I’m way late… I couldn’t fall asleep last night to save my life. I guess even though I was short on sleep, the nap I took during the day just killed me. That’s how it works with me, has my whole life, but I thought that it would be different last night because I was really sleep deprived and super exhausted, but nope: Come bed time, I couldn’t sleep. I just… lay there (I always forget the proper grammar for the past tense. Feel free to remind/correct me). I spent an hour like that before giving up. Then I got up and tried to be productive until I got tired, but there wasn’t much to do without waking people in the wee hours, so… I ended up doing the best I could and fighting off the strong desires to look at sports news and regular news and whatnot.
Gratefully, I actually did really well!
Anyway, it’s late tonight again (1:11 a.m. already), and I’m… hopefully tired, but I’m not feeling so hot. I’m discouraged. I’ll get to that in a minute.
Part of the reason I’m late is that I had a really good conversation with my mom, and that was well worth it. Then I worked on business stuff to be ready for tomorrow and tax stuff because May just ended, and I have all the monthly stuff to complete. That was all fine, but I’ve been working on a plan to be more successful in stock trading, and I learned something today that I had no idea about and am feeling… taken advantage of? That’s probably not right but… kind of?
Going back over my green day trades, I noticed (in fact, I noticed while I was trading) that my total account balance wasn’t high enough to reflect all my gains. That was bothersome. But it wasn’t until I decided to look into it today that I realized that, as an example, I actually made $683.54 in profit but I paid about $120 in fees, so my actual gains were only $564.26 😕
I had no idea.
Going back through my trading history, I realized that both Fidelity and TD Ameritrade were charging “regulatory fees.” So, though it’s zero commission trades, there are still regulatory fees the SEC charges, and good gravy, the numbers seem super tiny per sold dollar of share, but when you multiply them over millions of dollars worth of stock that’s bought and sold, golly, it adds up fast. I didn’t realize it at all. Nearly 20% of my last green day winnings were lost in fees for the SEC.
Wow.
So… I learned that today.
I’ve been paying fees I didn’t really understand, and TD Ameritrade’s fees are about 5x what Fidelity’s fees are, which… doesn’t make sense, as they’re government fees, so… why is TD Ameritrade a heck of a lot more expensive?
Anyway, so that was a bummer realizing that it was more expensive to trade than I thought. Guess the government has to get their mitts on pretty much everything. They take 20% of my gains in fees and then an additional huge chunk for income tax.
And in that vein, I still haven’t figured out whether one pays tax on the cumulative difference in profit/loss on stocks for the whole year or on each trade. For example, during my trading with Fidelity, I had $17k+ in gains and $20k+ in losses, but that’s on dozens and dozens and dozens of different stocks. You’re allowed to claim up to $3k in losses, but for the gains, do I pay tax on the gains for each individual stock (for example, let’s say I make $1000 on Tesla stock, $3000 on NIO, $2500 on XPEV, and $1500 on MULN. That’s a total gain of $7k. But let’s say I lose $8k on AMZN stock. I’m only allowed to claim a max of $3k in losses, but do I have to pay tax on the $7k in gains and can only claim the $3k in losses, such that even though overall I lose $1000, I still have to pay income tax on the $7k because it’s from different stocks, and so it’s a different appreciable asset?
That’s the big question. If y’all happen to know the answer, I’d be grateful to learn. Haven’t found the answer yet in all my learning.
Anyway, so I’ve been trying to prepare to be a more effective, safer trader. If you remove the huge loss days from my equation, then I’m actually in the green, and rather decently so (thousands). Those huge losses came for one reason. I averaged down in order to try to not lose but ended up losing huge because the stocks just kept going down. Had I stopped out, instead of losing $12k in those four huge loss days, I would have probably lost about $1200. So… yeah… hindsight. Don’t average down. It’s worked as a strategy for me before, but when it doesn’t work, ouch. And that’s what I’ve learned, both from others and for myself. It’s great when it works, but eventually, you’re gonna get cooked, and I’ve definitely gotten cooked by it, as y’all are well aware.
So… as I work to be a better trader, I have some rules that I think will serve me well.
- NO AVERAGING DOWN… EVER! Take the loss, and move on. Instead of being down $8k in my great trade experiment, I’d have been well into the green, enough so that it would be enough to live on.
- Max single trade loss $75. If I start a position, and it goes south, the moment it reaches a $75 loss on that individual trade. I sell and get out, immediately. I don’t wait and hope the price goes back up. I cut the loss, and I let it go, and I look for a better trade.
- Max day loss will be capped at $300 (equivalent of four bad trades in a day). If at any point, my daily totals dip down to $300, I walk away. The end.
- I stop trading at 10 a.m., with the only exception being that I’m in the middle of a trade/trade setup. The point of this stock trading is to give myself an income to live on that I can get early in the morning while leaving the rest of my day to do humanitarian, world-bettering stuff.
- On uptrend stocks, no risking catching falling knives, wait for the first green candle to make a new high.
- On downtrend stocks that might be reversing, wait for the second green candle in a row (unless it’s going parabolic, obviously).
Anyway, those are some solid starter rules, I think. A lot of trading will come down to just getting a feel for it. I’ve got a lot more learning to do before I feel like I’m a good bit more confident.
Well, that was a lot more than I intended to write. 🙃 I haven’t even really gotten much into the day yet. For some reason all the fee and tax stuff has me a good bit discouraged, so I’ll get my butt in bed quickly from here to hopefully sleep it off and start fresh. No reason to be down about it. It is what it is.
So… I spent part of the morning doing stock stuff. Then I drove my BMW to a body guy that Miguel used for work on one of his cars, but the guy was a no show, so we rescheduled for tomorrow. Hopefully, he’ll be there tomorrow.
I came back home and started working on my 2021 business property tax amended submission and my 2022 business property tax stuff (due today). I also spent a fair bit more time on stock stuff.
After getting the paperwork done for the property tax stuff, I went to tire trax to drop off a tire and rim, so I have a spare tire for my work van. Then I went to the DMV, and as luck would have it, I think I probably only waited a total of 7 minutes. A 5-minute wait to get all the assessment stuff done. A zero-minute wait to get the second part of the assessment stuff done, and then maybe a 2-minute wait to get the new truck I bought registered, as well as the new stickers for my other vehicles. So… that was nice.
I stopped off at the junk yard to pick up the fender they were supposed to have removed for me, but I guess their part puller had someone close to him get in a serious motorcycle wreck, so he’d left town and hadn’t pulled the fender, so it wasn’t ready for me. I guess they’ll call me when they get it pulled.
From there, I did a prepurchase inspection of a 2021 GMC Sierra truck that was a lot cheaper than it should have been. It was at a dealership in Springdale, and it’s history showed clean title, no worrisome history, but it had bounced around from dealership to dealership, oddly, without selling… and this in an insanely hot car market.
It should have sold for top dollar ages ago.
The gentleman was driving up from Little Rock (4 hoursish away), and I told him that the bouncing around and the low price were red flags to me. When I got there, I found that though it had a clean title and no accident history, it clearly had been in an accident. The body gap between the driver’s fender and driver’s door was way off.
So… that was a total deal breaker for my customer, as well it should have been. Can’t risk that. Unknown accident. Poorly done body work. Who knows what other problems it might have.
Only did two cars today, and the second one was a 2012 Chevrolet Sonic (never buy any small chevy car, Cruze, Sonic, etc. They be junk). And hers… was definitely junk. She’d been in multiple accidents, and the hood front was smashed in badly, the hood was held in place with a ratchet strap…
It was… in rough shape.
I got there to fix a coolant leak (not knowing the car was smashed), and I found that the leak was in a different place than they thought it was. It was a broken hose that was broken off inside the thermostat housing. I had the housing but not the hose (specially-molded hose, so I couldn’t just cut a section and put it on). Given everything I was seeing with the car, I suggested she think twice about her plans. I gave her a quick rundown of all the things that I could see that were wrong with it and suggested she think about what she might want to do before paying me or anyone else to fix the coolant leak when there were so many problems.
After that, got gas and headed home, as the last job postponed. It’ll be a really busy day tomorrow. I’m overbooked for tomorrow, and it’s gonna be a rainy day, so… we’ll see how it goes.
Home. A little dinner. Great conversation with my mom. Business planning and paperwork. Journal.
Made progress on the Transition list, as I’ve already mentioned. Not so noticeable today, but still progress (oh, I also got in touch with a junk yard that might have an engine for my Dodge truck. They’re going to pull it out of the truck and test it to see if it’s good. If so, they’ll call me. I’m hoping it’s solid both because it’s a good, low-mile engine (80k miles) and because it’s close. Just an hour away or so in Missouri, whereas many of the other ones are a lot farther away.
Gosh, almost 2 a.m. Goodnight, all.
Lift the World
~ stephen
Lift the World 