Day Trading

ImageI know some folks who have tried to earn a living day trading. That is when you invest in a stock and sell it in the same day to take advantage of the upward price movement in the share price. It is a risky strategy that generally does not work well. The costs and bad bets tend to eventually grind your capital away and tend to leave traders poor.

I know some folks on Empire Avenue who try to use a similar strategy to grow their net wealth. They believe that they can ‘win’ Empire Avenue by buying low and selling high. This theory seems to make a lot of sense, but somehow these folks end up with their share price and wealth stagnant or even falling.

The first problem with buying low and selling high is that folks get hostile. For most, our name is our account. An investment on EA implies a relationship. The EA investment metaphor is called friends or followers by other social media platforms. When you sell an investor, she will be upset and sell you also; often blocking you. When your selling creates a trail of broken relationships, it is tough to succeed.

The second problem is getting the timing right. When is the right time to sell a stock? Trends in share price on Empire Avenue are dramatically positive. I have a few sliders in my portfolio, but generally the EA algorithm encourages an upward price trend. Why pay commission on selling a stock whose price is rising over the long haul?

Ridiculously high dividend returns…daily! There is no real world investment that pays like an EA stock. Even crummy EA investments pay nicely. Empire Avenue will only pay dividends on your top 5,000 investments. Today the low end of that top 5,000 investments pays 0.31 (e) per share. If you want to eventually maximize your daily income, you need to own at 1,600 of every profile that pays 0.31 (e) per share. If you sell someone whose dividend is at least that high, you will need to buy them back some day. EA charges commission on buys and selling (up to 10% when you buy a bunch of shares); so you will have to pay that commission 3 times (your first buy, your sell, your re-buy).

By this I don’t mean that you should never sell. When folks quit, I sell. Frankly quitting their social media activity is more important than even quitting EA. Many excellent paying stocks don’t participate in EA today. See (e)PIRILLO at a share price of 961 and paying a div of 3.77 for example. If you quit & your dividend drops below 0.30 (e), I will tend to sell.

When folks behave badly with my missions, I generally sell & block them. It is possible to steal more than you are worth to me. More important I think those sort of folks are bad for the community. Blocking them will make it tough for them to participate in the game. I want the rascals out.

Finally I sell when I catch folks selling me, I dump them also. I send a message to be sure it wasn’t just an error. I also block them because I use portfolio management tools to automate my buying. You cannot see who sold you through Empire Avenue directly. That information creates a fair amount of ill will; so they choose to hide that. You can find the information with the third party portfolio management tools.

If you want to grow your wealth and share price, invest in quality stocks and hang onto them. That advice works even beyond the Avenue.

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