Securites (Stock) Investing
The Club Members work as a team to speculate on security (stock) investing.
Whether it be for the terms of Intra-day (one day), Swing-trade (days to weeks), Short-term (weeks to months), Intermediate-term (months to years), or Long-term (Years), we constantly filter, and scope out the entire financial marketplace, and place candidates on our radar screens.
All members vote unanimously that a particular investment/trade strategy looks lucrative, at a particular buy or sell price. A buy or sell target price is then agreed upon from the members. When all members have verifiably concurred, the designated member will place the order (a buy or sell order is executed).
We then all continue to monitor the position carefully, and set a profitable target sell price, and/or target stop-loss price (exit strategies). We also can make a unanimous vote at the beginning of every trade, to automatically set 'trailing stop-losses' for a certain amount or percentage, lower than the current price (or higher if a short position), to protect our profits and/or reduce our losses. We can also unanimously set a target sell price or percentage for every trade, (for example, to make things easy, we all just agree that for every stock purchase, the position must be sold as soon as it reaches a certain price or profit percentage). The policy we set can vary depending on the length of time the position is held (intra-day, days, weeks, months, or years). We can also have meetings and vote to experiment with different strategies for a set amount of time.
A very exciting way to profit is in the Intra-day (day trading), where all members monitor their computers, and are connected VIA phones, Instant Messages, and the like, to make a unanimous decision to buy and sell securities throughout the day (no holding positions over night). If the Club has the minimum required by the Security & Exchange Commission, of $25,000.00 for regular ongoing day trading, then it can enjoy making anywhere from 1 to 50 or more trades in the same day! Otherwise if the funds are less, it can only make three (3) day trades per week. The rest would have to be for the longer terms as mentioned, until the club's capital increased to $25,000.00.
All members will constantly strive to obtain the enjoyment of utilizing the most sophisticated trading account(s), stock analyzing software platforms, and internet data, to have the best possible advantages in producing profitable trading investments.
The minimum to join is $5,000.00. Each investment group at present, is five (5) members maximum, however, custom groups can be set up upon request of members. As mentioned, the Club shall have areas of securities investing for the Intra-day, Swing-trade, Short-term, Intermediate-term, and Long-terms. Members can invest in any of the terms however; all investment decisions must be made collectively among the members, and will be done so VIA documented recorded conversations and/or by other means.
As for funds management, all members must give full consent to the Banking Trust Fund Officer, before funds can be withdrawn from the Trust Account. In the event that all members do not agree to a withdraw, the Banking Officer directs and oversees the entire operations of the club to cease at once and be scheduled for hearing before a licensed mediator, picked at random draw before all the members, as to any disagreements/discrepancies regarding the Club Funds.
This caveat will always be in place for the protection of the Club's integrity, and stability.
Regardless of the area of investment (i.e. stocks, real estate, etc.), profits and losses are proportioned per percentage to the amount of capital each member has in the Club Trust Account.
The reasoning of smaller groups impresses upon the logic that quality will prevail over quantity. The club doesn't need an enormous amount of combined capital to function. Therefore, even if we only prefer to have no more than five members total, per group at $5,000 per each, that totals: $25,000.00, which is ample capital to build and keep building the pot for all four members to profit from.
If also one of the four members decides to put in more capital, say another $10,000.00, then of course the entire Partnership will enjoy the Buying Power of $35,000.00 cash, and even more on margin with stocks. Of course, that member will gain a higher profit ratio as well.
A major understanding in securities trading is that more Capital, enables us to take advantage of more trading opportunities.
For a brief example of this scenario, the typical active stock trade is in quantity of 1000 shares. Now, let's say a four member club has a total cash buying power of $25,000.00 ($5,000.00 each). Next, whether we are all inside a networked chatroom, on the phone, or on the beach with our laptops, we find a great buying opportunity for say Dell which is currently at a great target buy price of $20.00 per share. Let's now also assume that the account provides a 4-to-1 margin for intra-day and a 2-to-1 for over night. In this instance, we would have enough capital Buying Power, to afford a purchase of the 1000 shares at: $20.00 per share (a $20,000.00 purchase), because, $25,000.00 multiplied by the 4-to-1 intra day margin equals: $100,000.00 (buying power). In fact, the group wouldn't have to even use Margin since $20,000 is not over the $25,000 Maximum Buying Power of the group. It is always preferred to buy on straight cash instead of margin, to avoid additional risk.
This is a basic example in how Buying Power, effects market profiting opportunities. The more capital available, the more market the group can speculate on (and the market is massive, with continuous opportunities no matter what the DOW is doing).
Of course, once the investors' cash account grows large enough, margin will be less needed. Margin is simply a financial loan on the available cash in the account.
As for working the Intraday 4-to-1 and the 2-to-1 margins, hence, a major focus in money management that helps keeps investors safe, is the simple calculation of what they can and cannot afford to do/risk. Therefore the holding of any stock positions for more than a day, simply has to be calculated within and around the Club's buying power. Manipulating between 4-to-1 and 2-to-1 is quite advanced for an Investment Club. However, that is what progress and innovation is all about, hence the true vision of this partnership.
A very important rule of trading tells us that we must obey our own predetermined procedures. Such as making it an absolute certainty that if the stock drops more than 3/16 of a point it will be sold immediately thereafter, securing a loss of approx. .25 cents instead of becoming married to our theories of speculations thus, holding the stock until it takes a $3.50 per share bite out of the account. This frame of mind would keep us in the game and without having to face a margin call at all.
Early 'day traders' went into this financial battlefield without any such considerations of these rules or causes and effects. While they pulled the mouse trigger and stared at numerous mesmerizing price fluctuation opportunities, lack of essential money management was many their demise.
When all the Rules are followed, more trades are profitable, more losses are minimized, and the concept of 'day trading' can become a new standard in one's mind-frame of a long-term career, supplemental or additional stream of income, and/or a strong sector of a diversified portfolio.
For application, please contact the Club President: Jon S. Kahlkopf - Tel: 352-454-1127.
