Stressless Trading Method And Extra Cash On A Spreadsheet || Extra Cash || #trading

Summary

This script presents a strategy for generating steady income through frequent stock trading. Starting with an initial investment of $100,000, the approach buys shares as the price drops and sells when it rises, leveraging stock volatility to generate extra cash. By making regular trades based on price fluctuations, the investor profits from small movements in stock prices, regardless of overall market trends. The concept emphasizes using leverage and managing cash flow to maximize returns while maintaining a legal, sustainable model of generating profits in the stock market.

Takeaways

• 😀 The initial scenario involves an investor with $100,000 in cash looking to invest 50% of it ($50,000) into stock priced at $50 per share.
• 😀 The investor calculates the number of shares to buy based on the total cash available and the stock price, which is 1,000 shares in this case.
• 😀 After purchasing the shares, the remaining cash is calculated, and the shares owned are tracked.
• 😀 The account value is calculated by summing the total cash and the value of shares owned at the current stock price.
• 😀 Every time the stock price drops by $1, the investor buys 10 additional shares, leading to increased exposure and ownership.
• 😀 The average purchase price of the stock decreases as more shares are bought during price drops, leading to a more favorable cost basis for the investor.
• 😀 The total cash needed for future purchases is adjusted according to the stock price and the number of shares being bought.
• 😀 The investor may leverage their position by increasing the number of shares bought per price drop, using extra cash in the account to support the purchases.
• 😀 The concept of extra cash is introduced, referring to the difference between the cash available in the account and the cash needed for future trades.
• 😀 As the stock price fluctuates, the investor's account balance and extra cash fluctuate, allowing them to generate a steady stream of extra cash with frequent trades, regardless of market direction.

Q & A

What is the initial investment and how is it allocated in the stock trading strategy?

The initial investment is $100,000, and 50% of this amount is allocated towards buying stocks, which totals $50,000.

How does the strategy involve buying additional shares as the stock price fluctuates?

The strategy involves buying 10 shares every time the stock price drops by $1. This allows the investor to accumulate more shares as the price decreases.

What is the purpose of calculating 'extra cash' in this trading strategy?

The 'extra cash' is calculated to determine the difference between the cash in the account and the cash needed for future trades. It represents the money that is available without being required for any upcoming trades.

How does the number of shares owned change as the stock price drops?

As the stock price drops, the investor buys more shares, which increases the total number of shares owned. For example, when the price drops from $50 to $49, the investor buys additional shares.

What happens to the value of the account when the stock price drops?

When the stock price drops, the value of the account decreases because the price of the shares owned is lower. However, the extra cash can still increase if the investor purchases additional shares.

What is the average purchase price and how is it calculated in this strategy?

The average purchase price is calculated by dividing the total amount spent on shares by the total number of shares owned. As the price drops and the investor buys more shares, this average price decreases.

Why is it important to calculate the 'cash needed' for future trades?

Calculating the 'cash needed' for future trades ensures that the investor has enough money to make the necessary purchases as the stock price fluctuates. It helps in determining how much money is available and how much is needed for additional trades.

How does the strategy help in generating extra cash even when the stock price fluctuates?

The strategy generates extra cash by buying shares at lower prices when the stock price drops, and selling them at higher prices when the stock price rises. This creates a steady increase in extra cash through frequent trading.

What is the significance of the $1,000 extra cash per month mentioned in the strategy?

The $1,000 extra cash per month is the result of making 50 trades in a month. Each trade generates a small amount of extra cash, and with 50 trades, this accumulates to $1,000 in extra cash.

How does this strategy compare to Bernie Madoff's fraudulent scheme?

The strategy outlined is legal and based on actual stock market fluctuations, unlike Bernie Madoff's fraudulent Ponzi scheme. Madoff promised consistent returns that were not based on real market behavior, while this strategy generates returns through legitimate trading practices.