[mage lang="" source="flickr"]penny stock trader[/mage]
how do day traders profit if brokers charge them 7 bucks for a trade?
just a little confused on how you can make money from day 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 sell 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 should you go to do day trading and trade penny stocks?
Day-traders profit in two capacities.
1) knowledge. they don’t make stupid calls and don’t focus on the price…they focus on the fundamentals and the immediate market momentum.
2) volume! $7 per trade is not per share! So with a margin account, they can purchase more shares than they have the actual cash for. This margin account dillutes the impact a commission fee has on their overall account performance and increasing their profitability.
Now many day-traders avoid penny stocks. Hell, I avoid them. I played with 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 jump 215% in one day…and then you sell…but cannot get a buyer because everyone is now selling…and then the stock drops to -50% before you can even get out!
penny stocks are a buyer beware world, and they do not yield better returns than the real stocks. people flock to pennies just because of their price…and anyone of merit knows that a stock’s price means nothing…its all about its fundamentals.
hope this helped.
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