Over a Brew with Malcolm Kazal: Instant Buying Power
In this second instalment of Over a Brew, we continue to explore the advanced features that sharpen your trading when you unlock Stake Black, our premium membership. This week, we hear from Malcolm, Stake’s Corporate Relationship Manager, on his experience using Instant Buying Power.
Malcolm spends his days meeting with company executives and external brokers to bring in new opportunities for Stake investors. His background working in equity capital markets as an institutional sales trader gives him long-standing experience with trading and investing in stocks.
Holding a cup of his go-to coffee order – three espresso shots – Malcolm tells us how Stake Black’s Instant Buying Power feature works and how it enhances his trading. Grab your cup of Opening Bell and read on.
Can you explain how Instant Buying Power works?
Yes, that’s easy – it’s one of my favourite Stake Black features. As the name indicates, Instant Buying Power allows you to instantly buy stocks with funds from sell orders, without having to wait for those to settle. In other words, let’s say you sell $1,000 worth of Tesla shares: as soon as you sell, you can immediately use that $1,000 to make your next buy order. Whereas normally you’d need to wait for the U.S. standard T+2 settlement, with Stake Black you get access to these funds right away, sooner than the standard.
You mentioned the T+2 Settlement requirement, can you tell us what it means?
T+2 refers to trade date (T) plus two days. It’s the standard settlement period, meaning any funds made from executed sell orders will take two business days to be available for use on your account. This standard goes back to the days of paper delivery, when sellers needed time to get physical documents to the settlement and buyers needed time to clear the funds they needed. But with Instant Buying Power, essentially Stake is saying you’re good for it, we’re sure settlement will be fine, so Stake ‘advances’ that amount to you right away. You can use it for a buy order, but you can’t withdraw it.
Can you explain when Instant Buying Power might be useful for someone?
T+2 can be a huge bottleneck for those doing several trades a day. Instant Buying Power gives me much more flexibility when trading stocks, allowing me to reinvest those funds instead of topping up my buying power. As soon as I make a sell trade, I can go straight into reinvesting.
How can Instant Buying Power play a role in someone's trading strategy?
Instant buying power can provide traders with more flexibility and speed in executing their trading strategies. My strategy and trading style, for example, relies heavily on macroeconomic analysis, where I focus on identifying trends and anticipating market movements over the next 6-18 months. This approach can be impacted by macro news and events that can become public at any moment, without warning. Stake Black’s Instant Buying Power allows me to react fast if I spot an opportunity to sell out of one thing and buy into another. When there’s high trading volume – as the market usually is after big news – I can make those moves without worrying about delays in buying power.
Can you give an example of when Instant Buying Power was particularly useful?
As a result of Instant Buying Power, I’ve definitely had several moments where I’ve thought “thank goodness I was able to make that trade”. The most recent one was just last week; I’d been eye-ing Tesla ($TSLA) for a while now and had set a target buy price of $165. It suddenly dropped 10% in a day to $162 – using Instant Buying Power, I was able to pick it up at that price after selling some other holdings. While I’m still waiting to see where its share price goes from there, I’m glad to have the flexibility and option to make trades like these at a moment’s notice. Instant Buying Power has become a regular thing in my strategy now and I can no longer imagine not being able to make trades due to having to wait two days. For a trader, that’s two days of opportunity costs!
Instant Buying Power is the tool for any investor looking to move in sync with Wall St. Instant Buying Power is available on Stake Black Wall St, letting you bypass T+2 settlement periods and immediately access funds from a sell order, to buy 6,000+ Wall St stocks and ETFs.
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The personal views in this article do not reflect the views of Stake and do not constitute financial advice.