You (assuming you are a long-term value investor) are going to hate me for this post!
Among many other financial instruments, I have tried day stock trading for a while. And, still do once in a while. Overall, I must cautiously say, I did alright.
I certainly didn’t make a fortune, but I made a profit in almost all the trades (Certainly some loss). And, all of my profits were realized when the market is down, especially when the market was down.
How in a world is this possible?
Before I tell you how I achieved this feat, I must disclose that It was only possible because of the following reasons.
- I trade very big US companies, if not the biggest by market value.
- I trade a small fortune. Few thousand dollars.
- I only trade when the market opens in red.
- I paid no trading fee because of my premium
servise with my broker.
How to trade?
(Source: YouTube, CNBC. Link to Full Video)
First, I took advantage of this small spike in the grand scale of things.
Even if the market is down, the tick by tick of the stock price goes up (see the video above)!
I felt confident about the certainty of the small spike when the stock is trading in red than when it is trading in green.
I avoided the days when the market was up and especially when it was way up. I believed it was a risky situation for my plan. It was likely that the market will fall from that point.
Second, I picked the most liquid stock so that I don’t have to pay for the spread between the buy and sell price. It worked fine with big US companies. Top US banks are my favorite for this.
I was a small fish is a big pond. Seems like no one cared what I was up to.
Third, I traded with just a few thousand dollars, which was enough to dispense me 20 – 30 bucks per trade. I
Lastly, I, almost always, made an quick exit. In minutes if not hours.
And, took advantage of the automatic trading. The sell order with price limit. Once I buy something, I immediately put a sell offer for some cents more.
It’s like collecting free cents. This time, not from streets but from The Wall Streets.
Most of the time the trade will execute within minutes , since it is a small amount.
Final Thought
Even though I didn’t make a fortune, I made enough to buy me a piece of Salmon.
I do not suggest trading, especially with big amount.
Although, you can try it at your own discretion. Let me know if my strategy worked for you in the comment below!