In today's episode of the Stock Navigators Podcast, Tim and Vu talk about the dangers of trading meme stocks, whether we're in a real estate recession, and what they'd do if they had an extra $100,000.

How Would You Invest $100,000? — SN Podcast #16

How much cash do you need in your brokerage account to day trade? It's the age-old question beginner traders ask. Today, Vu shares his thoughts.

How Much Money Do You Need to Start Day Trading? (Day Trading for Beginners)

How much cash do you need in your brokerage account to day trade? It's the age-old question beginner traders ask.

Have you wondered how many stocks you should own in your long-term portfolio? Read a couple of articles online, and they might tell you to hold 30 or even up to 60 stocks. 

But famous investors like Warren Buffett and Charlie Munger have different ideas. 

How Many Stocks Should You Own in Your Portfolio?

Here’s the cold, hard truth about day trading…

We’re not saying this to scare you away from trading!

But it’s important to be realistic, so that we can prepare ourselves for what day trading requires.

Besides, there’s a reason most traders lose money. 

You can’t blame them though… there are so many online gurus who make it seem like day trading is easy… and they promise their followers fast cars and big mansions.

Unlike those guys, at Stock Navigators we tell you the opposite… we tell you the truth!

But it is a learnable, straightforward skill that can be developed with consistent practice. 

So whether you’re trading stocks, futures, cryptos, etc…

If you want to be one of the few who successfully hone the craft…

That means if you win money, someone else is losing it… and other people in the market are doing everything they can to beat you.

So we absolutely need to make sure that we have a step-by-step trading process. 

Planning your strategy is the most important part of the trading process.

Because you better bet everyone else has a battle plan.

And today, I’m going to share my trading battle plan with you.

Let’s get right into it, here’s my complete step-by-step process on how to get started with day trading.

1) Develop a trading power - What’s your edge?

This is what separates the winners from the losers.

In trading, someone always has to lose… so what’s your trading power to make sure you’re winning?

Whether it’s an education on technical analysis… or fundamental investing principles… insider trading information… or even the news…

Figure out your edge, and figure out how you’ll use it to execute trades. 

At Stock Navigators, our trading power is technical analysis. 

We teach people how to read the stock market - click here to see how other people are using our trading strategies.

2) Open a trading account and start trading with paper money

Look, if you want to get good at trading… you gotta learn how to use your tools.

It takes a couple months just to get a “natural feel” for the trading program you’re using.

How to send in an order, buy at the market price, limit order to sell, Whether it’s ThinkorSwim… or TradeStation…or any platform you pick and choose to execute your trades.

You’ve also got to learn how to play the stock market.

So when you first start trading, do it on a simulated account.

Use paper money to trade while you learn the ropes… and learn how to use your trading program.

Recording your progress is the fastest way to improve your trading results.

When you’re starting to make consistent profits on your simulated account, it’s time for the real deal.

Put some cash in your account and start trading with real money.

As a general rule of thumb, you should only risk 2% of your account per trade.

This way, you prevent overtrading… which is a fast way to destroy your portfolio.

5) Join a community of like-minded traders 

Once you’re making consistent profits on your own, the fastest way to scale your gains is by bouncing ideas off of other traders.

There’s a quote that says, “As iron sharpens iron, so one person sharpens another.”

If you’ve been searching for a community of like-minded traders… Stock Navigators may be the place for you.

If you’d like to develop your technical trading skills alongside other successful traders, click here to learn more about Stock Navigators.

It’s the word on everyone’s lips this week: Recession.

The latest Bloomberg model puts the probability of a recession at 38% (or 19 to 31, great odds if you’re betting). Economists are split, with some saying the recession is coming, others saying it’s not, and a third camp saying it’s already here.

But whether we slip into a recession or just remain mired in a bear market, it’s safe to say traders and investors alike are starving for opportunities to grow their money right now.

And while all of the major market benchmarks are in the red, there are plenty of places to stash your cash right now - we’ve talked about a few of them already over the past few weeks, including grocery and healthcare stocks that have historically performed well in recessionary periods.

But those aren’t the only sectors where you can find capital appreciation in tough times…

Take Advantage of a Strengthening Dollar with this USD ETF

The dollar has been rising against the euro (its natural currency pair) steadily over the past year, up 16% since July 2021. 

As you can see, the dollar has achieved near parity with the euro - and that’s thanks to the Fed’s commitment to raising interest rates.

As the old saying goes, “Money goes where money grows,” which means investors looking to make money on a currency investment will do better when interest rates are going up, so the dollar is attracting investors like we haven’t seen in years.

And that’s been great for the Invesco DB US Dollar Index Bullish Fund (UUP), which tracks the performance of the US dollar. It’s up 11.51% in 2022, while the S&P 500 benchmark is down 19.33%

An Easy Way to Profit From Bear Market Volatility

It’s no secret that volatility has spiked in 2022 as the bears have taken control of the markets.

Here’s a chart of the CBOE Volatility Index (known as the VIX, or the “fear index” - which measures expected price fluctuations over the next 30 days over the last year - July 2021-July 2022. 

For perspective, take a look at the chart from the previous year, from July 2020-July 2021…

You’ll notice far fewer swings, fewer spikes, and longer periods of low volatility…

But to get even more perspective, let’s look at July 2019-July 2020…

The left side of the chart depicts “normal” volatility in the pre-pandemic bull market. Volatility is low, and the line is relatively smooth, with very few spikes - until COVID hit.

In short, we’re locked into a period of high volatility and will likely remain there as the bears continue to push markets down and recession fears weigh on stocks.

Smart investors can look at the iPath Series B S&P 500 VIX Short-Term Futures (VXX), which is an ETF that tracks the VIX. 

It’s up 19.59% YTD, a full 40 points better than the S&P:

It’s Still a Good Time to Short the Tech Sector

After powering much of the run up the last 13 years, the once-vaunted FAANG stocks - Facebook, Apple, Amazon, Netflix, and Google - continue to decline in this bear market, pulling the entire Nasdaq Index (which is heavily weighted toward these companies) down 27% YTD.

The easiest way to profit from a decline in tech is the ProShares UltraPro Short QQQ (SQQQ), which tracks 3x the inverse performance of the Nasdaq. 

It’s up over 80% YTD - and has peaks as high as +122% in recent weeks. This will continue as long as the Nasdaq declines.

At Stock Navigators, we teach you how to tell when it's time to go short... or go long... click here to learn more about it.

As Recession Fears Kick into High Gear, These ETFs Will Keep Clobbering Markets

With markets down 21% on the year most stocks can be scooped up at a huge discount to where they were trading just a few months ago.

Bear markets tend to squeeze the dumb, speculative money out of the markets - meaning many stocks that were overvalued at the start of 2022 won’t make it back to their pre-bear market levels any time soon.

Example: Tech stocks have taken a beating because there’s so much speculative capital in the sector. It’s not enough to “buy the dip” on the stocks that were hit hardest by the market decline and hope to make 50% or more when markets hit bottom - because there’s no guarantee that buyers are coming back to these stocks… 

So you have to be smart about your choices in 2022: the best course is to find stocks that attract capital in a flight to safety during tough times, but still project upside.

And if you can get paid to own them, even better…

Because right now, high-yield stocks are beating the broader indices. Take a look…

This is a comparison of the S&P 500 (the red area) and the SPDR Portfolio S&P 500 High Dividend ETF.

High dividend stocks from the S&P 500 are beating the broader index by 15 percentage points - and a few select stocks are doing a lot better than that.

Here are three great dividend stocks to buy on the dip…

Dividend Dip Stock No. 1: Atmos Energy Corp. (ATO)

Atmos Energy Corp. (ATO) operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately three million residential, commercial, public authority, and industrial customers.

Atmos will benefit from the massive 700% surge in natgas prices rippling through the economy as a result of the Russian invasion of Ukraine.

Right now, the stock is up 4.5% on the year, and should benefit even more in the coming weeks with natgas prices going crazy. And getting paid 2.36% at current prices doesn’t hurt, either.

Dividend Dip Stock No. 2: Citigroup Inc. (C)

The Fed is committed to raising rates throughout the balance of 2022. And the sector that’s going to benefit the most from a rising rate environment is, of course, financials. And big institutions like Citigroup are going to benefit.

During the company’s Q1 Earnings call back in April, CEO Jane Fraser said “We continue to see the health and resilience of the U.S. consumer through our cost of credit and their payment rates. We had good engagement in key drivers such as cards loan growth and vigorous purchase sales growth, so we like where this business is headed.”

Citigroup is down this year, but still beating the broader markets. Take a look…

And of course, getting paid 4.35% at current prices will help your bottom line no matter what happens to the broader markets.    

Dividend Dip Stock No. 3: Iron Mountain Inc. (IRM)

Iron Mountain Inc. (IRM) is a global leader in storage and information management solutions. The company has a client list of over 225,000, with a real estate network of more than 90 million square feet across approximately 1,450 facilities in approximately 50 countries around the globe. Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts.

But we bring it to your attention for two reasons…

First, while IRM stock is down -5.73% on the year, it’s still outperforming the markets by 15 points. 

This means when bulls come back to the markets, IRM has some potential upside in terms of capital appreciation…

Second, it yields a fat 5.02% at current prices, giving shareholders some cash in their pocket while they wait for markets to rebound.

Some investors will tell you to buy the dip on a great stock no matter what. 

That’s fine if you’re a buy-and-hold type, someone who wants to build large stock positions over a number of years and watch them grow.

Buying more shares at lower prices is a great way to reduce your overall cost.

But what if you’re a trader - looking to make the most profit in the least amount of time?

Blindly buying the dip can lead you to a portfolio full of losers in short order…

The best way to avoid going upside in this market is to trade Money Zones - because they will tell you when the dip is going to lead to a reversal of the trend - and hand you profit when a stock makes a move to the upside.

I know we say this a lot at Stock Navigators - but that’s because the Money Zone Method flat-out works.

Chief Market Strategist Tom Luong uses Money Zones with every single trade - and they helped him book over $1 million in profits last year...

If you want to learn how you can harness the power of Money Zones to level up your trading game, just click here.

3 “Dividend Dip” Stocks That Could Be Worth Your Money 

Let’s face it, shorting isn’t for everyone…

Going short requires a margin account with enough cash to cover 150% of your position when you borrow shares of a stock in order to sell them short.

Or you’ve got to know how to trade options - and while trading put options doesn’t require margin, it does require special clearance in your trading account.

But there’s another way to make money when markets go down… 

An Inverse Exchange-Traded Fund (also known as a “bear” or “short” ETF) is an investment vehicle that uses a basket of derivative investments to track the inverse performance of an underlying benchmark.

They’re not only a great way to profit when markets go down, they can also help you hedge your portfolio during a bull market.

But before you take the plunge on inverse ETFs, there’s something you should know…

Inverse ETFs usually come in three varieties: -1x, -2x, and -3x.  

A -1x ETF tracks 1:1 with the underlying, while -2x and -3x use leverage to double or triple the inverse results…

So at 1x, if the underlying goes down 5%, the inverse fund is designed to go UP 5%. -2x and -3x funds would go up 10% and 15% respectively.

The danger of using leveraged inverse ETFs is that the more leverage you take on, the more susceptible the fund is to what’s known as a tracking error - the difference between the actual returns of the fund and the underlying benchmark.

For that reason, inexperienced traders should stick with 1x inverse ETFs to avoid the risks involved with leverage.

It’s also important to note that inverse funds are designed to give a -1x return of the underlying benchmark for a single day. The longer you hold even a -1x ETF, the more likely your position will experience a tracking error. Keep that in mind.

That said, here are some of the best inverse ETFs on the market…

ProShares Short S&P 500 ETF (SH) - tracks -1x the performance of the S&P 500. It’s the most popular inverse ETF on the market, with $3 billion in assets under management. 

As of this writing, the ProShares Short S&P 500 ETF is up 19.82%, just a hair off the -19.74% the S&P has lost over the same time period.

ProShares Short QQQ (PSQ) - PSQ provides investors with -1x returns of the Nasdaq benchmark, which has taken a serious beating in 2022. That should continue as the bear market squeezes speculative capital (dumb money) out of the markets for the next few months.

Year to date, PSQ has handed investors 31.12% while the Nasdaq Index has lost 28.58%.

ProShares UltraPro Short QQQ (SQQQ) - As noted above, the Nasdaq has taken a beating this year, the worst performer of the major market benchmarks. If you’re comfortable taking on leverage, the ProShares UltraPro Short QQQ targets a -3x performance of the Nasdaq Index. 

You’ll notice that the price of SQQQ is much more volatile and prone to fluctuations than PSQ - that’s the downside using leveraged ETFs.

The upside? Year to date, SQQQ has seen highs of +122% when the Nasdaq composite hit lows of -31% on the year.

But as you can see on the chart, tracking error can eat into your returns, especially when the trend reverses and the benchmark moves to the upside. 

In mid-March, when the Nasdaq made a short-lived 13% gain, SQQQ crashed, dropping 40%.

As always, make sure that any leverage you choose to take on is in line with your own personal risk tolerances.

Of course, you can use technical analysis to trade inverse funds as well. At Stock Navigators, we use Echo Mapping to trade technically. It works for stocks, cryptos, bonds, ETFs… all sorts of investments - click here to learn more about it.

The Easiest Way for Beginners to Profit from Any Market Decline

How Would You Invest $100,000?

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How Much Money Do You Need to Start Day Trading? (Day Trading for Beginners)

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The Cold, Hard Truth About Day Trading

As Recession Fears Kick into High Gear, These ETFs Will Keep Clobbering Markets

3 “Dividend Dip” Stocks That Could Be Worth Your Money

The Easiest Way for Beginners to Profit from Any Market Decline

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