NFTs or non-fungible tokens have gained a lot of momentum in the last few months. Whether it’s because of the digital art, the technology behind them, the money-making potential, or a simple case of FOMO, people can’t get enough of them.
Each day, we wake up to stories of artists and celebrities buying and selling NFTs for insane amounts. Case and point? Eminem recently shelled out 123.45 Ethereum (currently worth over $400K) for a Bored Ape NFT — and that’s not even the most expensive one in the market.
As someone who’s crawling herself out of student debt and on a budget, paying six figures for a digital asset is simply out of the question.
But are all NFTs that expensive? Or is there a way to start small?
I talked to NFT trader investor, consultant, advisor, and founder Ish Verduzco to find out, and, to my surprise, his answers were very promising.
What’s Ahead:
Do you have to be rich to invest in NFTs?
Last March, digital artist Mike Winkelmann, better known as “Beeple,” made headlines when an NFT of his work was sold for a record-breaking $69 million.
Then, we saw Snoop Dogg and Grimes buying and selling NFTs for six and seven figures, while Paris Hilton joined forces with Bill Ackman to back a $300 million NFT Foundation.
With figures like that, it’s easy to think that NFTs are some sort of exclusive investment that only the rich can afford. However, that couldn’t be further from the truth — at least that’s what both Verduzco and the data say. Verduzco says:
“Yes, there is some level of barrier to entry at the moment. But I wouldn’t say that they’re for the ultra-rich either…I think there’s an opportunity to get in.”
What makes NFTs more expensive than your average investment is that most of them are minted through smart contracts that live in the Ethereum blockchain, which Verduzco says is one of the most expensive ones, partly due to the gas fees.
Gas fees are basically the transaction fees of the Ethereum network. These fees are non-refundable, and must be charged to cover the costs of the energy used by the computers when validating and recording each NFT transaction. Verduzco says:
“To give you a very quick overview, it can cost like $50 to a few $100 just to transact, plus the cost of the NFT itself.”
So, how much money do you need to start investing in NFTs?
A recent study by Canadian concept artist Kimberly Parker, which analyzed public API data from sales on popular NFT marketplaces, like OpenSea, Nifty Gateway, Rarible, SuperRare, and MakersPlace, found that most NFTs are actually sold for under $200.
That’s right, you don’t need six figures — not even four figures, to own an NFT.
Verduzco says that a good amount to get started would be $500, which isn’t outrageous. After all, popular investment firms, like Wealthfront and E*TRADE, require minimum deposits of that same amount for you to start investing in their automated portfolios.
Read more: What Is An NFT? – How Nyan Cat Was Sold For $600,000
Why now may be a good time to get into NFTs
Many crypto and NFT experts — Verduzco included, think that the blockchain and smart contract technology behind NFTs will spread like wildfire across multiple industries, changing the world as we know it.
“It’s going to be integrated into almost everything we do,” Verduzco says.
“It’s not just going to be just art, it’s going to go into music, it’s going to go into film, it’s going to go into transacting things like deeds to houses, and anything that has to do with verification of ownership.”
Here’s a quick example of how this could work:
When you’re buying a house, the bank needs to make sure that the title is free and clear before closing on the loan. This process alone can take two weeks, and you’ll have to pay additional fees to the third-party company conducting the search.
But if the house was registered and sold as an NFT, for example, each transaction pertaining to that property would’ve been accounted for and recorded in the blockchain. So, clearing the title would only take a couple of hours instead of weeks, and you’d be able to get rid of the middleman and unnecessary fees.
Although the concept of NFTs is still in its early stages, Verduzco says that “it’s better to be ahead,” and — if possible — invest in it, so you learn the inner workings firsthand.
This will allow you “to spot more opportunities to make money, or find other people that are in this space who compliment your strengths and weaknesses in order to build projects based on needs.”
How to start investing in NFTs when you’re on a budget
As part of my convo with Verduzco, we bounced off some ideas on how you can get into the NFT game without breaking the bank. These are a few of them.
Read more: How To Create And Sell NFTs – The New Way To Sell Your Art
Explore NFT projects that use cheaper cryptocurrencies
If you visit OpenSea, which is currently the world’s largest NFT market, you’ll see that the vast majority of NFTs listed there use the Ethereum network (aka the most expensive NFT blockchain).
But just because most NFTs use this blockchain, that doesn’t mean that there aren’t other options.
Blockchains like Solana and Polygon (which was created as an efficient solution to the Ethereum network and is compatible with it) use cryptocurrencies that are much cheaper than ether, which is Ethereum’s currency.
Here’s an example:
At the moment this article was written, one SOL, which is Solana’s cryptocurrency, was worth $0.26, while one MATIC, which is Polygon’s cryptocurrency, was worth $2.13. But, if you wanted to purchase one ether, which is Ethereum’s cryptocurrency, you’d need $3,121.93 to do so.
So, yeah, there’s a huge difference there.
These alternative blockchains are also rising in popularity. JPMorgan recently released a report in which it states that the Ethereum blockchain is losing a chunk of its market share to Solana, as the blockchain is less congested (aka faster) and cheaper to invest in than Ethereum.
If you’re interested in buying NFT projects that use the Solana network, you can check out marketplaces like Solsea and Solanart, to find them.
When it comes to projects that use Polygon, you can find them just by visiting OpenSea. To see all the NFTs you can place bids on or buy using this network, simply click on the “Chains” option on the left panel, and select “Polygon.”
Mint a project
When you mint a project, you’re basically investing in it before it actually goes live. So, you could think of it as the Kickstarter of an NFT project. Verduzco says:
“The initial mint is usually like 0.05 Ethereum, which is a relatively small amount. If you happen to make it in that initial mint, then you pay only 0.05 Ethereum, versus if the project goes up in value, and then it costs 0.7, or much higher.”
One good example of an NFT project that is currently in its minting phase, and that I happen to like a lot is the Lucky Goat. You can currently mint this project for 0.0777 Ethereum ($243.43).
What has me rooting for the Lucky Goat (besides the art, of course) is that they donate some of their profits to Heifer International, which is a nonprofit whose mission is to help eradicate hunger and poverty.
So, how do you find projects to mint?
Twitter. If you enter “#mint” or “#NFT” on Twitter’s search bar, you’ll find countless threads of founders and artists sharing their upcoming NFT projects.
Discord. In case you don’t know what Discord is, it is a group-chatting app, where users join servers (aka private groups) to chat about a specific topic. Many NFT founders use this app to talk about their upcoming NFT projects, to get both support and feedback from users.
rarity.tools.Although this website is mostly used by NFT traders to vet projects and find rankings based on their rarity or unique traits, it also has an Upcoming NFT Sales section, where you can check projects to mint.
OpenSea’s homepage. They often share new mints, and you can easily browse through their huge NFT market.
But be careful…
Before minting a project, Verduzo says it’s super important to ensure its legitimacy, so you don’t get rugged (NFT lingo for “scammed”). Sadly, just like in any space, there are always bad players that are just there to do a quick cash grab and disappear.
To avoid this, make sure you research the project thoroughly by finding out all you can about its community, founders, and mission, as well as how long they’ve been around in this space.
Why?
If the project disappears into the mist, your NFT most likely will lose all its value, unless someone else decides to take over the project.
Time your purchase
Unlike the stock market, which is open for transactions Monday through Friday, from 9:30 a.m. to 4:00 p.m. ET, the NFT market is a global market that is open 24/7.
“So, it’s not just you and everybody else in the United States that you’re transacting with, it’s everybody in the entire world who has access to the Internet,” Verduzco says.
And, the more people that are trying to conduct transactions on the Ethereum network, the more congested it will be, which automatically translates to higher gas fees. This will hopefully be improved once Ethereum 2.0 (also known as the consensus layer) is fully rolled out.
One way to spend less money when buying NFTs is to ensure you conduct your transactions during the time of the day when the network is less congested.
Verduzco says that 11:00 a.m. to 1:00 p.m. PST is probably the worst time of the day to buy NFTs because that’s when most people around the world are awake. He suggests timing your transactions to random hours when most people are sleeping, like 2:00 a.m. or 5:00 a.m. PST. Though not always practical, it can help save a good amount of money.
You can also track gas prices by visiting the ETH Gas Station.
Become an NFT expert
Since NFTs are still an emerging concept, Verduzco says that one way you can make money in this space, without being an investor, is by learning all you can about them.
“It doesn’t always have to be investing in an NFT collection, in order to get a return,” Verduzco says.
“Understanding everything about the NFT space and becoming very good on one specific skill set, whether it’s social media marketing, community management, creating Discords, branding, or content creation, is going to provide value because, all of a sudden, you open yourself up to many job opportunities.”
In other words, you’ll be able to profit from your NFT knowledge as this technology becomes more widespread, and companies start searching for people who know their way around this space.
Before investing in NFTs…
Make sure your finances are in order
Investing in NFTs represents a higher risk than investing in traditional stocks or bonds, as their value is determined by speculation, so it fluctuates more than with your average investment.
Besides that, once you purchase an NFT, the transaction is final, and flipping them or reselling them could take a while. That’s why it’s so important you only invest money you have to spare, and not money you’re going to need short-term, as this could result in a financial disaster.
Learn as much as you can
“I would suggest investing your time and energy on learning before putting your money up,” Verduzco says.
“Find really cool projects that you like, and then join the Discords, listen to conversations, ask questions, watch a bunch of videos, read a bunch of blogs before you even think about putting Ethereum in your wallet to spend.”
Learning as much as you can about NFTs will give you a realistic idea of what to expect, plus determine whether you’re ready to take the plunge, or if you should wait a little longer before investing in this space.
If you’re curious about learning, you can check out podcasts, like a16z, which has extensive information on this topic, as well as reading books, like The NFT Handbook: How to Create, Sell and Buy Non-Fungible Token, to get started.
Additionally, Verduzco’s Twitter account is like a gold mine of NFT info, as he frequently shares projects, articles, and tips to help people learn more about this space.
Summary
You don’t have to be a millionaire to invest in NFTs, however, there’s a learning curve to be successful in this space.
The most important thing is to learn as much as you can about it, vet projects carefully, understand the risks associated with investing in such a volatile space, and make sure you don’t use money you’re gonna need. This will allow you to make the most out of your experience.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
If you have been trading for a while, then there is a good chance that you have made some trading mistakes along the way.
Unfortunately, it is part of learning how to trade.
After all, trading is a skill that takes time to learn.
Trading mistakes are part of the learning process. I know that sucks to hear, but it is the truth.
The outcome goal is to learn from those trading mistakes.
Then, you can realize what you did wrong so you do not repeat those same mistakes.
However, more than not, it is more common to repeat the same mistake over and over again.
If you are ready to recognize trading errors and learn how to overcome them, then keep digging in. Take notes and adjust your trading plan accordingly.
We will cover emotional trading mistakes, technical trading errors, and option trading mistakes.
What Are Trading Mistakes?
Trading mistakes are errors made by traders when you enter trades, either to purchase stocks or options.
More than likely, you will see the same type of trading error happening over and over again.
Trading mistakes are very common, but they do not have to lead to complete panic.
In order to minimize the chances of making a costly mistake, traders should adhere to their trading strategy. Additionally, traders should always trade with a clear head and stay disciplined.
There are plenty of trading mistakes you can avoid by being smart and adjusting your trading plan where needed.
Why Understanding Trading Mistakes Is Important for Long-term Success
Trading mistakes are the result of traders taking losing trades, which can result in poor overall performance.
Mistakes that occur during trading often include not paying attention to the market, not understanding risk, not having a well-thought out trading strategy, and being bad at managing the trade.
Whatever the reason, trading errors occur and it is how we react to them that matters.
Long-term success in trading is not a goal that can be accomplished overnight.
Achieving long-term success with active trading requires patience, discipline, and practice.
It is easy to get caught up in day-to-day successes and forget to commit to a long-term plan. As traders, it is important to be able to recognize our mistakes so that we can learn from them and move forward.
Top 5 Trading Mistakes
As you will see, we compiled a long list of trading mistakes. Each trader will see some of those trading errors in themselves. Some are small trading mistakes while others are detrimental.
First, we are going to focus on the top five trading mistakes first. This will make or break your success as a trader.
The following are five common trading mistakes that traders make and how to avoid them.
#1 – No Trading Plan
Trading without a plan means you enter a trade without knowing your next step.
No trading plan means that traders are not able to set clear goals, establish risk-reward ratios, and avoid common pitfalls that can occur during a trade. This makes it difficult for traders to know when they should be buying, selling, or holding.
Trading without a plan is risky because it can lead to losses that are much higher than they need to be.
When starting out in trading, it is important to remember that we can only focus on what we can control. This means that we should not worry about things we cannot change, such as the past or the behavior of other traders. Instead, we should form a trading plan and stick to it so that we can succeed in the long run.
Creating your trading plan will happen with many revisions. The goal of the trading plan is to set your overall strategy for trading.
Also, you need to have a specific trading strategy for each trade you enter.
Avoid by: Spending time to develop a trading plan. Revise as needed. Stick to it.
#2 – Risk Management Plan is Missing
A risk management plan is essential for traders and it should be included in any trading plan.
Without a risk management plan, traders are more likely to make emotional decisions that can lead to costly mistakes. For many traders, this is the hardest thing for them to manage.
It is possible to create a risk management plan as your overall trading plan.
In your risk management plan, you must decide (in advance) how much money you are willing to lose based on the amount of profit you perceive to make. For instance, you are willing to risk $300 in order to make $1000.
Many day traders focus on a 2:1 reward-to-risk ratio. Personally, I look for stronger reward-to-risk ratios greater than 3:1.
Avoid by: Understand how risk is a part of making a profit. Set your risk tolerance and do not deviate from it.
#3 – Not Keeping a Trading Journal
One of the most important aspects of successful trading is keeping a journal.
This not only helps you keep track of your trades and performance, but it can also help you remember what worked and what did not. Journaling is so helpful and such an overlooked task.
Your trading journal is the perfect place to take notes, keep track of your wins and losses, and record market movements so that you can learn from past mistakes.
At the end of every trading session, you should take some time to analyze your trades.
What went well?
What didn’t go well?
Why did you make that particular trade?
What was your entry strategy?
What was your exit strategy?
Where was the overall market momentum?
Did you control your emotions?
What grade would you give yourself?
This analysis is important so that you can learn from your mistakes and improve your trading skills. Stay motivated to continue learning about trading and keep more profit.
Avoid by: Start journaling. Spend time after exiting a trade and the market day to understand what happen and why you did a certain trade.
#4 – Watching Too Many Stocks
Watching too many stocks can lead to a decrease in returns and overall confusion on what is happening with your watchlist.
As a result, it is important to be selective.
The same can be said of stock scanners. If you are watching too many variables and possibilities, you can quickly become overwhelmed.
When you develop your trading plan, you need to decide how you find stocks.
Personally, I prefer to focus on a handful of stocks and a few key metrics. Then, watch them closely and trade accordingly.
As a new trader, I would pick about 5-10 stocks to analyze.
Avoid by: Revise your watchlist to half what you are currently watching.
#5 – Actually Exiting Trade as Planned
Above we talked about creating a trading plan and having a trading strategy for each trade taken.
But, the trading mistake happens when you do not exit the trade as planned.
This could be because of “hopemium” that the stock price will recover and you will get back your loss.
Our “hopemium” is that the stock price keeps rising and you will make more money.
Either one can be damaging to your trading account.
You created a plan. As a disciplined trader, you must follow your plan either to maximize your current profit or protect your risk against further losses.
Avoid by: Exiting at your set targets. Period.
12 Typical Emotional Trading Errors
Trading is 80% mental and 20% execution. Okay, I am not sure that there is an official study to back it up. But, I do know as a trader that emotions play heavily into your overall profit.
The typical emotional trading errors that traders make when they are in a trade are overconfidence, jumping into trades before the proper analysis is completed, and inability to take losses.
This is where most of the trading mistakes are made.
When first starting out in trading, it is easy to get caught up in the prospect of making a lot of money quickly. However, most traders find that trading is not easy to do and make common emotional trading errors.
Let’s dig into these emotional mistakes first and then we will follow up on the technical trading mistakes.
1. Letting emotions impair decision making
Emotions are an important part of decision-making, but it can be dangerous to allow them to influence our decisions. We should also take into account that emotions can often lead us astray.
It is clear that emotional trading can lead to bad decision making and, ultimately, financial losses.
When investors let their emotions take over, they are not thinking logically and may make impulsive decisions. For example, they may sell stocks when the market is down in order to avoid further losses, even though the stock may rebound soon after.
In order to be successful traders, it is important to stay calm and rational when making decisions.
Overcome by: Stick to your trading plan and take emotion out of the equation.
2. Unrealistic Profit Expectations
You go into every single trade expecting a home run! Enough money to achieve your dreams overnight!
These types of profit expectations will have you throwing your risk management plan out of the window and set you up for failure with greed, overconfidence, and impatience.
Be realistic about your expectations with trading activity.
Overcome by: Go for base hits. Small consistent wins.
3. Greed
Greed is a deep-seated need for more profit without regard to the chart or market conditions.
The common rationale is hopefully the stock will go up. Typically, you hold your position too long and end up losing some of your gains.
Greed can manifest in many different ways, and people with greed often neglect their own needs in order to attain more.
Overcome by: Set an OCO bracket to exit the trade at your specified level. Take you out of the equation.
4. Fear of Missing Out (FOMO)
You fear that you missed out on a trade, so you decide to jump in. As a result, you are risking more than you should.
This trading mistake is common, especially with online trading communities.
As a result, you may buy at the high and watch the stock reverse.
Overcome by: Realize that there will be missed opportunities. That is part of the game. There will always be another chance.
5. Fear
In many cases, fear is a reaction to why or why not we enter a trade.
For any trader, they may become frozen unable able to make a decision as their mind is wrapped in fear. At the same time, they are either missing out on potential profits or unable to exit a trade due to mounting losses.
Overcome by: This is a real emotion that you must overcome. Take the time and read resources to help you overcome being paralyzed by fear.
6. Overconfidence after a profitable trade
The overconfidence that comes with success can lead to a loss of profits.
When a trader has a winning position, they may become overconfident and make bad decisions because of the previously profitable trade.
For example, they may not take their profits off the table when there is an opportunity to do so or increase their position size when they should be taking profits. This could lead to them losing all of their winnings and more.
Overcome by: Take a break from trading for a few days or a week after a big win.
7. Entering a Trade Based on Your Gut
The process of entering a trade based on your gut is, essentially, following your “gut feeling” and buying or selling shares after the market opens. This is seen as a more risky and less profitable strategy than following a more traditional market timing approach.
Trading is all about making calculated decisions and sticking to a plan.
Trading based on your gut feeling or emotions will only lead to costly mistakes.
Overcome by: Before entering into any trade, make sure you have a solid strategy in place and know all the rules. Only then should you start trading.
8. Not reviewing trades
Not reviewing trades is a common problem for many traders. Traders who don’t review their trades tend to be more likely to make mistakes in their trading and over-trade, which can result in losses.
You will make the same mistake over and over again until you realize the root of the problem.
This is how you move from a losing average to a winning percentage.
Overcome by: Let your journal be your friend. Document everything including your emotions.
9. Following the Herd
Many people enjoy following the herd with stock trading, especially online platforms on Reddit, Discord, or Twitter.
You may decide to follow a certain group of people in order to be fed stock picks or updates.
This can be risky because there is no sound foundation to base your trade upon.
Overcome by: Trade your style and let that fit you.
10. The Danger of Over-Confidence
The “beginner’s luck” experienced by some novice traders may lead them to believe that trading is the proverbial road to quick riches.
Over-confidence is the belief that one’s abilities, knowledge, or qualities are better than average.
This over-confidence is a risk factor for certain types of mistakes and other negative outcomes as it leads to complacency, a lack of preparation, and an overestimation of one’s abilities.
Overcome by: Realize your limitations and watch for overconfidence to appear.
11. The Importance of Accepting Losses
Losses are always a part of trading life, but they can be overwhelming when they occur.
It is important to recognize that losses are in fact an inevitable part of growth and development as a trader.
Overcome by: Journal all of your losses. Look for patterns to appear. Adjust your trading strategy as appropriate.
12. Quit Your Job Too Fast
Quitting your job too fast is not a good idea, as it will force you to place trades that may not be the best set-ups.
Day trading can be a very risky venture, and it is possible to lose everything you have invested.
It is important to be aware of the risks before getting started. More importantly, do not quit your job too fast. This can lead to losses in your investments and could potentially put you in a worse financial situation than you were before.
Overcome by: Keep trading as a side hustle. Hone your trading skills and build up a reserve fund that will cover your monthly expenses. You will know when you are prepared to leave your 9-5.
Common Mistakes in Stock Trading
According to a study by the U.S. Securities and Exchange Commission, technical trading mistakes are actually fairly common among individual investors.
Mistakes in technical trading can be two-fold, either due to lack of knowledge or poor execution.
The most common mistakes are buying at the top and selling at the bottom, overtrading, and not taking the time to properly understand how trading works.
Now, let’s dig into all of the common trading mistakes I see.
1. Overtrading
Let’s start by talking about overtrading. This is a mistake that I see many people make. It is also a mistake that could have been easily prevented if you had just done your research before placing the trade.
Overtrading or placing more orders than you should do is the most common mistake.
Many new traders will simply open up their platform, look at the market, and place a trade. They are often chasing after the last couple of candles or they see an opportunity to get in “on the cheap”.
The problem with this approach is that you have no idea if this is a good trade or not. You are simply taking a shot in the dark and hoping for the best.
Overcome by: Only place the A+ setups that you like. Once you have traded so many times per day or week, stop trading.
2. Buying High and Selling Low
We all have heard the saying, “buy high and sell low.” However, too many novice traders do the complete opposite.
This trend happens with one of the emotional mistakes of FOMO; we already dived into that concept earlier.
Overcome by: Follow your trading plan on when to enter and exit the trade. Practice your strategy in a simulated account and master it.
3. Lack of Trading Knowledge
The lack of trading knowledge is a problem for many traders who are not familiar with how the stock market works. This can cause them to make mistakes when buying and selling stocks, which could result in losing a lot of money.
Just because you made a profit once on one stock does not mean that is a repeatable action.
In order to be successful in trading, it is important to have a good understanding of the markets and the strategies involved.
Without proper training, you are likely to make costly mistakes that can cost you money. Trading courses and tutorials are available online and through other resources to help you gain this knowledge and become a successful trader.
Overcome by: Take an investing course. Spend money on your education and not your losses. Here is a review of my favorite day trading course.
4. Following Too Many Strategies
Following too many strategies is a common problem in the investing world, which can lead to poor performance and more costly mistakes.
There are a million and one different approaches on how to trade the stock market, which indicators to use, whose advice you should follow, so on and so forth.
And then, many traders try and couple the strategies together only to quickly learn they may cause more losses than profits.
One way to avoid following too many strategies is by using a set of rules to decide which strategies are appropriate for investing.
Overcome by: Develop your trading plan. Outline the investing strategies you will use. Test any new strategies in SIM first.
5. Do Your Research
The solution to this problem is simple: do your research!
Before you enter a trade, take the time to do some analysis on the asset you are looking at. Look at past price action, news events, and any other relevant information that you can find.
Understand why the market might move in your favor and be able to build a case for it. The more data points you have supporting your position, the better off you will be.
If you are able to build a strong case for why the asset will move in your favor, then you can enter with confidence. This is because if the market does not move in your favor, you will know that it isn’t because of a lack of research on your part.
When you enter with confidence, this will make it easier to hold through the inevitable volatility and price swings.
Overcome by: If you enter without knowing why something is likely to move in your favor, then you are setting yourself up for failure. Do your research.
6. Not Using Stop-Loss Orders
Stop orders come in several varieties and can limit losses due to adverse movement in a stock or the market as a whole.
Tight stop losses generally mean that losses are capped before they become sizeable. However, you may have your stop loss too tight and get stopped out before your stock has room to move.
A corollary to this common trading mistake is when a trader cancels a stop order on a losing trade just before it can be triggered because they believe that the price trend will reverse.
Overcome by: Plan your stop loss in advance. Stick to it as it is part of an overall risk management strategy.
7. Letting Losses Grow
Active traders can be harmed by refusing to take quick action to close a losing trade.
It is important to take small losses quickly and limit your risk in order to stay profitable.
Stop losses can help you avoid larger losses.
While the stock may come back to your buy price, you have increased your risk far beyond what you planned. If your planned loss was $300 and now you are down over $500, it will take that much longer to overcome that growing loss.
Cut your losses. Review the chart. See what a better entry point may be.
Overcome by: If the stock moves past your pre-determined stop, then exit the trade. Don’t trade on hope.
8. Chasing After Performance
Many day traders are tempted to chase stocks, which is a bad reputation in the day trading world.
This happens when they see a stock that has had a large price increase and they think that it will continue to go up. In reality, this is not usually the case, and chasing stocks can lead to big losses.
What goes up must come down, right?
Overcome by: Wait for a better time to enter the trade according to your trading plan.
9. Avoiding Your Homework
It is important to do your homework. If you avoid doing your homework, then don’t expect fast results
Many new traders often do not do their homework before making any investment decisions.
This can lead to costly mistakes that can be avoided by doing some basic research. Trading is a complex process and should not be taken lightly – make sure you are fully prepared before risking your hard-earned money.
Overcome by: If you have not enrolled in an investing course, do that. Set daily goals on how to improve your trading performance that is not based on profit or loss.
10. Trading Difficult and Unclear Patterns
It is important to stick with the patterns and indicators that are clear and unmistakable so you don’t get caught up in any ambiguous or unclear trading signals.
With a little bit of research and understanding, these market patterns can become quite clear.
By forcing a chart to fit in what you want, then you are putting your trading capital at risk.
Overcome by: If you cannot read a clear chart or pattern, then quickly move to the next stock.
11. Poor Reward to Risk ratios
The most common mistake made by traders is poor risk management. This usually means taking on too much risk in relation to the potential rewards, which can lead to heavy losses if the trade goes wrong.
It is important to always have a solid plan for how much you are willing to lose on any given trade and never deviate from it.
What is the Reward to Risk ratio you look for:
1:1 Reward to Risk
2:1 Reward to Risk
3:1 Reward to Risk
Many beginner traders do not want to take on as much risk because their appetite for potential rewards may be lower. It is important for beginners to consider their trading strategies and risk management plans so that they can make the most informed decisions possible.
Risk-to-reward ratios are an important part of trading, and experienced traders are typically more open to risk in order to maximize their potential rewards. This means that they may be more likely to make high-risk, high-reward trades.
Overcome by: Stick to Risk to reward ratios that fit your trading plan.
12. Ignoring volatility
Volatility is the fear and unknown in the market.
The most important thing to remember about investing is that the stock market can be volatile.
A measure of volatility is from the VIX.
Overcome by: Decide how you will trade when the VIX is high and the news is negative.
13. Too Many Open Positions
Entering too many positions is one of the most common mistakes investors make. A portfolio should consist of a handful of top-performing investments that have proven to be good bets over time.
It is unwise to open too many positions in a short amount of time because it could lead to confusion.
This can be risky because if one or two of the positions go south, the entire portfolio can suffer. For this reason, it is important to carefully consider each position before opening it and make sure that all positions are contributing positively to the overall goal.
Overcome by: As an active trader, stick to under 5 open positions. As a long-term investor, look to build a portfolio of 25 stocks over time.
14. Buying With Too Much Margin
Most brokers offer 2:1 or 4:1 margin to cash. While this is tempting to use, it can also give you a margin call.
Margin can help you make more money by increasing your position size, but it can also exaggerate your losses.
Exaggerated gains and losses that accompany small movements in price can spell disaster for a new trader using margin excessively.
Overcome by: Use your cash only. Stay away from using margin.
15. Following Meme Stocks
These are the stocks made popular by many Reddit personal finance groups.
You have probably heard of Gamestop, Blackberry, AMC, or Bed Bath and Beyond as a meme stock.
While these stocks have risen to crazy highs, they have also fallen just as fast. Chasing the high may leave you with a big and painful loss.
Overcome by: Stick to your stock watchlist.
16. Buying Stocks With No Volume
Buying stocks with no volume is a risky idea that involves placing an order on a stock without knowing how much interest there will be in the shares. This can result in losing money if there are no buyers for the shares.
It is important to validate the price of a stock by looking at volume. The volume shows how much interest there is in a stock and can be indicative of future price movement.
When volume is low, it’s best to stay away from buying stocks as it could be a sign that the stock price is not stable.
Overcome by: Trade stocks with a volume of at least 500,000 or higher.
17. Ignoring Indicators
Indicators are things that tell us the market is going up or down. Examples of indicators would be the stock market at a particular point in time, a company’s performance with regards to earnings, the price of a product or service.
Every trader has their own set of indicators they use.
If you have outlined indicators you use in your trading, make sure to follow them regardless if it is against the way you want the stock to move.
Overcome by: Stick to your trading plan for each stock individually.
18. Trading Too Large Position Sizes
Trading too large position sizes is a risk that traders may run into when they hold positions in their portfolios for extended periods of time.
Position size is the amount of money placed on a trade, and the risk is that a trader may lose more than their capital on the trade if it does not go well.
Overcome by: Base your position size on the amount you are willing to lose. Not how much you want to make.
19. Inexperienced Day Trading
In order to be successful in trading, it is important to have a good understanding of the markets and the strategies you are using. Without proper training, it is easy to make costly mistakes.
Too many day traders turn trading into an unnecessary risky game.
To be successful, a day trader must have a solid foundation in how to invest in stocks for beginners.
Overcome by: Practice in a simulated account and make all of your mistakes there before moving to live money.
20. Inconsistent trading size
Inconsistent trading size is when traders are unable to predict what their position size should be in order to meet the trader’s desired profit goal.
Trading size is one of the most crucial aspects of a trading strategy and should be considered carefully. Larger trade sizes come with an increased risk, so it’s important to be aware of your position size when making trades.
Overcome by: Don’t risk too much on one trade. Stick to your risk management plan.
21. Trading on numerous markets
Trading on numerous markets is when a trader invests in stocks, bonds, commodities, crypto, and other securities.
Every type of market moves differently and takes time to understand how to be profitable.
Overcome by: Find your niche and stick to it.
22. Over-leveraging
Leverage is a powerful tool that can be used to magnify gains and losses in a trade. It is important to be aware of the amount of leverage being used in order to effectively manage risk.
Brokers play an important role in protecting their customers by providing margin calls and other risk management tools.
Overcome by: If you feel over-leveraged, sell some positions before your broker gets involved.
23. Overexposing a position
Overexposure is a term used in the investment world to describe the risk that comes with exposing your position too much in the market. When you have overexposed your position, you are putting yourself at risk of losing money if the stock or security you are invested in falls in value.
You are taking on too much risk.
Overcome by: Stick to your risk management plan. Always have cash reverse on hand in case the market reverses.
24. Lack of time horizon
There are different time horizons for various types of trading strategies. It is important to think about the time horizon you are comfortable with before investing in any type of investment.
If you are a day trader, you plan to close your trades before the end of the trading session. As a swing trader, you typically hold trades for a couple of days maybe up to a month. As a long-term investor, you plan to hold your stocks for longer than a year.
Overcome by: Match the time horizon of that investment purchase with your investing goals.
25. Over-reliance on software
Although some trading software can be highly beneficial to traders, it is important not to over-rely on it.
Automated trading systems are becoming so advanced that they could revolutionize the markets. As a result, human traders need to be aware of the potential for these systems to make mistakes and use them in conjunction with their own judgment.
Overcome by: Set alerts before you want to enter or exit a trade. Then, review if the move still follows your trading strategy.
Top Options Trading Mistakes Beginner Traders Make
These options trading mistakes are specific to option trading.
Trading options is an advanced strategy. If you have losses trading stocks, wait before you start trading options.
1. Not having a Trading Plan
Every trader needs a trading plan that outlines strategies, game plans, and trade metrics.
When you are trading without a plan, you are essentially gambling and hoping for the best.
This is not a recipe for success in the world of stock trading and is especially true for options traders.
A good trading plan should include chart analysis so that you can make informed decisions about when to buy and sell stocks. If you are using HOPE instead of a trading plan, then you need to find out the right way to interpret the chart because that will give you a better idea of what is happening in the market and how likely it is that your investment will succeed.
Overcome by: Create a specific trading plan based on your option strategy.
2. Not properly Researching Option Contracts
Learning to trade options is like going to school for a whole different trade.
There are way too many technical aspects to discuss in this mistake.
Spend time learning what criteria you want from an options contract to be successful.
Overcome by: Learn how options work and practice trading options in the simulator before going live.
3. Trading without an understanding of the underlying asset
Before you start trading options, trade with stocks.
Every stock moves at its own beat. You need to learn how it moves.
Jumping into options prior to knowing the stock can cause extreme losses. Learn how the underlying asset moves first. Be successful in trading stocks before moving to options.
Overcome by: Learn to trade the stock with shares first. Then, practice in a simulator. Once familiar, then trade live with options.
4. Buying Out-of-the-Money (OTM) Call Options
Options trading is a risk-based strategy. It’s important to know which strategies are right for you and what the risks of each option type are before putting on an option trade.
One common mistake that many traders make when it comes to option trades is buying out-of-the-money (OTM) call options.
This is because OTM call options are inexpensive and have a range of around 100,000 to 1 million. To avoid this mistake, it’s important to know what the risks of buying OTM call options are and which option strategies are appropriate for you.
Overcome by: Focus on trading In-the-money (ITM) call contracts. Know your strategy.
5. Not Knowing What to Do When Assigned
When you enter into an options contract, you are essentially agreeing to buy or sell the underlying asset at a specific price on or before a certain date.
If the market moves in a way that benefits the buyer of the option (the person who contracts to buy the asset), they can choose to exercise their option and purchase the asset at the agreed-upon price. However, if the market moves in a way that benefits the seller of the option (the person who contracts to sell), then they may “assign” their contract to someone else – meaning that they no longer want to buy/sell the asset, but would like someone else to take on that responsibility.
This can be jarring if you haven’t factored it into your decision-making when trading options, so it is important to be aware of the possibility.
This is why traders need a higher trading level to sell options contracts or verticals.
Overcome by: Be okay with buying the shares if you are assigned. That is a part of your trading plan.
6. Legging Into Spreads
It is a common mistake for traders to get legged into spreads by entering positions when the market price has moved away from their position. They may have gotten caught up in the belief that they are being a “smart” trader by trying to profit from the spread.
The problem is that they are not taking into account that their cost basis must go up in order to maintain the position. If the market price of the underlying goes up, their cost basis must go up as well.
Overcome by: If you are not comfortable with this advanced strategy, then exit your options contract and place a new one.
7. Trading Illiquid Options
Trading illiquid options is a mistake because traders are taking on too much risk, with potentially disastrous consequences.
Illiquid means that the option cannot be bought or sold at the given time.
In other words, the option is not tradable. When traders trade illiquid options, they are taking a risk that their trades will not be executed because there is no liquidity in the market at that time. They have to hope that the market will become liquid again, and they can then sell their position or buy back their option at a lower price.
Overcome by: Check option volume and open interest at your strike place. Verify you have interest in moving your contract.
8. No Exit Plan
It is important to have a plan in case your trading strategy doesn’t pan out as planned.
This will give you the peace of mind that you won’t be left high and dry without an exit strategy.
With options is it more difficult to limit your risk to reward. As a result, you must decide your exit plan in advance.
Overcome by: Develop your trading strategy and include how and when you will exit the option contract.
Ready to Avoid these Trading Mistakes?
Investors are often their own worst enemy when it comes to trading.
They make emotional decisions instead of logical ones, and this leads to them making costly mistakes. Plus there are many technical errors new and seasoned traders are still making.
In order to be successful in the markets, investors must first learn to accept their losses and move on. Only then can they put that mistake behind them and focus on making profitable trades in the future.
In this post, I shared some of the more common trading mistakes that people make and how to avoid them.
Now, you have to work to avoid these trading mistakes and be profitable.
Know someone else that needs this, too? Then, please share!!
The word timeshare is often associated with the same sneaky, slimy vibes that emanate from the backrooms of the car dealership during sales negotiations. They both are thought to involve high-pressure sales tactics, a big loss in value the second the purchase is made and rash decision-making you may regret later.
I don’t dispute those things are often quite true, but my timeshare purchase involved no salespeople, no pressure and (so far) no regrets.
And before you discount me as someone who has no clue what I’m talking about or that’s in denial, I travel on points and miles a lot of the time, am pretty adept at hunting travel deals and used math to decide that this purchase was a good one for us.
Here’s why buying a timeshare made sense for me, even though it absolutely won’t — and shouldn’t — make sense for everyone.
Related: 5 things to know about renting a timeshare
Buying a timeshare that doesn’t call itself a timeshare
We bought two contracts in the Disney Vacation Club, which is Mickey’s version of a timeshare … even though that nine-letter word isn’t one Disney uses on its public branding. But make no mistake, what we bought is indeed a timeshare — or two, to be more accurate.
With the Disney Vacation Club, you purchase a set number of points tied to a specific resort to use each year through the end of the contract. An agreement at a new property, such as the new villas at the Disneyland Hotel, is valid for 50 years, while getting a contract at existing properties usually means a shorter time frame, with some being as short as 19 years, ending in 2042.
The two smaller contracts we bought are for Disney’s Aulani resort in Hawaii (expiring in 2062) and the Polynesian Village Resort at Walt Disney World (expiring in 2066), for a total of 155 annual points in the Disney Vacation Club program. While you have priority booking 11 months from the date of travel at your home resort where you “own,” you can use the points within seven months of travel at any Disney Vacation Club resort with availability — with some caveats that we’ll mostly leave for this guide we have on how the Disney Vacation Club works.
Both of our contacts were purchased on the resale market, which means we are paying significantly less than what Disney would want for a direct DVC membership. A downside of buying resale is you can only pick through existing contracts instead of crafting exactly what you might want to design from scratch. You also don’t get some of the discounts and perks that come from owning at least 150 DVC points directly from Disney (such as access to the DVC lounges in the parks and being eligible for some less expensive annual pass types).
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I’ll get more into the numbers below, but we have a long track record of taking a variety of Disney vacations year after year, so I feel pretty confident that will continue for the foreseeable future. And I know what we often spend to stay at Disney resorts, which makes the math against the price to own easier. And there is a bustling market for renting DVC points that very much has my attention.
Related: How to rent Disney Vacation Club points to save money on Disney stays
Why now was the time to buy
While I’ve had a mild curiosity about becoming a Disney Vacation Club member for a few years — and have rented DVC points numerous times — there are a few reasons now was the time to purchase.
Disney has the first right of refusal to buy back all of its Disney Vacation Club contract resales. Once the buyer and the seller agree on a price, Disney then has 30 days to buy the contract back at that price itself, thus taking it away from its intended buyer. And historically, Disney really would exercise that right some of the time, especially on contracts where prices were low.
For example, according to the DVC Resale Market, a site that lists some DVC contracts for sale, by March 2022, Disney had already exercised its buy-back clause on 244 contracts that company had helped to sell by March that year. In contrast, by March this year, that buy-back number for the year was just four — and all of those were from January, with none shown since then.
With almost no Disney buybacks happening in the last few months, some contracts are selling at cheaper prices than historically was possible. With prices trending down, inventory trending up and Mickey not swooping in to buy back the best deals at a normal clip, now was the time for us to buy.
The math behind my timeshare purchase
Before I share our numbers, let me emphasize one more time that this isn’t for everyone — it’s not even right for most Disney aficionados. Smaller contracts also cost more per point than larger contracts, so you can get better deals on a per-point basis if you are willing to buy more points. We wanted to minimize risk by staying small, so we paid a bit more per point as a result. Here’s how it broke down for us.
For our Polynesian Village contract, we bought 55 points for $156 per point at a total cost (with dues, closing costs, etc.) of just over $9,300. For our Aulani contract, we bought 100 points for $108.50 per point for an all-in cost of just over $12,600. And yes, it is totally normal for some resorts to cost much more than others, as you see with our Aulani and Polynesian purchases. This is due to the cost of annual dues at each property, the desirability of booking further in advance at that property and the number of years left on the contract.
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Disney’s Polynesian Village Resort. SUMMER HULL/THE POINTS GUY
So for about $22,000, we now have 155 Disney Vacation Club points to use each year until the contracts expire. That cost may sound nuts by itself. But remember that at current rates, we also will owe $914 per year for dues on our Aulani points and $437.25 for our Polynesian points, and those numbers will likely only increase over time. So that means $1,351.25 per year just to own the points based on this year’s prices.
But here’s why it’s not as crazy as it likely initially sounds.
Right now, it is very realistic to rent your DVC points out for stays as an individual at $20 per point, with some getting higher or lower amounts. If we rented all 155 points out at that $20 rate in a year, that would mean getting $3,100, which way more than covers the dues. In fact, using current rates to rent out points and for dues (knowing both will likely increase as the years go by), we’d recoup the cost we spent to buy the contracts if we did that for 13 of the 39 years we will own both contracts — including covering the cost of the dues in the years we fully rent the points out.
Now, I’m not saying that’s my plan, but that’s the math. For those curious, per the terms, you can expressly rent out points, but not in a pattern that constitutes a commercial enterprise.
So now let’s talk about math when using the points, which we absolutely will do.
You can use the points to stay at Disney resorts starting at just 7 points per night at Deluxe resorts such as Disney’s Animal Kingdom Lodge. By owning 155 per year, we have the opportunity to cover numerous nights at Disney with the points we now own if we are strategic about how and when we cash them in. But for now, let’s be extra conservative and say our stays in studio villas will average 20 points a night. With that math, we get between seven and eight nights a year out of our points.
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Disney’s Animal Kingdom Lodge. SUMMER HULL/THE POINTS GUY
If, for the 39 years that we own both contracts, we used all the points ourselves and got an average of 7.75 nights at high-end Disney resorts from our points using a 20-point per-night average, that’s a total of 302 hotel nights (not even counting the additional four years of stays on our Polynesian points).
Not counting annual dues, that comes to a “cost” of $72.85 per resort night from the all-in original purchase price. Using today’s cost of dues, then counting annual dues, that cost jumps to paying $247.35 per night. This amount will go up, but likely so will the average cost of hotel stays booked directly, so using today’s dollars for both should give an apples-to-apples idea of the cost.
That’s not a cheap nightly rate for a hotel, but if you take a look at the going nightly rate for a night at Disney’s Polynesian Village Resort, Aulani Resort, Disney’s Grand Floridian Resort & Spa and other spots we like to stay, rates are often $500-$700. And compared to that, $247.35 per night starts to look more like a deal. And remember, this was using a conservative average nightly points rate compared to where nightly points rates start, so the more nights we redeem for lower points, the lower the average rate we are “paying” per night.
When you then factor in that there are other options for the points in the years that you may not want to go to Disney, such as gifting family and friends or even renting them out a stay, the math — for us — starts to look less and less outrageous.
Related: These are the best hotels at Disney World
What happens if we don’t want it anymore — or die?
If it turns out that eventually, we don’t want to own one or both of these Disney Vacation Club memberships anymore before the deeds expire, we can put them up for resale.
The good news is we bought at resale prices, so while no one knows what the future market is for these contracts, hopefully, we’d be able to get out of the memberships without getting too upside down since we didn’t pay retail. So far, someone has always been willing to buy a DVC membership as long as the price is right, so it’s not a question currently of if you could sell, but for how much.
But if no one bought them, we’d continue to be on the hook for the dues until we could offload them somehow. This is one reason we kept our purchase on the smaller side.
Since my husband and I are both on the deeds, if one of us dies while the deed is active, the other of us keeps on trucking with it. If we both die before the time is up on the deeds, then they become a piece of deeded real estate subjected to your will(s), those getting your inheritance, the probate process, etc.
Once our kids are adults, we could also add them to the deed(s) if it seems Disney is going to continue to be a part of their lives. Some people approach these purchases with a trust in mind as the owner. Naturally, there are implications to all of the proceeding options that would need to be worked out with lawyers and the like, so don’t take my word too seriously on any of that, but know that there are some implications of owning a deeded timeshare beyond just the cost to own.
Bottom line
Should any rational person spend $22,000 buying timeshares on the resale market — and still be on the hook for over $1,000 in annual dues for the next several decades for Disney resort stays? Maybe not. Probably not.
But on the other hand, after running the numbers many times and looking at our track record of vacations spanning more than the last decade, it started to feel absurd not to give this a try. And if it all goes south, then future me will hope that there’s someone out there like current me that thinks this is worth giving a try.
They say that right now is a seller’s market, but in my little neighborhood it was definitely a buyer’s market.
This made our home sale a little more difficult than what others may be experiencing in the United States but luckily we were still able to get a contract on our home 3.5 months after our home was put on the market. In fact, we actually received three contracts on our home that very week after not receiving any bites for 3.5 months (and over 30 home showings in that time period).
While I’m no expert at selling a home, I did recently go through the whole home selling process.
Selling a home can be a long and stressful process but hopefully with this guide I can help someone’s home sale go a little more smoothly than mine did.
Preparing your home to be put on the market and knowing the necessary steps and tips to selling a home can make a home sale go much more smoothly.
Plus, I don’t think anyone wants to experience any sort of surprise when selling their home since it is such a big expense.
Below are my steps and tips for selling your home. Enjoy and good luck with your home sale!
Find a real estate agent.
If you decide to sell your home by using a real estate agent, then you should look for one sooner rather than later. This way your real estate agent can give you an idea of what your home may sell for, what changes you may want to make, what the timeline for selling your house may be, and so on.
We used the same real estate agent from when we originally bought our home. If you need one in the St. Louis area, let me know and I can send you her contact information! She made the process a breeze.
Get a city home inspection.
I highly recommend looking into whether your city requires a city home inspection in order for your house to be put on the market.
We had to call our city office and schedule an appointment. I thought it would be easy and that they would just come over, but the wait time was actually quite long in order to fit my appointment in. Plus, we were calling during the slow season so I wouldn’t want to imagine what the wait would have been if we would have called during the spring or summer months when everyone else is trying to put their home on the market as well. The wait may have been months!
Also, keep in mind that these are only good for so many months. Ours was set to expire in the summer but thankfully we received a contract on our home and it sold in time. The city home inspection wasn’t expensive, but it did take a lot of time and there were some small changes that we were required to make before the house could be closed on.
Declutter.
We decluttered our home like crazy before we even showed it to our realtor. Home buyers do not want to see clutter as it can make a house look smaller, dirtier, and not as nice.
Decluttering is probably one of the easiest things you can do during a home sale, so why not do it?
Some of the things you may want to do include:
Clear out your basement and/or attic. Most have their basements and attics filled with things they do not need.
Put away any personal items. Sadly, you may have to tuck away your favorite photos during a home sale. Buyers like to imagine themselves in a home and if there are pictures of you everywhere then that may make it more difficult.
Sort through closets, cabinets, extra rooms, and so on.
Remove anything that may make a room seem smaller.
Clean.
Cleaning is something that everyone who is planning on selling a home should do. Sadly, this is a step that some skip!
Some of the cleaning tasks you may want to add to your to-do list include:
Clean and wax floors.
Power wash the driveway.
Dust everything.
Wash windows and mirrors.
Paint furniture, walls, trim, and so on if you are able to. It’s a relatively cheap change that can completely change a home. This is actually one of my TOP tips for selling your home. Paint can go a long way.
Clean your fridge. Yes, sometimes home buyers will peer in there.
Improve your curb appeal.
The first thing that a potential home buyer looks at is pictures of your home from the outside. The first thing they see in person is the outside of your home as well.
They say that everyone judges a home within the first 5 minutes. If that’s not enough to tell you that curb appeal is important, then I don’t know what will!
Potential home buyers don’t like to see a house that needs a lot of maintenance. Even though every house needs it, no one actually wants to think about it.
For curb appeal you will want to:
Keep your lawn cut and tidy.
Remove any trash from the front, back and side of your home.
Pick up any leaves and keep your gutters clean.
Plant flowers.
Decide if you will stage your home or not.
Homes that are staged usually sell quicker and for a higher amount of money than homes that are not.
If you are able to then look into staging your home or leaving some of your furniture in the home (if you are moving before the home sells).
Show your home.
When you’re house is on the market, you will have to allow for home showings. Potential home buyers may show up at the very last moment so your home should always be clean.
I’ve been asked by many if the home seller should be home during a home showing. I pretty much think that’s just a bad idea overall. You should clean your home and leave (take your pets with you) so that the potential home buyer can look at your home and be stress-free.
Since we didn’t live in our home while it was on the market, it made for selling our home much easier. Many times potential home buyers would come just 5 minutes to an hour before they wanted to see it, which would have been quite difficult if we would have been living there.
The house also would have been a disaster!
Accept an offer.
Eventually, you will hopefully receive an offer or two. You may do some negotiating on price and again after the homebuyer completes their own home inspection and appraisal as well.
Once you accept an offer though, you may be able to breathe a little easier. However, it’s not done just yet! You still need to actually close on the house and give the keys to the homebuyer.
Close on your home and move out!
The last of my tips for selling your home is finalizing everything on closing day. You will be told how much you owe or how much you will receive, what you need to do in order to close on the loan, and so on. Then, you will sign tons of papers and hand over the keys.
The last part may be the best or worst – you have to move out! Depending on when the home buyer’s closing date is, you generally want to have everything out of the home by then unless some sort of agreement has been made.
Hope you enjoyed my guide to selling your home. While my home sale didn’t go as smoothly as I would have liked, there were no surprises and the only thing that held us back was tanking neighborhood prices. Hopefully the tips for selling your home I gave above will make the process for you much easier!
Did anything go wrong with a past home sale of yours? What tips for selling a home would you give to someone?
Direct retail lender Revolution Mortgage has scooped up two of loanDepot‘s top LOs, accelerating its plans to expand market share despite a tough origination environment.
Jorden Brok and Brett Lotsoff are producing area managers and SVPs of mortgage lending at Revolution Mortgage and are tasked with expanding the company’s footprint in the greater Chicago area. Lotsoff and Brok spent nearly 10 years at loanDepot and the branch they managed originated $1 billion in volume in 2020 and 2021, Lotsoff and Brok said.
“We liked that we’d have the opportunity to be more entrepreneurial and have more freedom. We just see a lot of growth opportunities here in terms of building our branch and building our team,” Lotsoff said in an interview with HousingWire.
As with the rest of the country, the Chicago-area market is dealing with issues stemming from a lack of inventory, and until rates decline, it’s the first-time buyers that Lotsoff and Brok are primarily targeting for volume.
“We should see more purchase activity from existing homeowners once rates and/or home prices come down a bit. Until then the factors we see that will drive existing homeowners to purchase are life events and household formation changes,” Brok noted.
For first-time homeowners, having the capital for a down payment is the biggest barrier, Brok said. Providing presentations on whether to opt for a conventional loan, Federal Housing Administration (FHA) loan, Fannie Mae’s HomeReady or Freddie Mac’s HomePossible loans while winning over contracts in a multiple bid environment are key to creating client stickiness, Lotsoff added.
“The first transaction is the most important, but we want to make sure we have a relationship with you afterward. We’ve been able to create a lot of stickiness over the years,” Lotsoff said.
Rapidly expanding Revolution
In a rising rate environment, many lenders have downsized or have gone out of business. Revolution, on the other hand, has been expanding its footprint by scooping up top loan officers in local markets.
By the end of June, the Ohio-based lender will have added 30 new branch locations nationwide since January, bringing the total to 120.
Last year, Revolution began bringing top LOs in the industry to the company, including Larry Steinway, former senior vice president of lending and branch manager at Guaranteed Rate, and Stacy Chevalier, loanDepot’s former area manager.
“When we grab what we call top LOs and top originators, they’re leaving that world in most cases, and they’re going into the world of owning their own shop,” Tim Johnson, president and COO at Revolution, said in an interview.
At Revolution, loan originators select their own staff members to support their branches from processors, assistants and other originators. The executive also sees opportunities to pick up high-producing branches across the country from lenders that are struggling.
Johnson estimates origination volume will be between $2 billion and $2.5 billion in 2023 and expects a target production of $4 billion in 2024.
“They’re coming over here because they want to go build something for themselves (…). People just want to have their own deal and you have to be willing to set up a model that promotes that. That’s what we are about – entrepreneurship,” Johnson said.
Buying a house ranks among the biggest financial decisions of a lifetime. So when making an offer, it helps to have an escape hatch if something goes wrong. That hatch is called a real estate contingency.
What is a real estate contingency?
Typically included in the contract, contingencies aim to protect buyers and sellers should issues emerge in the period between accepting an offer and closing the sale.
“The transaction is typically 30- to 60- day process—it isn’t like walking into a store and buying an iPhone,” says Anurag Mehrotra, an assistant professor of finance at San Diego State University.
With properly worded contingencies, buyers can rescind their offer if, for example, they’re unable to get a home loan or an inspector flags a leaky roof. In short, they can walk away from the deal without losing their “earnest money,” the security deposit put down when the offer was made.
When the real-estate market is cooling, as it has been in many parts of the country over the past year, buyers are increasingly able to ask for contingencies and still remain competitive if there are other offers.
In theory, potential buyers can ask sellers for almost anything imaginable—like assurances that the house has “good vibes.” But in reality, there are five contingency clauses most commonly found in real estate contracts.
Contingencies to consider
Inspection contingency
Once an offer has been accepted, there is typically a 30-day period for due diligence, Mehrotra explains. A buyer can hire a third-party inspector or engineer to assess things such as the home’s foundation and structure, electrical wiring and plumbing, the heating/cooling system and kitchen appliances.
Many inspection reports reveal minor or cosmetic defects that are no cause for alarm, a ding on the refrigerator door, for instance. But when the report unearths major issues, an inspection contingency allows the buyer to tell the homeowner to rectify them or reduce the purchase price.
“This is a huge one,” Mehrotra says. “It helps with unforeseen problems.”
Indeed, Realtor.com found that the number of buyers asking for repairs after an inspection more than doubled between August 2021 and August 2022, with the majority of sellers saying the cash value of repairs was in the $10,000-or-less range.
(News Corp, parent of The Wall Street Journal, operates Realtor.com.)
Appraisal contingency
Before it provides a mortgage, the lender will have the home appraised to ensure that its value meets or exceeds its purchase price. If the property’s valuation comes in low, buyers with an appraisal contingency are able to quash the transaction without losing their security deposit. Without that contingency, buyers would typically be on the hook to pay the difference upfront.
When the inventory of available homes is low but the demand from buyers is high, purchase prices are more likely to exceed appraised values. That dynamic was at play after the onset of the pandemic, when throngs of buyers sought larger homes. In January 2020, just 7% of home sales had a contract price above the appraised value, an analysis by real-estate data provider CoreLogic found. By May 2021, the frequency increased to 19% of transactions.
Since then, however, the demand for homes has eased—partly because rising interest rates have made mortgage payments less affordable. When sales are slower, bidding wars that jack up prices are less likely, which in turn helps close gaps between a home’s purchase price and its appraised value.
Mortgage contingency
When buying a house, most people can’t exactly whip out their checkbooks. According to the National Association of Realtors, 78% of recent home buyers obtained financing to complete their purchase. A mortgage or financing contingency gives buyers some extra time to shop for the best lender and interest rate.
That time is especially essential today. In the early months of 2023, average mortgage-interest rates bounced around 6.5%—well above the 2021 lows of less than 3%. In general, higher interest rates lead to larger house payments, so some borrowers may have more difficulty qualifying for a mortgage. That’s because a key component of the lender’s decision is the borrower’s debt-to-income ratio, a measure of the applicant’s total monthly debt payments in relation to the total monthly earnings.
It’s helpful when potential borrowers are preapproved for a mortgage before house hunting begins, explains Vanessa Famulener, president of HomeLight Homes, a real estate technology company. That may be enough to assure sellers that the deal will go through even with a financing contingency in the contract.
Better yet is conditional approval from a lender before the home search begins, Famulener adds. With preapproval, the lender mainly looks at the borrower’s credit score, credit history, income and assets. With conditional approval, the underwriter has received and reviewed most or all of the documentation required to get a loan up to a certain amount. Assuming nothing changes—no job losses or change in marital status, for example—borrowers with conditional approval can feel confident about their creditworthiness, which may eliminate the need for a financing contingency entirely, Famulener says.
Home-sale contingency
Over 56% of buyers are also selling a home, Famulener notes. And for most of them, selling is necessary before buying. First, they likely need the equity in their existing home to qualify for financing on their new home. And second, they can’t afford to make two mortgage payments every month. For both of these reasons, home-sale contingencies are commonly used in tight markets, Famulener says.
When including the home-sale contingency, it is important to include a time limit. Typically, the clause gives buyers 30 to 90 days after the contract is signed to sell their home. Without a time frame, buyers and sellers are left in limbo.
Facing a home-sale time crunch, some buyers turn to companies that pay cash for their current home.Terms vary widely among these companies, with some requiring homeowners to pay service fees, broker commissions, taxes and/or closing costs.
Title contingency
Before a home sale closes, a title search is performed to ensure there are no issues over ownership, such as liens against the property for things such as unpaid taxes, outstanding loans or overdue contractor fees.
A title contingency allows the buyer to back out of the deal if the title search flags ownership concerns. However, this contingency is less common because most purchase agreements already include a clause that voids the sale if title issues emerge, Famulener says.
Even if they waive a title contingency, buyers are typically required to purchase title insurance. This policy covers them—and their lender—if ownership issues arise down the road, such as an undisclosed heir. The premium is generally a one-time fee paid to the title company at closing.
Will contingencies hurt my chances in a bidding war?
While contingencies of all types give buyers some wiggle room when making an offer, contingencies can also hurt your chances of getting the house of your dreams.
In Milwaukee, first-time home buyers Drew and Lyn Buus, both 26, made offers on seven homes between March and mid-May—losing out each time to other buyers, most likely because of contingencies.
In one instance, the couple bid $303,000 for a three-bedroom, 1½ -bathroom house in Wauwatosa, Wis., that was listed for $273,000. They included inspection and appraisal contingencies, but also said they would cover up to $5,000 if there was an appraisal gap and up to $5,000 if the inspection showed necessary repairs.
After just one day on the market, the house had 33 offers, eventually selling for $293,000. “We offered more and it sold for less,” Buus says. “We never heard back [from the sellers], but we assume contingencies were waived” in the winning bid.
For now, he and his wife—and their dog Bailey—are staying put in a house they’re renting in Milwaukee’s Bay View neighborhood. “I feel strongly that you shouldn’t waive the inspection and appraisal contingencies,” says Buus, a supply-chain specialist for a medical manufacturer.
“It’s one of the largest financial decisions you’re going to make,” he says. “If something goes wrong, you’re on the hook.”
More on real estate
The advice, recommendations or rankings expressed in this article are those of the Buy Side from WSJ editorial team, and have not been reviewed or endorsed by our commercial partners.
Investing isn’t unlike a martial art. Victors are decided not by brute force, but by reaction time and technique.
Call options are one such technique that when applied correctly can lead to a nice profit. BUT (and that’s a big but), like any investment, if you miscalculate (which is easy to do), you’re out a lot of money.
That’s exactly why call options are for advanced investors that know how to time the financial markets better than your average newbie buyer.
What’s Ahead:
What is a call option?
Source: WHYFRAME/Shutterstock.com
A call option is a contract that gives you the option, but not the obligation, to purchase a stock, bond, commodity, or other security at a locked-in price within a certain time limit.
Here are a few of the various terms you’ll need to know when it comes to buying calls:
The strike price is the price of each share within the call option.
The premium is the price of the call option contract itself.
The expiration date is the date on which the call option expires, usually a week, month, three months out.
Let’s say TSLA is selling at $100. You think it’s going to go up to $120, so you purchase a call option for a strike price of $100 and an optionpremium of $3 per share.
Remember, you’re not buying the stock yet, just the right to buy 100 shares at $100 per share. So you’ve just paid $3 x 100 = $300 for the call option. The expiration date is three months out, so you have some time to watch the market’s volatility.
TSLA rises to $120 as you had predicted, so you execute on your call option and purchase your 100 shares at $100. Let’s do the math to see how you made out.
Your premium total for the call option was $300.
Your strike price for the TSLA shares is $100 x 100 = $10,000.
So in total, you’ve paid $10,300.
Your shares are now worth $120 x 100 = $12,000.
So you’ve made $12,000 – $10,300 = $1,700.
If you’d put more serious money on the table and purchased 10 call options for $100,000 plus a premium of $3,000, your profit would’ve gone up by 10x = $17,000. Maximum profit right there.
How is a call option different from a put option?
A put option is simply the reverse of a call option. It’s a contract that you pay a small premium for in order to get the right, but not the obligation, to sell the underlying shares at a certain price point within a certain time limit.
What is a covered call?
A covered call is when you sell call options on stocks that you actually own. Covered calls are used to make a little extra income on the stocks in your portfolio that you think will remain steady or even drop, while others think they’ll increase.
For emphasis, covered calls are “covered” because you actually own the shares and are able to sell if the holder of your call option chooses to execute their right to buy (in contrast to a short call, defined below).
Let’s say you own 1,000 shares of AAPL at $100 and sell call options for a strike price of $110 and a premium of $3. Another buyer thinks that AAPL is about to skyrocket, so they purchase all 10 of your call options.
Remember: you haven’t sold them the shares yet, just the right to buy them if they choose to execute on the option. You’re betting that shares of AAPL will stay steady or drop and the buyer won’t buy. The buyer, by contrast, is betting that your shares will increase in value enough to offset his premium and strike price.
Turns out, AAPL doesn’t rise above $105 by the expiration date, so your buyer allows the options to expire. Your covered call paid off. You keep your shares and the buyer’s premium of $3 x 1,000 = $3,000.
What is a long call?
A long call is when you purchase a call option because you believe that prices will eventually rise before the expiration date.
In the example above, the buyer of your call options was making a long call. They believed that the prices of AAPL would rise high enough to offset both their premium and the strike price by the expiration date. In this case, the strike price was higher than the current market value, meaning the call option was “out of the money”.
If AAPL had risen to, say, $150 before the expiration date, they would’ve executed on their call options to purchase 1,000 of your shares at $110 = $110,000. Factoring in their premium of $3,000, they paid you $113,000 for 1,000 AAPL shares now worth $150. Their total profit is $150,000 – $113,000 = $37,000. Their long call paid off.
What is a short call?
If a covered call is selling options on shares that you currently own, a short call is selling options on shares that you don’t currently own. It’s a high-risk strategy that advanced investors and hedge funds might use to sway the market, make premiums, and lower a stock price.
To use a realistic (if unscrupulous) example, let’s say the market indicates that shares of Xeris Pharmaceuticals are about to skyrocket in value from $100 to $200 thanks to a new miracle drug. You believe that the drug will get rejected by the FDA, so you offer 100 short calls for $150 at a premium of $5 and an expiration date of 1 month.
You’re telling the market “I promise to sell you 10,000 shares of XERS at $150 within the next month, for an upfront premium of $50,000.”
The market thinks you’re nuts and buys up all 100 of your call options. You immediately net 100 x 100 x $5 in premiums, or $50,000.
In Scenario one, let’s say the drug gets rejected and XERS shares plummet to $50. Nobody executes on your calls, so get to keep the $50,000 of premiums.
In Scenario two, let’s say shares of XERS did rise to $200 by the expiration date. All of your buyers execute on their options, but you don’t have the shares to sell them. You now have to buy up 10,000 shares at $200 and re-sell them for the strike price of $150 to your call buyers. Your net loss (minus commissions et al) is 10,000 x ($200 – $150) = $500,000, minus your premium of $50,000 = $450,000.
This example illustrates why short calls are so risky. The maximum upside of short calls is the premium only, or in this case, $50,000. But the downsides are limitless; if XERS had skyrocketed to $1,000 per share, you’d be out millions.
Are call options safer than other investments?
Source: Kaspars Grinvalds/Shutterstock.com
Call options are often considered a very risky asset. They’re inherently complex, and because they’re more commonly traded by advanced investors and institutions backed by limitless market data, amateurs can quickly find themselves in the red facing a lot of potential losses.
While it’s great to understand the basics of call options, don’t consider them until you’re a more experienced investor. There’s a lot of money on the line if you don’t know what you’re doing. You’re better off sticking with a less risky asset such as a mutual fund.
Read more: How To Invest: Essential Advice To Help You Start Investing
When are call options useful?
Source: NATNN/Shutterstock.com
There are three common reasons why more advanced investors might leverage call options (again, I need to reiterate that this is not the right investment for beginners).
Income
Selling options is a quick way to make a few bucks off of your existing assets. As illustrated in the example above, you can sell a covered call on stocks in your portfolio that you believe will stay steady or even lose a little value. There are tools out there like E*TRADE‘s Options Income Finder that can help you ID shares in your portfolio that are ripe for passive income generation.
Plus, selling calls with a strike price above the current market price is a low-risk income-generating strategy; even if your buyer’s long call pays off and they execute their right to buy, you’ve still netted their premiums plus the difference in your purchase price and strike price.
Low-risk speculation
Call options also give you the ability to “invest” in a stock without having to purchase shares upfront.
Let’s say you foresee shares of TSLA skyrocketing, but you need some time to save or sell off your other positions to afford some TSLA. You can lock in a decent strike price by paying a few hundred bucks in premiums today and buy yourself some time. Later, if TSLA doesn’t rise like you thought it would, you can simply let your options expire.
Tax management
Call options are also a common way a buyer can prevent a “taxable event” through realized gains.
Let’s say you need to squeeze some income out of your 100 shares of AMZN. You could sell, but you’ll be subject to commissions and capital gains taxes on your newly-realized gains.
Read more:Gains And Losses: What Will Be Taxed And What Can I Claim?
So instead of selling your position, you can sell a covered option on your shares. In this case, the only cost to you, the buyer, is the time and legal bill for setting up the options contract. Many option sellers (aka, online brokers) can set up options contracts for a low fee, and once your buyer picks them up, you can reap in the premium right away.
Summary
Call options are financial contracts that can be leveraged to squeeze a little extra income out of your existing portfolio and help you invest in the stock market without having to purchase shares upfront.
Make no mistake; options trading is an advanced investing technique (maybe not a black belt, but perhaps a yellow belt right in the middle). It’s worth reiterating, too, that short calls can put you at unlimited risk for little immediate upside, so they’re not at all right for the beginner trader.
But if you learn the ropes and take it slow, options trading can make your portfolio go a little further.
Next month may bring an unpleasant surprise for some businesses: Their borrowing costs may rise sharply after banks finally retire the once-ubiquitous Libor interest rate.
Banks, lawyers and business leaders are spending the next few weeks working to avoid rate spikes, reflecting the need for last-minute work despite years of preparations. The London Interbank Offered Rate, which underpinned financial contracts across the world before being felled by a rate-rigging scandal, is finally going away in July.
The transition to new rates has so far gone smoothly. U.S. banks started making loans using new interest rate benchmarks ahead of last year, and trillions of dollars’ worth of derivatives contracts also transitioned without much of an issue.
Now comes the final leg: Switching old loans that still refer to Libor onto different rates. Some loans have easy fixes, but others have contractual language requiring that the interest rate charged should be the Prime rate when Libor isn’t available.
That’s a problem for borrowers, since banks’ Prime rates are above 8%, while Libor rates are closer to 5%. Though banks have alerted many clients to the situation, some borrowers may still be unaware of the looming cost increase, a sign that the Libor transition for loans is behind despite years of work.
“Frankly, I think it’s not where it should be,” said Joyce Frost, co-founder of the advisory firm Riverside Risk Advisors.
The higher interest payments could cause some borrowers to breach loan covenants, such as those measuring companies’ ability to repay their debts, Frost noted. At the very least, the issue is expected to cause some late nights for bankers and lawyers as they try to rework loan contracts. Legal disputes are also possible.
Observers don’t anticipate that borrowers will be stuck with the Prime rate for too long. Once companies realize they owe more interest, they will likely dial up their bank to figure out how to return to a cheaper option.
Bank lawyers say the industry is spending the next few weeks trying to get ahead of those phone calls — by following up with affected borrowers who may have missed previous communications about the issue.
While banks would make more money by charging the Prime rate, they are wary of negative surprises, which could sour client relationships.
“Everyone is trying to get to the same end goal, because no one wants to deal with: What happens if we start charging you Prime?” said Edward Ivey, a lawyer at the firm Moore & Van Allen.
It’s hard to say just how many customers will be affected, since many business loans involve only the bank and the borrower, and precise data isn’t public. The borrowers are more likely to be smaller and middle-market companies, which may have less sophisticated finance departments than larger firms.
Data from the leveraged loan market — where loans are made to larger and heavily indebted companies — shows that a small subset of contracts are at risk of switching to Prime. Roughly 8% of leveraged loans, or perhaps a bit more, may be at risk if the parties do not take action, according to Covenant Review data.
Regulators have spent years warning banks and borrowers to switch away from Libor as quickly as possible. In December, Federal Reserve Vice Chair for Supervision Michael Barr cautioned against a “pile-up of contracts all waiting” for a change to a non-Libor rate.
The Alternative Reference Rates Committee, the group of market participants that is leading the U.S. Libor transition, said in a statement Wednesday that market participants should by now be well aware of the “fast-approaching deadline.”
“Those that are not prepared risk significant ramifications, including uncertain and potentially unfavorable outcomes regarding their legacy Libor contracts along with operational disruptions,” the ARRC said. “These risks underscore that it is essential that all market participants complete their transition of remaining Libor contracts now.”
In preparation for Libor’s demise, the ARRC developed fallback contract language that lenders could use in the earlier stages of the Libor transition — providing a clear sense of what will happen when Libor ends.
Because some old contracts did not have any workable fallbacks, Congress passed a law that automatically transitions them to new rates and further limits Libor transition risks.
But the law did not fix any contracts that had workable fallbacks in place — even those where plan B was using the more expensive Prime rate. That language was long a standard in the industry. But it was intended to address situations where Libor wasn’t published temporarily for whatever reason — not a scenario in which it goes away forever.
The next month will be “quite busy in this space,” as banks and borrowers work to amend contracts at the last minute, or give themselves more breathing room, said George Cahill, a partner at the law firm Alston & Bird. It helps that lenders have dedicated Libor teams in place to talk borrowers through their options, and that policymakers and industry officials spent years on the issue.
“There will be some bumps along the road, but I think the amount of time that these industries have put into trying to solve this problem will go a long way,” Cahill said.
The best-case scenario is for banks and borrowers to switch to a new rate by the end of the month, though actual deadlines for specific loans may be several weeks later, depending on when the borrower’s next interest payment is.
And though Libor will soon be buried — the U.K. panel banks whose funding estimates make up U.S. dollar Libor will no longer submit those numbers — a fake version of Libor will live on until Sept. 30, 2024.
U.K. regulators are requiring the publication of “synthetic U.S. dollar Libor” for one-month, three-month and six-month tenors. The actual rate will be the CME Term SOFR, which has quickly become popular in business loans, plus a small add-on figure that’s meant to adjust for credit-related risks. Term SOFR is a forward-looking rate based off the Secured Overnight Financing Rate, which is replacing Libor in most cases.
Lawyers are getting questions on whether specific contracts allow for the use of synthetic Libor, which would avoid an automatic switch to the Prime rate.
But some contracts have clauses specifying that Libor rates must be “representative” of interbank funding costs, which allows for less wiggle room, said Graham Silnicki, a lawyer at the firm White & Case. That’s because the panel of U.K. banks will no longer submit what’s long been seen as representative of what banks would charge for loans to each other.
Lary Stromfeld, a partner at Cadwalader, Wickersham & Taft, is recommending that banks and borrowers carefully review their contracts for any such nuances.
“Remember what your mother told you: Watch your language,” Stromfeld said.
Mortgage rates surged closer to 7% this week, further worsening housing conditions for buyers.
The rate on the 30-year fixed mortgage increased to 6.79% from 6.57% the week prior, according to Freddie Mac, on expectations the Federal Reserve will hike interest rates again. For the past eight months, rates have stayed between 6% and 7% with few signs of significantly softening anytime soon.
Elevated rates — along with still-high home prices — have been a blow for homebuyer affordability and have convinced many homeowners to delay listing — worsening inventory conditions in a supply-starved market.
“Both buyers and sellers have backed off from the market because mortgage rates are so high,” Daryl Fairweather, chief economist at Redfin, told Yahoo Finance. “They’ve made homebuying more expensive. Homeowners who were able to lock in 3% mortgage rates a little over a year ago don’t want to give up those rates and are not selling.”
“So we’re seeing way fewer transactions this time of the year,” she added.
The dearth of deals was evident in other data this week.
For instance, the share of applications to purchase a home slid 3% last week from a week earlier, according to the Mortgage Bankers Association’s survey. Overall, buyer demand is 45% lower than the same week one year ago.
“Although there has been a steady flow of purchase demand around rates in the low to mid 6% range, that demand is likely to weaken as rates approach 7%,” Freddie Mac Chief Economist Sam Khater said in a statement. Khater noted that a “buoyant economy” has convinced many market watchers that more Fed hikes are on the way.
A separate study by real estate analytics company Altos Research found the number of pending sales that should complete in June and July sat at 398,000 last week, unchanged from the week prior. That’s even as inventory rose 2% or the week ending May 29.
“That could be a signal that some buyers froze as rates jumped,” Mike Simonsen, founder of Altos Research wrote in a blog post.
Higher rates have also left a growing share of homeowners reluctant to list this spring. Those who have put their homes on the market may find they have the upper hand against buyers.
“We had a house on the market for only a couple of days and right off the bat we had four buyers through its first day listed,” Monte Miner, real estate agent at Ironwood Fine Properties, told Yahoo Finance. “That’s a good sign that the place is going to sell at or even above expectations, but buyers won’t get the opportunity to negotiate when competition is high.”
That’s if buyers can even find a house to purchase.
For instance, an index measuring the volume of signed contracts was unchanged in April from March, even though the spring is the busiest time to list and sell a home, according to the National Association of Realtors last week.
Similarly, the number of homes that went into contract this week was down almost 5% from the previous week and down 14% from the same time a year earlier, according to Altos Research.
“We know that demand for housing has outpaced supply all year. But mortgage rates really jumped this week … There are signals that some buyers put their actions on hold,” Simonsen wrote. “If rates stay … do the little green shoots of market strength quickly wither away?”
Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.
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Inside: Trade and Travel is a legitimate investing course to learn how to make money in the stock market. See my personal view as a student.
I have been in the personal finance industry for a long time and have watched gurus with CFP and many more designations struggle to make money consistently in the stock market.
There are many concepts on how to trade the stock market.
Teri’s IWT system works.
It’s legit.
I’m a part of her investing course. I have seen the results. $1000 a day club in my LIVE account. Yes.
So, you get to read my Invest with Teri review first.
Teri is able to break down investing into the stock market like no one else I have seen.
You can read a book or blog and find many different concepts that work for them. Then, walk away with your head spinning and quit on the idea of trading and lose a bunch of money along the way. This is why most people leave it to professionals (which is a mistake with that pesky 1% asset management fee).
The Invest with Teri Method is a 7 Step Process that simplifies how to invest in the stock market.
She goes into detail on each of the seven steps to make sure you pick the right companies, limit your risk, know when to buy, and when to take profit.
Plus you have access to a private Facebook group and countless hours of coaching calls to really understand the IWT method.
This is how I am choosing to finance the life I want.
Okay, now that we got that out of the way… let’s dig into the details of the Invest with Teri review and learn how to travel and travel.
This is what you want? Right?
Make more money and have more time freedom.
Enough sitting on the sidelines… read this IWT review and then sign up today.
Honestly, if you have any money in the stock market, you need to take this course to understand the fundamentals.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What Are Online Stock Trading Classes?
If you’re interested in taking stock trading classes, there are a few things to consider before jumping into the world of investing. Stock trading is an investment that can be profitable if done correctly and is a way to grow your money.
Stock trading courses are a great way for newcomers to learn about the stock market. Also, courses are fantastic for those who want to refine their investing skills or maybe stop the bleed of money from trying on their own.
The Invest with Teri Ijeoma course provides a more structured learning path and can help you avoid some of the common mistakes made by novice traders.
In order to get the most out of a stock trading course, it is important to find one that matches your individual needs and goals. Plus one that can offer support and guidance because learning to trade is a learning curve.
Who Should Take Stock Trading Classes?
It is possible to learn the ins and outs of stock trading on your own without taking any classes.
However, for those who want a more structured learning experience, or for those who want to have access to a community of traders, stock trading classes can be a great option.
Taking stock trading classes can be a great idea for people who are interested in getting into the industry. The stock market is one of the most popular industries to get involved with, so it is likely that you’ll want to pursue a side hustle that may lead to a career in this field.
There are many different types of stock trading classes available, so it is important to do your research and find the one that best suits your needs.
Even if you are an index fund investor doing it on your own, this investing class is great knowledge to understand how the market works beyond “I hope it keeps going up.”
Must Read: How To Invest In Stocks For Beginners: Investing Made Easy
Trade and Travel 2.0
Right now, Teri and the rest of her coaches are doing a MAJOR overhaul on the signature course.
Her design team is currently working really hard to create an updated look and feel so you can experience Trade and Travel even better than before.
However, there will be changes – some we know about and some we don’t.
What we Know Today:
A significant Price increase happened (like double to $10k)
Shorting and gaps will be included in the main Trade and Travel course.
Limited time support on coaching calls. (However, a subscription model for additional coaching will be available.)
What You’ll Learn in the Trade and Travel 1.0 Course
The Trade and Travel course is an online course that will teach you everything you need to know about the world of trading, and more!
First of all, Invest with Teri along with Trade and Travel are used interchangeably. They are both the same AMAZING course that will teach you to make money in the stock market.
You will learn the Teri Ijeoma trading strategy.
The Invest with Teri 1.0 course is divided into two sections:
Travel & Travel – This is the basic course to understand fundamentals and to learn how to make money as the stock market goes up.
VIP Program – This is an advanced course that covers shorting, gaps, and options.
The great news… you can start with the basic Trade & Travel program and upgrade to VIP at a later date.
If any of this sounds foreign to you, Teri is one of the best teachers I have ever met. She breaks break down investing in the stock market like no one else I have seen. She is able to take difficult concepts and make them easy.
Simply put, Teri offers a course that teaches you everything you need to know about investing.
Later, in this Invest with Teri review, I will detail the difference between the two courses and what you will learn.
Teri’s Purpose of Trade and Travel – Financial Independence
The purpose of the course is to help students learn how to generate wealth.
Students can use the extra income earned from the course to supplement their income, pay off debt, or save so they can solidify their financial independence.
There is no doubt that in order to achieve financial independence, you need to invest in yourself. This means learning new skills, working on your mindset, and making smart choices with your money.
With a positive attitude and a determined spirit, anything is possible!
Want to Learn More about Investing?
How do you trade with Teri?
The privilege to have one-on-one coaching with Teri herself is very rare. However, she is known to offer group mastermind sessions for her VIP students.
So, in order to trade with Teri, you must enroll in the full $5000 course and wait for the next opportunity to trade with her.
Trade And Travel Program
The Trade and Travel program is the fundamental part of the investing course. This section will teach you the basics of the stock market and how to make money on the way up.
Teri’s trading strategies focus on risk management and she has seen many of her students achieve success with trading.
To be upfront in this Trade and Travel review, you will learn:
Learn how to pick stocks
Understand how the stock market works and how you can make money off it
Recognize why risk management is the most important aspect of trading
Understanding how to read charts
Learn the best places to buy and sell a stock could be
Be able to tell the story of the candles
Understand if your stock trade has a strong likelihood of being profitable
Determine how many stocks to buy based on your risk tolerance
How to place a trade at your brokerage
Manage your trade and exit based on your trading plan
That is a highlight of what you will learn in the basic Trade and Travel program.
Trade And Travel VIP Investor Program
The VIP program is the advanced piece of the course once you learn the fundamentals of the Trade and Travel program.
For those looking to upgrade to the VIP program, you will learn:
Make money when the market goes down.
How does shorting the stock work
When to look for gaps and what they mean
What is globex?
Options! This is everyone’s favorite part of the course!
Understand how to make money with option contracts
Risk management with options
Plus so much more!
Plus you can rewatch all of the curriculum and coaching calls over and over until you get it. That aha moment!
Both Travel & Travel and VIP offer live zoom training each week. Plus there is a vault of recording coaching calls to review.
Supportive Trading Community
Teri has built a supportive trading community of fellow students who have gone through the course.
Each trade cuzzin offers encouragement, advice, moral support, and feedback to each other.
This supportive community can help people overcome their anxiety and doubts when trading and investing.
You can find this supportive community on Facebook groups, Telegram groups, Clubhouse clubs, local meetups in your city, and people have connected to create a mastermind group. Honestly, there are plenty of people available to make sure you are successful on your journey.
Don’t forget… There are weekly live calls and chart parties.
This is how many people have turned 10k into 100k.
My Personal Trade and Travel Reviews
This is one of the best educations I have received.
My biggest regret is that I did not enroll in the course sooner (same as the time before I upgraded to VIP).
In all honesty, this course is a better education than spending hundreds of thousands on a college degree.
Personally, I meet Teri during FINCON, a huge conference for personal finance content creators and brands.
I loved how Teri spoke during her presentation and quickly reached out to learn more about her Invest with Teri course. Also, I was intrigued by the $1000 in a day club.
As always, I investigate every single company or platform that I recommend.
Obviously, this course has an eye-shocking price tag when you first see it. However, once you start earning your money back, you quickly realize how undervalued her course is.
As I always tell my readers… if I wouldn’t put my time, energy, or money on the line, then I am not going to tell you about it. I will only recommend products, services, and courses only that I truly know that work.
My View as a Trade and Travel Student
After a few months of debate if I could afford to spend the money on this investment course…
I became a Trade and Travel student in February 2021.
As outlined above, the course is jam-packed with information. I thought with my background in personal finance I would have a leg up over the others. However, I quickly learned that I need to view the stock market from Teri’s point of view and put blinders on to others’ opinions or styles of trading.
There are a ton of ways to make money in the stock market. This is one of them.
You can google and probably find many more investment courses and rabbit holes to follow. Investing is one of the most popular Reddit Personal finance topics. People want to learn to trade and most are looking to be fed information.
You have heard that saying, “teach a man to fish and he will never go hungry.”
The same holds true for completing this course, “Teach a trader to make money and you will be more profitable than your dreams.”
The best thing about life is you get to decide what you want to do, spend your time, and budget your money. Investing in this course is a big pill to swallow and I get it. However, I would not be so adamant about telling others about this course since I see a path for people to stop the stress with money.
I am successful with trading. Now, it is your turn to become successful.
This is by far the best investing course I have ever seen. 1000% recommended by me personally.
$1,000 In A Day Club
Here is proof. I made the $1k club in my live account and $10K in SIM.
I am a part of the trading community.
What exactly is the $1000 in a day club?
This exclusive club is for those traders who have made over $1k in a day.
Many IWT traders have received this plaque and part of this $1000 in a day club.
If you want to invest money and make $1000 a day this is how to start.
This is how I am choosing to finance the life I want.
Get one step closer to reaching your dreams and financing your life!
How Long Does It Take to Learn to Trade Stocks?
The time it takes to learn how to trade stocks depends on your personal learning style.
It typically takes 2 to 3 years to learn how to trade stocks.
By taking an in-depth course, you can shorten your learning curve.
Teri’s Approach to Learning to Trade Stocks
More importantly, the results you see trading stocks will depend on the effort put in to learn the curriculum, manage the trade, minimize your risk, and prepare your mindset.
Teri’s goal for her student is to earn 1% of our capital consistently.
This is not a get-rich-quick scheme. You have to put in the hard work to reap the benefits (aka profit).
For example, some people learn better by reading and others prefer watching videos. Some people may find that they learn best by following an instructor in a live trading room.
Who is Teri Ijeoma?
How many years of trading experience does Teri have?
Teri Ijeoma has over 10 years of trading experience.
Once she left her job as an elementary school assistant principal, she took off to travel the world. Those around her started asking questions and she taught her first group of students in Thailand.
Teri enjoys enlightening people on investing strategies and is passionate about building wealth.
Combining her trading experience with her teacher background, Teri is a talented educator in the investing world.
Teri has been featured on Forbes, NBC, CBS, ABC, Black Enterprise, Yahoo Finance, Business Insider, Fox News, Comcast – just to name a few!
She thrives by teaching others how to invest, so they can afford the life of their dreams.
Teri has made significant amounts of money through trading and is motivated by helping others achieve success.
Check out Teri discussing her $1,000,000 in a day profit. Yes, one million dollars in a day!
I’m scared to lose my real money trading. Can I still take the course?
Don’t want to risk your money, but are curious?
You can practice in a simulated account before you move to real money. Then, you can make mistakes. Learn from those mistakes. Understand how the stock market moves. Make wins.
The bottom line you can make real money in the stock market. You just have to be armed with knowledge and a trading system that works.
That is why most people lose money in the stock market! They don’t understand how the stock market works. They have poor risk management strategies and tend to select the wrong companies to trade with.
In the Trade and Travel course, you will walk away with so much investment knowledge and support from other people in the course to be successful.
Afraid to trade individual stocks? Teri’s process works with ETFs too!
Is Invest with Teri Reviews Reddit? Is this a scam?
As with any popular r/personalfinance thread, this is one that comes up often…is Invest with Teri legit?
There is a lot of mixed information on the web when it comes to Invest with Teri.
Some people have had great experiences and made a lot of money, while others have had negative experiences and lost money.
Since I have been forthcoming that I am a student of her course, I would recommend active trading as a way to supplement your income.
However, you must be willing to put in the time and effort to see the results.
And honestly, that is where most people give up because you must put in the effort.
At Invest With Teri, they believe anyone can learn how to invest and generate income through investment. They offer a variety of courses on how to invest, as well as a community of support to help you get started.
Their program has helped people from all backgrounds achieve their financial goals.
Did this Trade and Travel Review Convince You?
Teri Ijeoma is a millionaire trader and coach who shares her tips and tricks for success.
Trading is a skill that can be learned, and with the right education, anyone can do it successfully.
Trading is not a get-rich-quick scheme – it takes time and effort to learn.
Don’t waste your time or money on being a self-taught trader. Take a course from an expert.
I am part of this trading community and so excited to be a trade cuz!
Start building another income stream for yourself.
Invest with Teri Ijeoma teaches you how to make a lot more money than you currently are. Very possibly, trading can help you replace your current income or even exceed it
To be successful, you need to invest in this investing course, develop a solid trading plan and stick to it.
Get one step closer to reaching your dreams and financing your life!
Be the first to know when Teri releases a coupon code for her Invest with Teri course.
Do you have an Invest with Teri Coupon?
It is VERY rare that Teri puts out a coupon code.
However, if she does, I always notify my email list who have been on the fence about enrolling.
Typically, these coupon codes are valid for a limited time only.
Trade and Travel FAQs
Obviously, you are doing your due diligence before enrolling in this course, which I completely understand. I did too! I spent a lot of time researching prior to enrolling in this course.
Here are answers to the most asked questions about Invest with Teri, Trade and Travel, VIP program, as well as Teri Ijeoma.
Is the Trade and Travel course for new investors?
Yes, the Trade and Travel course is for both new investors and experienced investors.
Honestly, you are more likely to lose money in the stock market by trading on your own rather than spending money on the best investing course available.
The course is designed for everyone, regardless of experience level.
There are different courses available within the program for more advanced students (like shorting and options).
How long does the program take to complete?
You can complete the course within a weekend if you binged watch everything.
However, it takes 8 weeks to thoroughly go through the curriculum.
The main Trade and Travel course is broken down into sections, and modules include videos, tutorials, pdf worksheets, quizzes, and more.
The course instructor, Teri Ijeoma, estimates that it will take 8 weeks to complete the online course material before you begin trading.
In addition, there are plenty of coaching calls, which are filled with gems of information that you can watch.
This investing course is much like obtaining a college degree. The more you study, the better results you will have.
What will I learn in Invest with Teri course?
You will learn how to trade stocks and options based on her Invest with Teri method.
This is a solid, effective investing strategy.
Learning how to effectively trade stocks and make 1% consistently is the goal. This is higher than the market returns on any given day.
How much does Teri ijeoma course cost?
The cost of the Trade and Travel 2.0 course is $10000.
In addition, there is a payment plan available that allows you to pay in installments which is a great option without interest or hidden fees.
Honestly, this investing course is undervalued given the amount of knowledge you will gain.
Is there a payment plan?
Yes, there is a payment plan.
This is a great way to invest in the program with an affordable payment plan based on what you can pay today.
Right now, you can start the course with Payment Plans as LOW as $208/Month.
Can I purchase the Trade and Travel course and upgrade to the VIP program later?
Yes, you can always upgrade to VIP and pay the $2,500 difference. This is something you can do at any time.
I purchased the course to learn the basics and when I made money to pay for the VIP course I upgraded. Many students have done the same.
My gem of advice… eventually, you need to upgrade to VIP to fully understand the chart analysis as well as make money on the way down.
How much money do I need to start trading?
Many students start with $500.
This question is very difficult to answer because it depends on your personal finance situation and the type of trading you want to do.
The best advice is to start small and grow your account.
Trading stocks and options come with risk as such you must recognize that it is possible to lose all of your trading money.
Personally, I recommend starting with the amount you are comfortable losing. For me, I started with $3000.
Again, you do not need a lot of money to start trading. Check out this interview with Chris Calvin (aka Trade with Coach). He started with $500 and quickly grew it to 5 figures!
What trading platform does Teri Ijeoma use?
In her Trade and Travel course, she reveals which brokerages she has used in the past.
Right now, she is known to use Tradestation.
Recently, in her 5 Day Take the Trade Live Challenge, she set up a brokerage account with TD Ameritrade.
Do I have to attend coaching calls live?
You don’t have to attend coaching calls live. Also, all of the live trainings are recorded except the weekly Trade and Travel Q&A.
By attending a live coaching call, you have the opportunity to ask questions and get help from the instructor.
You can access the class recordings at your convenience once the coaching call is uploaded.
Personally, I attend the VIP coaching calls live to get the best out of the experience.
Remember, if you miss a class, you can always watch the recording later. You will have lifetime access to the coaching call recordings.
How long do you have access to the curriculum?
LIFETIME ACCESS!
You will have lifetime access to the curriculum.
That is pretty amazing to have these resources available forever.
You can review the curriculum as many times as you like.
Personally, I have gone back and reviewed many modules and coaching calls again (and again).
Is there a Facebook group? How long do you have access?
In fact, there are two Facebook groups for students that are run by the IWT coaching staff.
One Facebook group focuses on the general IWT method and the other is specific to VIP strategies.
In addition, there is a Trade and Travel sponsored Telegram group.
These Facebook groups are a great way to connect with other students and to learn from each other.
You have access to the group for as long as you are enrolled in the course.
What’s Teri’s Instagram handle?
First of all, there are so many fake accounts for Teri Ijeoma, Invest with Teri and the Trade and Travel Course.
Teri’s real account is @teriijeoma
Beware of imposters accounts and scams.
Can I share my course log-in information with others?
No, this is not allowed.
Each person should purchase the course separately.
The only exception is you can share with your spouse.
What is the refund policy?
According to their policy, refunds are not available for any of their courses. (You can read that here).
However, they do not want unhappy students or I don’t want unhappy trading cuz.
So, if you need additional assistance, reach out to their support team at [email protected] and one of the fabulous coaches will assist you.
Honestly, this makes 100% sense as a student. There is so much knowledge and information in the course that it is not surprising.
If you truly put in the time and effort, you will see success. You have to put in the work though.
Just a reminder… trading is a risky investment if you don’t know what you are doing. You can lose money in the stock market.
Know someone else that needs this, too? Then, please share!!