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Q&A: What you can ask your broker and how to calculate your trading gain

by , 24 July 2019
Q&A: What you can ask your broker and how to calculate your trading gain
Q. “Other than the technical side of trading, what else can I ask my broker which may help with my trading and investing knowledge and the financial decisions I make for my portfolio?”

A. I love this question because I think most people feel intimidated by even talking to their broker.

When you phone up your broker, you may ask them a number of investment and trading questions which they will be happy to help and assist.

The way I see it is that the more clued up we are about the markets when trading and investing, the better the chances we'll end up taking more trades which will benefit both the broker and us.

Here are a few questions you can ask…
 
Question #1: How’s the local and international market looking today?
 
Your broker is by his computer reading and researching non-stop about the local and international markets. And they most likely have the Bloomberg channel on in their office.
 
With the high competition of brokers out there, they have to be on top of their game with the market news and events.
 
So once a week or so, call them up and ask them what the top performers, top losers and how the main indices are looking.
 
Question #2: Are there any big news announcements that I should watch out for today?
 
Your broker most likely has a few economic calendars’ available on their Bloomberg terminal or their own trading platform which shows them what big and small news announcements are coming out, the expected value and the predicted value per announcement.
  
These can range from 
 
Non-Farm Payrolls (NFP)
Housing Price Index
Purchasing Managers Index (PMI)
Retail Sales (Year On Year)
Jobless claims
Employment data
Reserve Bank and FED announcements
Gross Domestic Products (GDP)
Consumer Price Index (CPI)
Interest Rate Decisions (FOMC)
And so on…
 
Question #3: When is company X paying dividends and when is the Last Day for Trading (LTD)
 
You may also want to ask any dividend related question which may have an impact on your portfolio investments.
 
Also, you can even get them to dig deeper by looking for the highest paying dividend stocks while you’re on the phone with them.
 
Question #4: What are your thoughts on buying company X or selling company Y?
 
If you do not have a solid trading or investing strategy and you’re holding onto a couple of investments in your portfolio, I would ask this question to get an outside and researched opinion on your current positions.
 
This knowledge could also help you make better financial trading and investing decisions in the future.
 
SIDE NOTE: Don’t let him sway your opinions on the shares. You already have your own ideas; you’re just increasing your knowledge by adding your broker’s ideas to the knowledge pool available to you.
 
Also, ask when is the best time to call to ask questions like these.
 
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Q. “Early in July, I received an email telling me to raise my stop loss on the Kumba Iron Ore CFD trade to R506 in order to lock in a minimum 43.80% gain. Can you please explain how much money I would have made if I deposited R7,500 into the CFD trade?”
 
A. If you deposited R7,500 into your trade you would have made a R3,285 gain.
 
To explain this, let’s start with an easier value to see how it works.
 
If your initial margin (deposit) was R1,000, in this trade your gain would have been R438. You’ll simply multiply the deposit amount by the percentage gain you would have made.
 
Here’s the calculation…
 
Gain = (Initial deposit amount X percentage gain)
        = R1,000 X 0.438
        = R438
 
Now that you see how it works, we can now plug in the value of what you would have deposited.
 
Gain = (Initial deposit amount X percentage gain)
        = R7,500 X 0.438
        = R3,285
 
Write this formula down for the next time you receive the next SMS from me.
 
“Wisdom yields Wealth”
Timon Rossolimos,
Analyst, Red Hot Storm Trader
 
P.S: If you found this article useful or you have a trading question which can help with your trading, please click here and ask away!


Q&A: What you can ask your broker and how to calculate your trading gain
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