How do time traders profit if brokers charge them 7 bucks for a trade?
just for a while confused on how you can make money from sunshine trading or trading penny stocks. if you buy and sell penny stocks isn't it costing you more money than it is making you? you buy at 1.56 a share and you put up for sale at 2.78 a share. so you profit 1.22. but you don't profit if your broker charged you 7 bucks to buy. someone please help im so confused. where on earth should you go to do daytime trading and trade penny stocks?Answers: Day-traders profit in two capacity.
1) knowledge. they don't manufacture stupid calls and don't focus on the price...they focus on the fundamentals and the on the spot market momentum.
2) volume! $7 per trade is not per share! So near a margin report, they can purchase more shares than they have the actual dosh for. This margin side dillutes the impact a commission fee have on their overall account production and increasing their profitability.
Now many day-traders avoid penny stocks. Hell, I avoid them. I played next to them for a bit, but they really aren't that great an option. Nothing burns more than when you see a penny stock you own fly 215% in in the future...and then you trade...but cannot get a buyer because everyone is very soon selling...and then the stock drops to -50% in the past you can even get out!
penny stocks are a buyer beware world, and they do not give up better returns than the real stocks. citizens flock to pennies just because of their price...and anyone of merit know that a stock's price means nil...its all around its fundamentals.
hope this helped.
You buy and deal in more than one share at a time. If you profit 1.22 per share and you have 100 shares you merely made $122.00 - $7 to buy - $7 to sell = $108.00 taxable profit.
You have need of to do some more research before you invest, especially if you are looking at daylight trading.
First, most day traders don't trade penny stocks. They trade the most stirring, liquid stocks on the NYSE and NASDAQ.
Second, they wage an institutional rate for trading which turns out to be between 1 and 2 cents per share.
If you're a day trader, UNLESS you buy HUGE quantity of stocks - 100s of thousands or millions of shares - you don't buy penny stocks.
To a trader stockbrokers are like nouns, food or clothing: they are a necessity. Before a trade is placed to buy or sell - ALL the diligence is done - or should be - including how much of a loss the trader will adopt.
BTW, the broker doesn't care whether a trader earn money or loses money: brokers get their money as traders run into a trade AND exit a trade.
Personally, I don't even waste my time looking at any stock costing smaller number than $26.50 per share. I have tons other tr ding rules, too.
I'm a swing trader - usually in and out inwardly 5 days. I DON'T have the funds to be a consistent afternoon trader, which is $25,000 and more.
Thanks for asking your Q! I enjoyed answering it!
VTY,
Ron Berue
Yes, to be exact my real ending name!
Are there any brokers that charge a yearly fee instead of charging you for every trade?
Answers: Yes it is possible to get a negotiated fee to trade per quarter with the big brokers-dealers like Goldman or Merrill ... but you have to be a BIG fish.
Got a 7 digit account ?
I pay a quarterly fee (based on the contents of my account) and am not charged commissions when I trade in my Wachovia account. Other brokers offer similar plans.
As far as I know, these plans all have a minimum account requirement and exclude day traders.
If the Federal Reserve stops buying and selling stock, what will transpire to the stock open market?
Common sense tells you that the Federal Reserve have been buying and selling shares of stock within the market to steady out the market, to stave off unreasonable advantages from the use of foreign and terrorist capital investment. But what if they stopped? What would begin to the markets later?Answers: You certainly do inhabit another universe.