[Post 114] Learning investing/trading together #27:How to fund your IBKR(Interactive Brokers) account

In this learning investing/trading post, I am going to show how to fund your IBKR(Interactive Brokers) brokerage account. 

Normally for Singaporean investors, we would just simply do a bank transfer. However, for IBKR, we would have to fund your brokerage by wiring money to it(which is pretty much the same as a bank transfer)

*Do refer to my guide on how to set up an IBKR(Interactive Broker) account if you have not done so, here.

So, why choose IBKR(Interactive Brokers) as a brokerage?

Pros

• Good customer service, I did ask some queries even before my account was approved regarding whether there is any charges on wire transfer(There are no charges, btw) using the chat interface and was answer promptly
• Fees of $0.005 per share or min $1.00 USD(whichever is higher) or $0.035 per share or min $0.35

Cons

• Must transfer money to your custodian bank account assign to you and they will update your account balance(Updating of balance in the account generally takes an hour not immediate)

Onto the step by step guide on how to fund your brokerage account in IBKR!

1)Transfer money into your IBKR Account

How much to transfer?

• Well, it depends on how much your budget to purchase those stock and whether you have enough in your bank
• Currently, the Brokerage charges for IBKR(US market):$0.005USD/Per share, min $1.00 or $0.035 per share, min $0.35
• Hence, the minimum amount one should invest to maximize the brokerage fee of $1.00 is actually any amount they wish to invest or trade in stock(if you cannot afford a $1 commission fee, well there are also plenty of zero commission broker but it varies from country to country)
• ***Note: You can invest in any amount you like, in my personal case I use either $3000 or $5000 or $7000

So you have decided the amount? What's next?

• Transfer the money, of course!

2)Transfer your money to fund your IBKR brokerage account

Log in to your Interactive Broker account. At the homepage, scroll down and click on transfer fund(black circle)

Click on Make a deposit

Scroll down and under Bank wire, click on HOW TO WIRE FUNDS

Enter the Sending Institution, Account Number, and Account Nickname. In my case, I use DBS, and my Sending Institution will be DBS BANK LTD, SWIFT/BIC code will be DBSSSGSG, and the account number will be your bank account number. You can check up your SWIFT/BIC code at the SWIFTcodes.com.

Select No to " Is your bank/financial institution located in Hong Kong or Mainland China? ".

Change the currency according to the country you live in.As i live in Singapore, it will be sgd

Enter the deposit amount that you wish to transfer,e.g $3000

Click on No for " Would you like to make this a recurring transaction?"

Then scroll down and click on "Make a deposit"

After getting the routing details,use the routing details to initiate a FAST transfer.

Log in to your IBKR account and transfer fund. In my case, I use DBS, go to transfer, and select To Other Bank Account(Fast). You will then be brought to the page below.

If this is your first time transferring, leave the paying to option as default

Follow the routing instruction as above,

Recipient Name: Interactive Broker LLC.

Recipient Bank: CITIBANK NA

Recipient account: The Bank account number as above

Transfer Amount: Enter the transfer account e.g $3000

Purpose of Transfer: Investment & Securities

Comment for the recipient: Your interactive broker account number, refer to picture below(UXXXXXXX)

Then, click next and you are done

*Do note that Updating of balance in the account generally takes an hour not immediate

Withdrawal is similar to depositing. Although depositing is always Free using FAST, Interactive Brokers only allow 1 Free withdrawal per month or you will be charged SGD$15 per withdrawal.

If you would like me to write an withdrawal article,do let me know in the comments below!

[Post 113] Learning investing/trading together #26:How to sign up a brokerage account with Interactive brokers

In this post, i am going to show how to set up a brokerage account with interactive broker.

So, why choose Interactive Broker(IBKR) as a brokerage?



Pros

Good customer service, asked some queries on the account fee using the chat interface and was answer promptly
Fees of USD 0.005 per share or min $1.00 USD (Cheapest stock brokerage for Singaporean investors to invest in US Stock Market)

Cons

Must transfer money to your custodian bank account assign to you and they will update your account balance(Updating of balance in the account generally takes an hour not immediate)
Onto the step by step guide on how to set up a brokerage account with interactive brokers!

1.Go to https://www.interactivebrokers.com.hk/en/home.php

2.Click on Open account(red circle)

3.A popup box will than appear. Under individual, joint or IRA Account, click Start application

4.You will be brought to a page for creating a username and password. Fill in the email address, username, password and confirm password. Under Country/region, select your residential country. Then click Create Account

5.Go to your mail inbox. You will receive an account confirmation in your mail as shown below ,click verify account

6.You will be brought to this page below. Under the complete a started application, enter the username and password that you have key in earlier and click login

7.Under customer type, select individual and base currency according to the currency that your country is in(in my case,i select Singapore).Simply select of the option listed, for how did you hear about us.Then, click continue.

8.You will be brought to the personals information page. Fill in your saluatation, first name, middle name, last name, suffix, date of birth , gender, marital status, number of despondent.

9.Fill in your address #1 and #2,city, state/province, zip/postal code. You do not need to change the default option for the remaining question such as(Do you have a different mailing option?)

10.Fill in your phone number, country issuance, Identification type, Identification number

11.Under tax residency, Select your country and enter your tax identification number(For singaporean, enter your nric number).Then select your employment and leave the default option as no for "Do you have additional sources of income?"

12.Enter your account information(More will be explained later) and also key in the respective security question.

Cash or margin account?


 


  

Cash Account Pro

  

Cash Account Cons

 

  



Will not short mistakenly


  



Have to wait T+2day for money to settle. Hence,
  no day trading.



 



 


  

Margin Account Pro

  

Margin Account Cons

 

  

         · Allow you to day trade, short or invest

      ·Cash settle as soon as you sell your stock

  



You may accidentally leverage or short the stock



 

*these are just some pro and con that i can think on top of my head


13.Leave the default option for regulatory information as it is.Enter your net worth,liquid networth and annual net income


14.Check the investment objectives,select any options


15.Select Yes for stock and the respective investment product you wish to trade(e.g Forex,bonds).Do not worry too much as the investment product can be change .Fill up the years trading, trades per year, total trades and  knowledge level



16.Select the countries that you would like to trade in(Can be changed after you set up your account)


17.Fill up the Substitute Form W-8BEN if you are a non-US tax resident individuals. Remember to select the option “I am not a resident in a country with a US tax treaty”

18.Select agree to all




19.Next,you will have to enter your mobile, upload the respective identity documents.

20.You can fund your account after your account has been approved, hence there is no hurry in funding your account(Will touch on how to transfer money from your bank to fund your IBKR in the next few post)


Credits mostly to lazybutintelligentinvesting for most of the pictures, do look out for my future post!. Thanks for reading!

[Post 112]Learning investing/trading together part 25:Pre-Dividend capture strategy method(legit or not?)

*For more information on Pre-dividend capture strategy method, you can refer to/download this book

This week post we will focus on a trading method known as Pre-Dividend capture strategy method(Not exactly sure if there is another name for such strategy though)

What is "Ex-Dividend"?

• A trading term that specifies when a declared dividend is owned by the seller rather than the buyer

• For example, the ex-dividend date for the stock DBS(D05) as shown below is 2018-08-08
• This means that if you own the stock on 2018-08-08 aka Aug 8, 2018, you will be entitled to the dividend also known as cash dividend 

• Dividend or Cash dividend: A cash dividend is a money paid to stockholders, normally out of the corporation's current earnings or accumulated profits. Not all companies pay a dividend though)

• A common misconception is that you must own the stock until after the ex-dividend dates to be entitled to the dividend 

• In DBS(D05) case, most people thought that you have to hold until after the Ex-dividend date before you can sell it, which is one day after the Ex-dividend date(Aug 9, 2018)

So,what is this Pre-Dividend capture strategy method?

• The key date to remember is 10 trading days prior to the day before EX-DATE(circle in red), in this sample of STI ETF(ES3) the date would be (circle in black)
• You buy the stock 10 trading day prior to the day before the Ex-dividend date and sell it on the day on before the ex-dividend date
• Win or lose,you just follow the rules of buying 10 day prior to the day before the Ex-dividend date and sell it on the day before the ex-dividend date (Anyone that tell you that a trading strategy is a sure win, is a liar.)
• This strategy here has been historically 75 to 85% successful as the author state, which means he lose somewhere between 2 to 3 out of every 10-15 trades him make.

Let show's some historical data from STI ETF(ES3) to see if its really work as he stated,will be using the previous 10 ex dividend dates to compare 

Since each year,es3 will have two ex-dividend date(Jan and July),the data used will be from 2015-2019

All data taken from yahoo finance:credits to yahoo finance

I will be using the data of the opening price to see if this strategy really work.

• 22 Jul 2019(10 trading day prior to the day before ex dividend date:3.4300
  02 Aug 2019 (1 trading day before ex dividend):3.3500
• Result:Loss

• 21 Jan 2019(10 trading day prior to the day before ex dividend date:3.2800
  01 Feb 2019 (1 trading day before ex dividend):3.2490
• Result:Loss

• 19 Jul 2018(10 trading day prior to the day before ex dividend date:3.3030
  01 aug 2018 (day before ex dividend):3.3910
• Result:Win

• 18 jan 2018:3.60
  31 jan 2018:3.60
• Result:draw or loss (if you consider transaction fees  too)

• 14 Jul 2017(10 trading day prior to the day before ex dividend date:3.2900
• 27 Jul 2017(day before ex dividend):3.3800
• Result:Win

• Prices does not include commission or other data for simplicity sake
• 18 Jan 2017(10 trading day prior to the day before ex dividend date:3.0600
• 01 Feb 2017(day before ex dividend):3.1100
• Result:Win

• 15 Jul 2016(10 trading day prior to the day before ex dividend date:2.9700
• 28 Jul 2016(day before ex dividend):2.9900
• Result:Win

• 15 Jan 2016(10 trading day prior to the day before ex dividend date:2.7200
• 28 Jan 2016(day before ex dividend):2.6100
• Result:Loss

• 16 Jul 2015(10 trading day prior to the day before ex dividend date:3.3900
• 28 Jul 2015(day before ex dividend):3.3500
• Result:Loss

• 16 Jan 2015(10 trading day prior to the day before ex dividend date:3.3800
• 29 Jan 2015(day before ex dividend):3.4600
• Result:Win

As you can see from the result,we have

• Win:5
• loss: 4
• draw:1

So 5 out of 10 wins, about 50% chance

If we were to include commission, I would probably suggest a range from $5000-$10,000 to trade to see any decent profit

Using Jan 2015 e.g 

BUY

SELL

PROFIT

• $5.177.08- $5,082.87=$94.21

Conclusion

• Circumstance may change as we are using Singapore stock instead of US stock
• Another consideration would be applying this strategy to a normal stock instead of an ETF

Hope this article gives you an insight into trading strategies!

[Post 111] Learning investing/trading together part 24:How to purchase stock through SAXO

In this learning investing/trading post, I am going to show how to purchase stock through SAXO

Surprisingly, the signup process for SAXO was easy as it uses Singpass information(for Singaporean resident only) for signing up despite it being a Denmark bank and in about one day, I open a brokerage account with SAXO(Remember to set your account as USD  denominated!).

So, why choose SAXO as a brokerage?

Pros

• Good customer service, asked some queries on the account fee using the chat interface and was answer promptly
• Fees of $0.01 per share or min $4.00 USD 
• Able to sign up using SINGPASS
• There is a Singapore office
• Paynow transfer is near instant

Cons

• No physical bank(Well,at least not in Singapore)
• When (FAST)bank transfering money to your custodian bank account assign to you and they will update your account balance(Updating of balance in the account generally takes an hour not immediate)
• Let's say you transfer $4000 at 3 PM to your custodian account, only at 4 PM then your account balance will show that you have $4000 transfer in
• 0.12% annual fees(this mean that if you have an investment of $10000, you will have to pay an annual fee of $12)
• There is a 0.75% forex conversion fee if you are making trade in a foreign currency

Onto the step by step guide on how to purchase a stock via SAXO!

Step 1)Transfer money into your SAXO Account

How much to transfer?

• Well, it depends on how much your budget to purchase those stock and whether you have enough in your bank
• Currently, the Brokerage charges for Saxo (Singapore market):0.08%, min $10
• Hence, the minimum amount one should invest to maximize the brokerage fee of $12,500
• 0.08%/100=0.0008
• $10/0.0008=$12,500
• if your trade is bigger than $12,500,the 0.0008% is bigger than $10.Compare to other brokerages charges which are far more expensive such as DBS and Standard Chartered,FSM and SAXO are one of the cheapest brokerage in Singapore(Except for tiger brokers)
• ***Note: You can invest in any amount you like it need not be $12,500, in my personal case I use either $3000 or $5000 or $7000

But what about the US Market charges?

• Again, it depends on how much your budget to purchase those stock and whether you have enough in your bank
• Currently, the Brokerage charges for Saxo (Singapore market):$0.01/per share or min $4.00 
• Hence, the minimum share one should purchase to make it worth it is 400 share
• 4.00/0.01=400 shares
• ***Note: it is just a guide, you can purchase any amount of shares you like just as long as your profit is more than your commission for purchasing and selling the shares.

So you have decided the amount? What's next?

• Transfer the money, of course!
• Do refer to this webpage on how to fund your account

Step 2)Time to buy some stock!

After you log in click on add instrument to search your stock ticker, in my case, i am buying APPLE inc stock(AAPL)(red circle)

After clicking buy,the trade ticket will appear,key in the quantity of the stock that you would like to purchase, in my case, I will sell my shares of APPLE

The terms are explained as follows:

• Bid: how much someone is willing to pay for the share(Someone wants to buy the share at a price of 318.75)

• Ask is the price a seller is willing to sell the share(someone wants to sell his share at a price of 318.84)

• Last traded: How much was this share bought or sold for in the last/latest trade transactions

• Net changed: How much the share has increased/decreased change is the difference between the current price and the closing price of the previous day (e.g market close at 1600pm at the previous day at $316.85 per APPLE share and it is now at the current market price of $318.89 per APPLE share)

• % change: Similar to net change but in a percentage form

• Type or order type: Limit order(buying or selling a share at a specific price, Always choose Limit order!!!), market order(buying or selling a share at the current market price or also known to buy or sell the shares immediately, OR Order get filled immediately)

• Buy./Sell: Select buy if you want to buy shares and select sell if you want to sell the shares(In my case, I select sell)

• Shares: How many share you would like to purchase(In my case, I select 6)

• Price: The price you would like to buy/sell your share at(In my case, I select at 319.55)

• Duration: DAY Order(A Day order is a limit order good for that business day only. If the order is not filled by the end of the trading day, the order will expire.This is the order we are going for, for simplicity sake.)

• Cost: Shares x price(6 x 319.55=1917.3)

• Nominal value: Saxo commission charges(as mention before,it is min 4.00 USD,hence 4.00 USD)

• Cash available: How much ash you have available in your account

*As taken from here: When a market is experiencing more buying volume than selling volume, it means that there are more traders buying at the ask/buy price, which has a tendency to push the price up.

When a market is experiencing more selling volume than buying volume, it means that there are more traders selling at the bid price, which has a tendency to push the price down.

After that click place order, and click confirm and you are done!(You have made your first investment!😁)

Pretty easy right?Do watch out for my next post,thanks for reading!