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- Money Of The Day Vs Real Terms Definition
- Money Of The Day Vs Real Terms Meaning
- What Is It Called When You Count Money At The End Of The Day
Stocks, by their very nature, fluctuate in price over time. That’s the basis of how most investors make profit. Some investors take long-term positions, making very few trades — instead, relying on their confidence that their chosen equities represent solid earnings potential over time. Long-term positions tend to be reserved for the more stable blue-chip companies that represent the “retirement” or “low-risk” portion of an investor’s portfolio.
Day traders are stock market investors who take advantage of small fluctuations in share prices that occur between the opening and closing bell. A day trader closes out all positions at the end of every day, and starts out the next day with a 100 percent cash position in order to make several buys and sells throughout the day.
The SEC has a very specific definition for a day trader, and applies a special set of rules. The agency defines a day trader as an investor who makes same-day buy/sell transactions at least four times during a five-day period. If you buy an equity on Monday and sell it on Tuesday, that’s not considered a day trade. Same-day trades must account for at least six percent of the investor’s activity. If you fit the definition of a day trader, you must maintain at least $25,000 in your trading account. If your equity falls below $25,000 and you still are day trading, you will get a day trading call to make up the difference. Some day traders maintain separate accounts to avoid any confusion, doing their day trading out of one account and other intra-day trading from a second account. The second account would not be subject to the same day trading rules, and would not require the $25,000 minimum.
Intra-day trading, or short-term trading, differs from day trading in that the trader does not limit himself or herself to same-day trades. This sort of trading does not carry the same sort of restrictions as day trading, and you can start this method of trading with a minimal amount of capital. The major difference between the two is that a day trader profits on smaller price fluctuations; the intra-day trader holds positions for several days or weeks at a time in hopes of a larger swing.
Ideally, even if you do have the $25,000 minimum required to be a day trader, the best strategy is to combine both methods of trading. Some stocks that show larger swings throughout the day may be good day trading candidates, but other stocks may show regular swings over time. Intra-day trades may also be a wise choice if you are expecting a particular company to show a surge in activity in the near future.
For example, if you suspect that a corporation is going to announce that they exceeded their quarterly EPS expectations, purchasing the stock before the 10-Q is released–preferably on a “down” day–and holding it for a couple weeks until the numbers are announced would likely yield a considerable profit. The day trader would look at that same equity, but buy it on the morning of the announcement in anticipation of a same-day spike.
Information is for educational purposes only and is not be interpreted as financial advice. This does not represent a recommendation to buy, sell, or hold any security. Consult your financial advisor.
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A High School Economics Guide
Supplementary resources for high school students
Definitions and Basics
Definition: The nominal value of a good is its value in terms of money. The real value is its value in terms of some other good, service, or bundle of goods. Examples:
- Nominal: That CD costs $18. Japan’s science and technology spending is about 3 trillion yen per year.
- Real: A year of college costs about the value of a Toyota Camry. Those tickets to see Van Halen cost me three weeks’ worth of food!
Relative price is another term for the real price of a good or service. When we say that the relative price of computers has fallen in recent years, we mean that the price of computers relative to or measured in terms of other goods and services—such as TVs or cars—has declined. Relative prices of individual goods and services can decrease even if nominal prices are all increasing, because of inflation.
Real versus nominal value, at Investopedia.com
Real value is nominal value adjusted for inflation. The real value is obtained by removing the effect of price level changes from the nominal value of time-series data, so as to obtain a truer picture of economic trends. The nominal value of time-series data such as gross domestic product and incomes is adjusted by a deflator to derive their real values….
Gross Domestic Product, from the Concise Encyclopedia of Economics
In practice BEA first uses the raw data on production to make estimates of nominal GDP, or GDP in current dollars. It then adjusts these data for inflation to arrive at real GDP. But BEA also uses the nominal GDP figures to produce the “income side” of GDP in double-entry bookkeeping. For every dollar of GDP there is a dollar of income. The income numbers inform us about overall trends in the income of corporations and individuals. Other agencies and private sources report bits and pieces of the income data, but the income data associated with the GDP provide a comprehensive and consistent set of income figures for the United States. These data can be used to address important and controversial issues such as the level and growth of disposable income per capita, the return on investment, and the level of saving….
In the News and Examples
Tax Freedom Day: Americans work 4 months to pay this year’s taxes. The amount of time varies by state. Tax Freedom Day 2018 is April 19th. TaxFoundation.org.
Tax Freedom Day® is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes and divides them by the nation’s income. In 2018, Americans will pay $3.39 trillion in federal taxes and $1.80 trillion in state and local taxes, for a total tax bill of $5.19 trillion, or 30 percent of national income. This year, Tax Freedom Day falls on April 19th, 109 days into 2018.
A Little History: Primary Sources and References
Real versus nominal value. [Editor’s Note: This useful explanation was originally published at Answers.com but is no longer available on that site.]
Money Of The Day Vs Real Terms Definition
In economics, the nominal values of something are its money values in different years. Real values adjust for differences in the price level in those years. Examples include a bundle of commodities, such as Gross Domestic Product, and income. For a series of nominal values in successive years, different values could be because of differences in the price level. But nominal values do not specify how much of the difference is from changes in the price level. Real values remove this ambiguity. Real values convert the nominal values as if prices were constant in each year of the series. Any differences in real values are then attributed to differences in quantities of the bundle or differences in the amount of goods that the money incomes could buy in each year….