Day Trading US Stocks – 5 Reasons

Why would I day trade US stocks? In this article, I give you five advantages of US stocks compared to other countries.

I am a Norwegian living in an obscure former Soviet country but are mainly day trading US stocks.

Why I day trade US stocks

There are several reasons. Here I will mention what I consider the main reasons why I day trade US stocks:

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.

FAQ:

– Why you should prefer trading US stocks over other financial instruments like forex or futures?

US stocks are more inefficient than forex and futures, which provides more opportunities for profitable trading strategies. My preference is to use the law of big numbers where even small profits can add up significantly over time.

– What advantage do low commission rates offer in day trading US stocks?

Low commission rates, typically priced in cents per share, are crucial for day traders. These low rates help minimize trading costs, which is essential for maintaining profitability. Paying per share, as opposed to per transaction, allows for more cost-effective trading.

– How does the US stock market impact global stock exchanges?

The US is a significant driver of global stock markets. While other regions like Europe and Asia have their domestic influences, they are also largely influenced by the performance of the US stock market. The US plays a vital role in shaping global financial trends.