Free Money: February 2015

When last you heard from Free Money there had been a profit of $13.98 generated from mining and selling bitcoins.  Since then, the two video cards that were used to do the mining have been sold for $100 each.  Yes, that is some pretty fast depreciation but that is the way it is with computer hardware.

So for Free Money 2014 the final calculations looked like this.

– $367.29 Cost of mining hardware

+ $381.27  Sale and Conversion of bitcoins to Canadian dollars.

+ $200.00 Sale of mining hardware.

Total Profit.   $213.98 Canadian or 58.3%.

Definitely beat the market.

Since it is already February you can guess that deciding what to do for Free money this year was a bit tougher.  There was nothing that really jumped out as the cool new thing in the news.  Since I wanted to use the profits from last year there was also an initial capital limitation.  $218 is not enough to start a real trading account on standard stock markets and it is far below the requirements for day trading or forex accounts.  So what was needed was some sort of smaller market that was a little more legitimate than the prediction market used in Free Money 2013.

This year eToro will be the focus (and hopefully source of) Free Money.  eToro bills itself as a “social trading site”.  This means that you have a social profile much like Facebook or Twitter but the entire website is dedicated to trading.  You can trade standard stocks, limited commodities, forex and market indices.  I am going to try to describe it without sounding like an advertisement. Their big feature is being able to follow other traders and even copy them.  You can set a certain amount of your money to simply copy all trades made by another user on the site.  This creates superstar traders that everyone copies. It’s social!

Standard Stock is not the focus but they have an interesting setup.  You are allowed to buy fractional stocks.  So if a stock price is $40 and you want to invest $100 then you will get 2.5 stocks. The downside to this system is that they only execute standard stock orders once a day, right after market close.  I interpret this to mean that this site should only be used for medium and long term stock holds.  If you see your stock tanking in the middle of the day, you are along for the ride until the trades execute at about 4:30 EST. Fees are low, 0.1% of the trade value.

Forex, commodities (gold, silver, oil) and indices(Dow Jones, FTSE, etc.) are not limited in this way.  You can do leveraged, intraday trading in these categories. Fees here vary, mostly to do with the leverage amounts and how long you hold.

You can deposit as little as $50 USD into your account.  I decided that $200 USD would be my starting amount; in-line with the profits from last year.  Since the Canadian dollar is so weak right now that cost  $250.78 CDN.

Since I am just starting out on the site I decided to put through an easy trade to get a feel for the system.  Yes, they have a practice mode but that does not make my posts very exciting to read so real mode it was. I thought markets were a little harsh on MSFT after Microsoft announced their quarterly results I put an order in for $100.  The order was placed at lunch time and the trade executed at 4:30 EST as advertised. Price was $41.64; a little higher than when I put the order in but only by about 0.7%. So,

Current position:

Cash: $100
Portfolio: $100 Microsoft stock purchased at $41.64

Warning: This section will definitely make it seem as if I am trying to sell you on eToro.  They have a referral system.  However, it is a benefit to both parties.  If I refer someone to the site and they deposit $200 USD then we both get a free $100.  So if you deposit $200, you end up with $300 to trade with and I get an extra hundred.  Seems like a sweet deal to me and since this series is all about Free Money I am all for it.   If you are interested,  you can click here to use my referral.   Remember, you can always check it out with a practice account first.

So Free Money 2015 begins. The stakes are still low and it will take some serious effort to beat the last year’s 58% return but it should be a little more active than just setting a computer to process codes in a closet.