Why Day Trade US Stocks?

Last Updated on November 24, 2020 by Oddmund Groette

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I am Norwegian, and living in an obscure former soviet country, but are mainly trading US stocks. Why? There are several reasons. Here I will mention what I consider the main reasons:

  1. A big stock universe. There are a lot of liquid stocks and a lot of illiquid stocks among a wide range of industries. In addition, there are a lot of ETFs and futures contracts. One can find a wide range of potential strategies among those stocks. Personally, I trade stocks and some ETFs and not forex or futures. I believe stocks are more inefficient than forex and futures. I want to use the law of big numbers. Just a small profit will generate money if it is done many times. For example today, 5th of June 2012, I traded 183 different ticker symbols and 72 000 shares all in all (above the average this year). I made about 700 USD before commissions so the profit per share is very small.
  2. Low commission rates. This is actually one of the most important things for me. I pay cents per share, not ticket prices per transaction. With the latter, I would lose money. I pay .001 per share in clearing plus different taxes to SEC etc. Even though I for example trade one share in IBM I only pay 0.001 in commissions.
  3. The arbitrage between indices and stocks means there will always be movement.
  4. Tiny spreads. In liquid stocks, the spread is normally 1 cent.
  5. The US is the prime mover for all the world’s stock exchanges. Of course, the Far Eastern and European markets have an influence, but although they, like the UK, do have substantial domestic and local factors, they are also largely driven by the United States.