The three components of Everest by Frej Capital.
When is comes to investing there are a few different types of strategies that we focus on; day trading, swing trading, long term investing, and hedging.
What is Day Trading?
- The practice of of purchasing and selling a security within a single trading day.
- Involves well-educated traders and well-funded accounts where certain restrictions are lifted.
- Utilizing high amounts of leverage and short-term trading strategies to capitalize on small price movements that occur in highly liquid stocks or currencies.
What is swing trading?
- The practice of holding a security for more than one trading session. (A trading session is from 9:30AM-4:00PM est)
- Usually lasts a few days up to a couple of weeks, but with overnight and weekend risk trade time frames vary.
- The goal: capture a specific price movement, either long or short.
- Risks involved are gap ups or down, pending news, stop losses being triggered, and risk/reward ratio not being favorable.
What are the benefits of long term investing?
- Creating a solid base to outweigh a risky portfolio.
- Investing for your future self in stocks you are confident will grow in value.
- Minimalizes the tax burden of short term capital gains.
- Creating a dividend income on stocks such as AAPL, JPM, XOM, JNJ, etc.
What is Hedging?
- Managing and minimizing risk by insuring themselves against a downside in an investment.
- Types of Hedging:
- Locking in a specific price for a premium up until a certain date called the expiration date
- Locking in the right to buy/sell but not the obligation to buy the underlying asset (the stock) at a certain price (strike) up until a certain point in time (expiration date)
- 100 shares per 1 contract, the premium is the price you pay for the right but not the obligation to buy/sell 100 shares at a specific strike price
- These are rarely executed in our strategy since we capitalize on the rise of the premium for the option contract
- Call Option
- Put Option
- Asset Allocation
- Diversifying your portfolio
- Small cap – Large Cap, Commodities, International
- Averaging Down
- If you are confident in your stock purchase but it fell due to recent news, buy in at a lower price to lower your average cost
- Dollar Cost Averaging
- Continuously purchasing a fixed amount every day, week, or month
- Having cash on hand for unforseen opportunities and protecting against market uncertainty