factor involved I’ve enjoyed my time trading this stock.
My entry and exit points are within seconds, I would say between 5-15 seconds max I’ve been holding shares at a given time. The candlesticks have been moving but, not drastically by any means.
Im gonna share my screen from one of those trading days to show you a few entries and exits in the YouTube video below. I checked the time on these as well and I had been in a trade for a maximum of one minute. These trades are quick in and out
The first trade I bought in on an uptrend and sold for a higher price, this was took 5 seconds, being family quick. My second trade I bought-in when there was selling pressure on a bullish candle, then sold for a higher price, this lasted approximately 15 seconds. Third and final trade I bought on the dip and sold at a higher price, this one was better than the others holding for about a minute.
So what is Margin Trading? How am I making so much money in the stock market using funds I don’t have?
The primary platform I use to trade with is TDAmeritrades’ Think or Swim platform, that is offered at no charge. There is also an option to paper trade for practice. TDA allows you to Day Trade 2X the amount of money you have in your brokerage account, simply put. I have been trading with roughly 100 thousand worth of Tesla the last few days, including the following Monday. Although I only made about $500 to start off the week, I can’t complain.
Margin trading is when you’re taking a loan out for the purchase of a stock via your broker.
When using Margin your shares of stock are used as collateral, alike buying a house and opting for a mortgage your house is used as collateral. If the stock goes down your collateral is now worth less than your loan and vice versa in the positive direction. You can make just as much money as you can lose trading this way. I’ve been using this method in an effort to increase my profits in a shorter amount of time.
I don’t feel I have enough certainty in the near future for the market overall. I also don’t have the necessary funds to afford Tesla stock at the capacity I desire. So, I borrow the funds and this helps me make more in less time, leverage.
This trading style likely won’t stay long for me the risk is just too high I’m opinion. I would hate to borrow a sum of money like this and lose it all overnight. I’ve said this before, I believe the market is about due for a correction and in my eyes were in choppy waters.
Some companies charge margin requirements, these can range from 0-100%. Elaborating on what a margin requirement is:
Lets say company ABC has a margin requirement of 50%, when you contact your broker for the funds to borrow, you will have to put up 50% of the money. The Broker covers the other 50% in this scenario.
Now here’s where the profit comes into play.
You have the money you just don’t want to spend it, margin requirement is 50%, stock price is $500.
You would have to put up 50% of the $500, being $250.
The broker covers the other half and you have one share of $ABC.
Stock $ABC goes up $100, now its worth $600.
Selling and locking in profits; The broker takes the shares back and you’ll get the difference in gross profit.
Balance: ($250) for 1 share at $500. $250 borrowed on margin/leverage. Selling stock at $600, paying broker for margin borrowed being only $250, you keep the remaining $350 as your gross profit. Your net profit: $100 from an initial investment of $250.
So this $100 in dividends created from your initial investment of $250 would result in a profit of 40%.
How this would differ from a typical market order is directly effected by how much you initially invest. Leverage.
If you were to have invested $500 in order to gain that same $100, your profit would only have been 20%.
So using leverage has double my profit/loss percentage.
Remember this is a very risky trading strategy that I would not recommend for a beginner, you can be liquidated just as fast as you can make profits and you’re responsible for any debt owed.
Everything stated in this vlog is pertaining to day trading on margin. There are margin transaction premiums charge at the end of the month if you hold your position for longer than one day. This percentage fluctuates depending on how much you are borrowing on margin. With the amount I am borrowing currently I am charged about a 9% annual rate on my shares. Divvying that into cost/day it is roughly $12 to hold my shares overnight. Happy trading & stay wise!
Remember that this is my opinion and I am not recommending you trade with margin or go take out loans in order to start day trading. Trade with caution and if you have any questions please let me know in the comments below. I think I am going to start releasing more content at a faster pace but it will come with a deficit in editing because it just takes me forever.