This type of day trading rarely works dues to the bid/ask spread. At any particular point in time the price you can buy at is always higher than the price you can sell at. On some thinly traded penny stocks the spread can be as much as 10%
If it that easy to make money everyone would do it that way. Itās extremely difficult and something like 95% of daytraders end up losing money.
If you want to day trade Freetrade is not the best way to do it as it doesnāt show bid/ask spread.
So I did my research for what I have invested in its called pod point and its basically a charging station for electric cars. Itās only been on free trade for a couple weeks now and the price is really low. I personally think it will go up by quite alot but recently itās dropped so are you saying when things like this happen and you lose alot of money to just accept it and wait for it to go back up or should I sell? I think that might be my mistake I panic sell if its not doing well more than 2 days in a row.
You havenāt lost a lot of money. Yet. Selling the shares means you have. Keeping them means you might.
If you believe Pod Point are going to do well and their share price will increase, then you must have a timeline for that based on your research. A year? Two? Ten? At that point would be when youād look at selling. Not the day the share price drops a bit.
All shares move both rationally and irrationally but the one thing must always do is to act rationally. If you like podpoint and have done your research then buy the stock and donāt sell until such time as your research tells you something has changed.
You @Makemerichplz21 have done the research meaning you have done a valuation (reading other peopleās opinions about it going up and and down is merely paying attention to gossip). The point is that we are talking about your conviction. Not mine. So my opinion is largely irrelevant.
So what I am saying is that if you have done the research and you believe the price is low (which is why you bought it) I assume you would hold at least until it reaches your target price - your research and valuation will tell you what this is. If prices wobble it wonāt affect your research and it wonāt affect your conviction. All share prices wobble. Shares might go down for several days and weeks in a row. Of course new information might change your valuation and therefore your opinion.
So you see I canāt say to you āholdā and I canāt say āsellā. These are things you have to decide and depend on your attitude to risk. My personal philosophy is not centred around daily share price changes. Sometimes I go over months without looking at a share price - or even my portfolio. I set a triggered loss and leave it alone. If it triggers I get an email about a sell. The only time in the recent past that I changed all those triggers is Jan 2020.
Iām looking for both long term and short term being an extra bit of money every month. So what would a āQuick buckā Strategy look like? Iām thinking that I would have some investments that Iāll just leave alone (Long term) and then some others that will make me that extra bit of cash that I can take out at the end of every month.
Iām not a day trader so definitely canāt answer your question. See https://onlinelibrary.wiley.com/doi/abs/10.1111/0022-1082.00226
where they say Our central message is that trading is hazardous to your wealth.
and
Hmm so once it reaches said target price thatās when I should sell my shares and then what? Do I wait for it to hopefully go down again and then repeat or should I move on and invest into something else?
Think Iām starting to see my mistakes I didnāt have a target price and I ignored my research I would check it every day and if it was just continuously not doing well I would sell all the shares. I get its all about patience but I donāt see how people can be so calm watching the line go further and further into the negatives and watching your loss go from green to red in the hundreds Iām really supposed to just ignore that? Is this one of those wobbles you mentioned where you just sit it out? Wish I had the self control to not check it btw how do you set the triggered loss thing?
So in a nutshell day trading is not the way to goš Is there nothing I can do to gain extra monthly cash from investing? Or do I just leave it for a few years?
Ah got you but what about selling temporarily? When the price just drops for a few days if i sold day 1 of the drop and it continued to drop for the next few days and then it starts to bounce back and I buy back on the day it bounces back would that be good or would that be āTiming the marketā That Iāve heard about?
Itās extremely difficult to consistently make a quick buck in the stock market even for experienced investors, if it was easy weād all be rich. Coming in as a beginner and looking for a quick buck is not going to work.
IMO the best way to start is to learn the ropes with some safer stocks or ETFs
That sounds great in theory, but getting it right every time is impossible, and when you do get it wrong you can easily wipe out any gains you made previously
So even if thereās no reason for the price to drop but does anyway, I should just leave it alone? There are days when the price would drop for several days and i would try and figure out why by doing research but there would be no reason for it? Or what about a temporary crash for example I think Friday pod points app crashed for a couple hours should I have sold my shares then until it was fixed even tho it only took a couple hours to fix it still definitely had an impact.
If you choose some nice high, regular paying dividend stocks then you could have a regular income of some sort.
Iāve heard alot about these ETFs and i had a look at some but Iām not seeing whatās so safe about them? Most of them over the past week have actually lost money could you explain why everyone keeps saying they are one of the safest options. Also could you give me an example of a āsafer stockā do you mean largely popular stocks like amazon?
Whatās a dividend? Sorry Iām still a noob to all thisš
The way I think of it, and Iām sure someone will argueā¦ is that the stock market is like quicksand. Your choice of stocks or funds (ETFs) are your way of trying to cross. If you put everything in one place youāre likely to sink. If you have a wide range of shares itās like spreading your weight on a raft and more likely to make it.
ETFs are an easy way to spread your weight in one go, because they are already a pile of different stocks. Depending on which you choose they are more likely to be more stable than an individual stock.
ETFs are safer because they have built in diversification. rather than putting your eggs in one basket you are investing in a whole range of companies and your investment will track whatever market the ETF is designed to track. If you invest in something like an S&P 500 ETF the return is something like 7-8% per year on average
Pod point is a single company that hasnāt yet made a profit. itās not the only company doing EV chargers. It may turn out to be be a great investment, but that is not yet guaranteed. Established companies that have been profitable for a number of years are usually safer. So yes I would consider a company like Amazon to be safer. The chance of Amazon going bankrupt is negligible
Some companies make regular payouts to shareholders, think of it like profit sharing. It tends to be large well established companies that do this. Youāll often see this quoted as a yield. For example a company with a share price of Ā£10 might pay out 50p per year for every share you hold, in this case it would show a yield of 5%
Here are the companies in the FTSE 100 that pay a dividend, along with the yield
Ive been given alot to think about definitely gonna take a different approach to this, I think Iām gonna have a mix of just a couple of riskier stocks like pod point for example then a few safer stocks Iām thinking meta because of the changes happening (Virtual reality) amazon and maybe tesla and then a couple dividends they seem decent. Does this sound like a decent plan?
Also thank you for the help really want this to work so answering my questions and giving me information really does mean alot. So again thank you
I get its all about patience but I donāt see how people can be so calm watching the line go further and further into the negatives and watching your loss go from green to red in the hundreds Iām really supposed to just ignore that? Is this one of those wobbles you mentioned where you just sit it out? Wish I had the self control to not check it btw how do you set the triggered loss thing?
Iāve been trading for about four years now (nowhere near as long as some of the folks here) and I still freak out when the numbers begin to shrink and colours shift from green to red. That said, itās hugely better long term to have conviction. If I have put a lot of effort into researching and I truly believe in a particular asset but it starts crashing, Iāll try my best to turn a blind eye to it. Some people use this as an opportunity to buy more, as if the asset is āon sale.ā
Personally, I have amassed wealth which would have been unfathomable to the me of five years ago. But almost everything I have touched has moved below (sometimes deeply) the buy price at some point or another. If I would have sold when green flipped to red, I would never be where I am now. My only regrets are: 1. not sticking to my guns on a few certain assets, which I bailed out of too early and eventually played out incredibly well long run, which would have added another zero to my wealth; and 2: not buying more! (A commonly-shared feeling.) Alas, learn from your mistakes and move on with more self control and stronger conviction.
Edit: worth noting that Iāve had my fair share of duds, and you will too. You should try to reevaluate periodically, ideally at objective moments.