There are all kinds of trading platforms to use out there. The key is in finding the one that suits your style and needs. Many banks or brokerages offer a variety of trading platforms but are limited to certain functionalities and market indexes, but changes have been made over the years to better the services provided. To mention a few online self-directed trading platforms offered in Canada and the United States by banks and brokerage firms:
These platforms can operate in accounts such as the Registered Retirement Savings Plan (RRSP) in Canada or Individual Retirement Account (IRA) in the United States. You can open an RRSP up until you’re 71 if you have earned income and filed your tax returns in Canada. In the United States, an investor can contribute up to the age of 73 before or 72 after 2019 in the IRA before making required minimum distribution payments (RMDs).
In the United States, if you contribute to a 401(K) as well as an IRA account, then that will be granted if you meet the requirements. The only difference is that you might not be eligible for a tax deduction for the traditional IRA contributions, when having both a 401(K) and IRA account.
Self-Directed RRSP or IRA Accounts:
Here are some key points about self-directed RRSPs and IRAs:
1.Tax-Deductible Contributions:
2. Withdrawals and Taxation:
3. Contribution Limits:
Self-Directed 401(k) (US Only)
In a self-directed 401(k), you, as the employee, make pre-tax contributions and have control over where to invest those funds. Unlike traditional 401(k) plans where fund managers decide investments, a self-directed 401(k) allows you to choose where your retirement dollars go. Here are some key points:
1. Investment Choices:
2. Tax Benefits:
3. Fees and Risks:
4. Disqualified Persons:
5. Prohibited Transactions:
Remember that self-directed 401(k)s offer flexibility but require informed decision-making to avoid penalties.
TFSA Accounts (Canadians):
The Tax-Free Savings Account has gained popularity among self-investors. Similar to an RRSP, it offers several tax advantages and can be set up for self-investing of securities. Here are the key points to consider:
1.Tax-Free Deposits and Withdrawals:
2.Flexible Use:
3. Prohibited Activities:
4. Overcontributions:
5. Contribution Limits:
6.Multiple TFSAs:
LIRA Accounts (Canadians):
Locked-In Retirement Accounts are accounts where your money is locked in until the age of 55.
Here are a few key notes when dealing with LIRA account:
1) Purpose and Lock-In:
2. Withdrawal Requirements:
3. Transfer and User Restrictions:
4. Tax treatment:
Non-registered Accounts:
Key take aways for non-registered accounts are:
1. Tax Treatment:
2. Flexibility:
3. Avoiding Double Taxation:
4. Investment Choices:
Margin Accounts:
Another type of non-registered account for those looking to purchase securities like stocks, bonds, and mutual funds is the margin account. This account allows the bank or broker to borrow funds to the investor for their purchases.
Here are key takeaways for margin accounts:
1. No Contribution Limits:
2. Short Selling:
3. Leveraging and Initial Investment:
4. Capital Gains Tax:
5. Maintenance Margin and Margin Calls:
6. Risk and Caution:
Whichever account you decide to open for your trading securities, just remember that each comes with its own set of Pros & Cons and Risks attached.
In this section we will examine ways and methods of picking quality stocks for your investment portfolio. There’s a lot of information on all kinds of analysis tools through free and paid apps, as well as trading platforms usually have some kind of analysis tool for investors to use as well.
Value investors will look at matrices like, the price per earnings (P/E), price to book (PB) ratio, the debt-to-equity ratio (D/E), the return on equity (ROE), free cash flow, and price to earnings to growth ratio (PEG). Reviewing this will give you a better understanding of how things are calculated based on criteria that are relevant towards making short or long-term decisions within your portfolio. Also, taking into consideration that a diverse portfolio is much more resilient in nature, but may not get you those net growth moments that many are looking for.
Valuation Metrics:
One of the easiest ways to find quality stocks without going through the whole reviewing stage is by looking at exchange-traded funds (ETFs). Once an investor has selected their securities through this method, they can further investigate valuations as mentioned above. This will give the investor a better idea as to what the markets are looking for in terms of security valuations.
Many ETFs are made up of a combination of securities that are classified from low to high risk. Generally, the most allocated portion (Highest Percentage) of the security making up the ETF is the most secure but can be lower on the growth spectrum. Looking through many different types of ETFs will give you, the self-investor, an opportunity to become familiar with the different companies involved within that sector of business. Below is an example of the iShares S&P 500 Growth ETF and the 20 securities that make up this ETF.
In the Weight (%) column, the percentage of the security is listed so that the investor can see how much it represents within the fund. This higher percentage stock is considered more secure in valuations than others. Also, as you glance through the different columns you will find the Sector column. This is noteworthy when starting out and getting familiar with securities and which sector they are classified in.
As a self-investor, it can be somewhat of a learning curve before you figure out how things are structured, such as currencies. Now, if you’re an investor in Canada looking to invest into the USA security exchanges like the Nasdaq or S&P 500. There’s what are called Canadian Depository Receipts (CDRs) that allow the Canadian investor an opportunity, to easily diversify your portfolio with investments of major global businesses as seen above in the ETF charts. These CDRs hedge against the dollar exchange rate difference of the CAD to USD dollar.
Below is an example of what you will be presented with as an option when entering the security ticker (Unique ID: NVDA).
As you can see, there’s two options presented for choice. The Cad Hedged CDR is the option for this scenario. But as you get more familiar with the currency exchanges, then you may want to purchase the Ord Shs option for hedging bets that the currency difference will work in your favor. Generally, an investor could look for as much as a percentage difference of 0% – 30% on currency deviations.
Similarly, for the residences of the United States, there are American Depository Receipts (ADRs) available, that give you exposure to Foreign Ordinaries, and the Canadian Toronto Stock Exchange (TSX). As these are great products to help you hedge your bets against currency exchange fluctuations, they still carry currency risk exposure and don’t nullify the impact of currency exchange rate changes in real-time within the markets.
Below is an example of the options presented when entering in the ticker NIO. You’ll see that the second line option gives you the investor the ability to select the NIO ADR for investment.
These are useful products that allow the investor to participate in individual assets. Remember that the currency is hedged by the bank or broker so there is a fee of approximately 0.50% per year for CDRs and 1-3 cents per share for ADRs.
There are many different sectors of business when purchasing securities and it’s in your best interest as a self-investor to become familiar with each sector and how they operate throughout the calendar year, in short-and long-term cycles.
The markets can be categorized in 11 different sectors for investment:
Information Technology – This sector is made up of technological businesses that produce items or provide services considered technology based. This includes companies such as Mastercard Inc. to Microsoft Corp.
Health Care – Businesses within this sector consist of medical supplies, pharmaceuticals, and scientific-based operations for the improvement of the body or mind. Companies’ cannabis based like Canopy Growth to Johnson and Johnson are examples of businesses within the sector.
Financials – The financial sector is made up of all companies involved in finance, investing, and the transfer or holding of currencies. Companies like CIBC or VISA are good examples of those making up this sector.
Consumer Discretionary – This sector is deemed as products or services that are not essential for survival. Many luxury products and services such as jewelry, sporting goods and resort vacationing are grouped together. Businesses like Amazon to Starbucks are good examples of such companies found in this sector.
Communication Services – Companies that strive to keep people connected in some forms are found in this sector. Internet providers, phone plan providers, and media sources such as AT&T and Meta are examples of businesses making up this sector.
Industrials – There’s a wide range of businesses that make up this sector that provides airline, railroad, and military products and services. This sector has 14 different industries but Aerospace & Defense along with Construction & Engineering make-up the biggest portion within. Companies like Boeing and SNC Lavilan are examples of those to be found in this sector.
Consumer Staples – This sector is made up of products that provide a necessity for life. Food and beverages along with personal care products can be found in this sector. Procter and Gamble to Loblaws are good examples of companies that can be found within.
Energy – The energy sector consists of all companies that explore, drill, and extract consumable fuels. Companies that refine and manufacture equipment for the process can also be found within. Businesses like Chervon to Enbridge are examples of companies making up this sector.
Utilities – Companies that provide or generate electricity, natural gas, and water for households and businesses make up this sector. Businesses like Brookfield Renewables to American Water Works are examples of those within this sector.
Real Estate – This sector is made up of Real Estate Investment Trusts known as REITs as well as other companies involved in the sale or purchase of real estate. Businesses like REMAX and American tower are examples of those found here.
Materials – This sector consists of those that provide raw materials like copper, iron ore, and wood for other sectors. Mining businesses like Teck Resources and International Paper are examples of such companies found within.
As you make investments in securities initially, you may find that most or all fall into only a few sectors. This is ok at first, but just keep in mind that each sector has winners and losers during different cycles, and keeping funds dispersed among each will give you the self-investor more diversity within your portfolio.
This type of trading can be used by holding the security outright within your portfolio or by using the Options method that is reviewed in Part 6. Securities used in this method are those that have a historical pattern that can be depicted throughout cyclical market trends such as growth, volatile, and correctional periods. The strategy involves identifying the overall direction of the index and making security trades based on the same direction derived.
Technical trading uses moving averages and trends to understand the market’s sentiment as a fundamental principle for generating growth in security contracts. Furthermore, it should be noted that technical trading uses statistical analysis of historical patterns, supply and demand evaluations, trading volume and prices, rather than fundamental business valuations from financial statements, to capture gains from security investments.
The following are examples of common strategies used:
Trend-Following: Tools like moving averages and trendlines along with support bands can be used to determine the direction of the index(s) or securities.
When studying moving averages of a security, one should investigate the trends of the security’s history to better get an idea of how the long-term and short-term patterns are developed in an advancing, declining, and volatile market. Long-term trends are generally from 50-to-200 day moving averages and short-term trends are generally from 10-to-50 day moving averages. It should be noted that an investor doesn’t have to stick to the rule of thumb and use a fixed 10-or 50-day moving average on your app or trading platform. Once an investor becomes familiar and confident of the moving trends, he, she or they can formulate their own long-term and short-term trends on a chart.
Once you have decided upon the long-term trend, say it’s 90 days before changing direction. Then it can be set as your indicator for how the security typically reacts during market cycles before changing direction again. You can also have cyclical long-term trends for growth, volatility, and correctional periods while the same security can vary in daily moving averages as well. This can also be the same for the short-term moving averages throughout each cyclical period.
However, moving averages typically work so that long-term averages are set to cover the cyclical cycle currently taking place. Let’s say, for simplicity the long-term average is 100 days of growth before the direction of the security changes direction. Now as we further drill down into the charts to determine the patterns and trends, we can set a short-term trend which we’ll say is 20 days. The pattern that you are looking for is when the short-term trend line dips towards the long-term trend line. In this example the 100-day growth trend is further dissected into 20-day short-term growth cycles followed by a period of correction in between each 20-days of growth. The period of correction is another daily average that can be depicted from the charts and set in-between each 20-day moving average. These are generally short periods of time or days that the security takes to decline and then advance again. Once the daily averages have been set, it’s time to purchase the security once the 20-day moving average crosses above the 100-day moving average line. This security is now considered in the growth portion and will be held by the trader until it reaches its peak apex point, towards the declining movement of the 20-day cycle for that security.
The image below better shows this illustration, of a longer-term SMA 30 represented in green. A SMA 10 is indicated with a purple line and a drawn in SMA 15 is represented in orange. As the S&P 500 was in a growth cycle from January to April you can observe the SMA 15 cross at the beginning setting the trend. Furthermore, the SMA 15 dips but does not cross the SMA 30 creating a 15-day cycle throughout the growth period from January to April.
As the growth cycle loses momentum, there is a large bearish signal in volume that suggests a change in trending. The added bearish sentiment following further creates the turn in direction and we see all SMA lines cross indicating the reversal is taking place. This is followed up by a downtrend in the S&P 500 index until sentiment turns bullish again.
There’s still risk involved that the security behaves erratically, and the cycle isn’t completed as expected. To protect yourself from such unexpected situations it is recommended to set a stop loss, or a stop limit order to protect your bottom line, so that extreme losses are prevented from occurring. It should be noted that if a stop loss or stop limit order is set, it will have to be removed before executing the sale of the contract manually by initiating a sell order, or else the sale of the contract will be triggered by the stop loss or stop limit order settings.
Momentum: In momentum strategies, investors are looking for securities that are moving at a fast pace, with a lot of strong volume behind a certain direction to further capitalize on the trend taking place.
Traders can use a combination of tools online or in an app to follow the volume measurements in the indexes and securities of interest. Most charts will indicate a green bar for a positive signal (rise, bullish sentiment) and a red bar for a negative signal (decline, bearish sentiment) in the indexes or securities being viewed. A combination of red and green at a consistent measurement of volume, generally indicates that the security will continue to move in the direction anticipated. If the combination goes mostly red, then this suggests a Bearish (downtrend) position and the security or market index will start to diminish in value.
A combination of mostly green suggests a Bullish (uptrend) position and the security or market index will start to increase in value. Subsequently, a large spike in a red or green indicator followed by supporting red or green indicators signal that a reversal is taking place. This is more evident when studying a long-term chart of the security or index in viewing.
Mean Reversion: This strategy is based on the idea that prices will revert to their historical average. Investors look for securities that have deviated significantly from their average price and bet on a return to this price over a predetermined period.
Investors generally buy when the price of the security is below the historical average (Oversold) and sell when the value is above (Overbought). But investors can inverse the strategy as well, to take advantage of a declining momentum in securities.
Breakouts: This strategy involves identifying key levels of resistance or supporting bands. Investors make trades (positions) when the prices break through these levels, as they’re a signal of a new trend developing in a particular direction.
Chart Patterns: Investors use patterns like flags, double tops/bottoms, and head and shoulders to make future predictions with this strategy. The patterns used are based on historical price behavior and identify potential continuation or reversal movements.
Each strategy has its own set of rules for entry and exit points. Investors use and often combine strategies together to improve their odds for successful trades.
Wave theory in trading, particularly the Elliott Wave Theory, provides insights into price movements based on investor psychology and sentiment. Here’s an explanation on how it works:
Elliott Wave Theory:
Impulse Waves:
Rules (unbreakable) that they follow:
a). Wave 2 cannot retrace more than 100% of wave 1.
b). Wave 3 is usually the strongest and can never be the shortest among waves 1, 3, and 5.
c). Wave 4 cannot overlap wave 1.
Corrective Waves:
Remember, understanding corrective waves helps investors anticipate market reversals and adjust their strategies accordingly.
Wave analysis doesn’t follow rigid templates; it offers dynamic insights into trend dynamics. Investors use it alongside other technical tools to make informed decisions.
The whole premise of this trading technique is to buy a stock during a dip and sell it once it reaches its peak potential before the cycle repeats over again. First and foremost, it is crucial to find a stock pattern that is cycling between a low and high point. Once the two values have been determined and all indicators are flashing a repeat of the cycle, making that leap of faith to make a stock purchase is essential in capturing these gains. Once you have confidently made your position, there are two things that can happen:
This is nothing to be alarmed about, if experiencing the latter outcome, for it is almost impossible to capture the bottom perfectly which leaves you exposed to a possible decline after purchasing. The best thing to do is not to panic and allow the stock to work its way back towards the top value or allow the tools (E.g. Trailing Stop Limit) to protect your investment from extreme losses.
The image below illustrates how to establish upper and lower support lines to identify the highest and lowest values for conducting trades within specified ranges.
There are two ways that a self-investor can now capitalize on this repeated cycle. You could either set a Limit Order sell or Stop Order sell to activate a market order to capture the growth generated from purchase to sale of the contract.
Limit Orders can be used once you purchase your stock of choice. Setting up a limit order to sell a stock at a specific price is done by putting in a value greater than the initial entry price. For example, if the stock costs $50.00 and you have a top value of $60.00 being reached, then setting a limit price of $58.00 would trigger the sale of that number of securities entered in the contract.
Similarly, the Stop Order works the same as the Limit order in this scenario as well. There are two differences though between the Stop and Limit Orders. A Limit Order uses a price to symbolize the least acceptable amount for a transaction to occur, whereas the Stop Order uses a price value to trigger an actual order when the stop price has been traded. Therefore, a Limit Order, when initiated, could sell partially or not at all, whereas the Stop Order will fill the contract, but it could be at a different price than specified. This is why it’s important to set the top and bottom values at a slight deviation from the actual values determined. For example, if the security that you wish to buy and sell is trading between $10.00 and $20.00, then setting a top value of $18.00 and a bottom value of $12.00 will make the odds of your position more likely to come to fruition. If you start to experience a situation where the top or bottom value no longer triggering your positions taken, then re-evaluation of the security will be required to find out if there’s some underlying reasoning behind why it’s no longer following the pattern as anticipated. The most common reason for this occurrence is that the markets are ending their volatility cycle and are projected to move upward, indicating a growth cycle (Bull-run) or downward, indicating that a correction cycle is starting (Bear-run).
Some platforms have a Stop/Limit configuration setup. This is simply executed by entering in a Stop price higher than the Limit price to start the initiation process before hitting the sales price target with the limit value. Other platforms could also have a percentage number that you need to determine, which will require you to calculate the value needed to be entered. For example: ($58 / $50)-1 = 16%, this would be entered in as the Limit or Stop value to initiate the transaction once the securities price is reached. In the case of a combination entry, you could set the limit around $57.00 and the stop at $58.00 to make an executable trade around your targeted price.
As in the case of setting up a value to execute a trade at a higher value, you can also do the same for a lower value as well. If you’re worried that the value of the stock could collapse after purchasing, you can set up a Stop Loss order. If you were to buy at $50.00 and wanted to protect yourself in case of market instability, you could set a limit at $45.00 and the stop at $43.00, giving back just over 10% of the total value invested. This is somewhat of a catch twenty-two, especially if the value dips and then goes back up as expected. It’s prudent that one protects their bottom-line but doesn’t set the Limit or Stop so thigh as to activate the sale of the contract prematurely, resulting in a net loss overall.
Similarly, you can also set up a Trailing Stop Limit to protect your investment. With this tool one can set an estimated Limit Price and set the Trigger Delta value. The trigger Delta is the amount by which the order is following the securities current market price. It will determine the price to trigger the order if the market starts moving in an unfavorable direction. This is a great way to protect your investment along the way but could result in undetermined gains and losses in the process.
It is important to keep notes on any stock news that may cause stock deviations, as well as following along with what the index is doing in terms of potential bubbles being created or scares of index crashing on the short-term. Being caught in any of the two situations could result in undetermined losses in your positions taken.
So how is it that one finds or stumbles across a security with such characteristics? It’ll take time and prudence to find them, but the key is looking at the index(s) and determining which are volatile at the current time. This means an index that’s trading sideways more than up (Growth Cycle) or down (Correction Cycle). Most stocks will follow the index that they reside in, with a few exceptions, which will be covered in later training sections. Also, self-investors can use the VIX (CBOE Volatility Index) index to make a better judgement if the markets are volatile in nature. The VIX index will rise in high market volatility and lower in low Volatility markets. Using the VIX index is another great way to determine the volatility of current markets and securities. More precisely, the VIX index inversely mimics or represents the market’s expectations for the relative strength of near-term movements of the S&P 500 (SPX).
The VIX index, also known as the CBOE Volatility Index, measures the market’s expectations for volatility over the next 30 days. Investors often label it as the fear gauge because it tends to rise when the market is experiencing significant declines and investors are bearish on securities and the markets.
The VIX is calculated using the prices of the S&P 500 index options. It aggregates the weighed prices of these options over a wide range of strike prices to estimate expected volatility. As the VIX index increases in value it signals higher expected volatility or fear in the markets, which corresponds to increasing uncertainty. Whereas, if the VIX lowers in value it suggests lower expected volatility and a more stable market or bullish sentiment.
The image below further represents the illustration of the VIX index reactions to the S&P 500 trajectory. The S&P 500 index is represented by the green line, while the brown line represents the VIX index. The VIX index is overlayed on the S&P 500 index to further show the inverse correlation between the two indexes.
Investors can trade various financial instruments based on the VIX, such as:
These investment tools are useful for hedging against market downturns or for speculating on market volatility.
As this seems all straightforward, there is a process called the VIX Contagion that gets investors somewhat confused at times. This process refers to how volatility can spread across different markets and security classes, much like contagion in a biological context. When the VIX rises, it indicates increased market fear and bearish sentiment. This often happens when significant market downturns or economic uncertainty develops. High VIX levels can lead to risk-averse behavior throughout investors causing a sell-off of high-risk securities, leading to further declines in security prices. As investors pull out of risky securities, market liquidity can dry up. The lack of liquidity can exacerbate price movements and create a spillover effect on other markets and securities. This can cause further increased volatility in commodities, bonds, and even international markets. VIX ETFs and ETNs can sometimes be highly volatile during this process and may not always move in the intended direction of the VIX index, leading to unexpected losses or gains.
We will explore how the Options work when participating in Call or Put contracts on securities in this section. In finance, Call and Put options are types of contracts that give investors specific rights to buy or sell an underlying security known as derivatives. A derivative is a financial contract whose value is based on an underlying security, such as stocks, bonds and commodities. Options are a type of derivative because their value is derived from the price of the underlying security.
A Call Option gives the holder the right, but not the obligation, to buy the underlying security at a predetermined price (Strike Price) within a certain period of time. Investors will typically buy call options if they expect the price of the underlying asset to rise in value.
A Put Option gives the holder the right, but not the obligation, to sell the underlying security at the Strike Price within a certain period of time. Investors usually buy put options if they expect the price of the underlying security to fall in value.
Options investors will investigate the trend of indexes that securities reside in and get a better idea as to what direction the market is trending, to speculate on the future trajectory of different securities. As mentioned, instead of outright purchasing security shares, option contracts give the investor the opportunity to pay a lower up-front premium, which is typically 100 shares of the underlying stock.
There’re four types of Option Positions that an investor can use from their bag of tools to make a position. Buying a Call, Selling a Call, Buying a Put, and Selling a Put are the four types used by investors. An investor can use the Buy a Call to give them the right to buy a security at an underlying (lower) specified price, then the market value of that security. A Put is the right to sell a security at a given price. This allows the investor to buy a Put, enabling them to have the ability to sell it later at a certain price. While all this is taking place, it’s the option writer (seller) that collects the up-front premiums, for entering the contracts with the buyers.
So, when should a self-investor use the Options tools provided when investing in the markets? It should be noted that option strategies are best used in swinging markets, because it’s the spread between entering and exiting the security that makes the investor profits. Also, when security prices get elevated and price out many from affording them, options give investors the possibility to still buy and sell those securities at a lower buy in price. Whereas it’s the premium (Buy in Price) collected for writing the contract that the Option Writer (seller) receives their profits from.
In options trading, the strike price (also known as the exercise price) represents the price at which an investor can buy or sell a derivative contract. Specifically:
Options contracts list various strike prices above and below the current market value. For example, if a stock is trading at $100 per share, a $110-strike call option would allow the holder to buy the stock at $110 on or before the contract’s expiration date. If the stock never reaches $110, the call option may expire worthless. However, if the stock rises above $110, the option can still be exercised to buy the stock at the strike price to make a profit.
Self-Investors should evaluate and consider a strike price that’s best for their risk tolerance. A strike price for a call option may be considered at or below the stock price for lower risk tolerance, whereas high tolerance risk traders may pick a strike price above the stock price, if confident that the security will move higher before reaching the contract’s expiration date. Like many things, the higher the risk taken, the greater the profit or losses will be for that contract once fulfilled.
There are two types of strategic positions taken when dealing with option contracts, Long and Short.
Long Option Contract:
This strategy incorporates two types of options when a buyer holds a long option contract.
Long Call Option:
Below is an illustration of the Long Call option
explained above:
Long Put Option:
Below is an illustration of the Long Put option
explained above:
In summary, long option buyers profit from favorable price movements while risking only the initial premium. A Long Call will profit the buyer once they sell above the strike price and premium paid for the contract before the expiration date. Whereas a Long Put will profit the buyer once they sell below the strike price and premium paid for the contract before the expiration date. Keep in mind that options can expire worthless for the buyer if the security’s price doesn’t move as expected, then the premium paid by the buyer is lost to the seller.
Short Option Position:
When a buyer engages in short option contracts, they become the seller (writer) of the option contract. Here’s how they can potentially make money using this trading strategies as an investor sells an options contract, anticipating that the price of the underlying asset will decrease. Here’s how it works.
Short Call Option:
Below is an illustration of the Short Call option
explained above:
Short Put Option:
Below is an illustration of the Short Put option
explained above:
Remember, short options involve risks, and they’re typically used by experienced traders. A short call without owning the underlying shares is called a naked short call, while a covered call involves owning the shares to limit losses.
Let’s dive into the concepts of naked short calls and covered calls in option trading:
Naked Short Call (Uncovered Call):
Covered Call:
Remember, naked calls are riskier, while covered calls provide some downside protection. Top of FormBottom of Form
This is different from Shorting (Short Selling) securities. As an investor you would borrow say 10 units of a security from a broker and then sell the units at $100. Now, if everything goes as planned, you buy back those 10 units at $50 (Lower price) and return the borrowed units back to the broker. You would have made a profit of (10 x 100) – (10 x 50) = $500.
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