what are some of your fave stocks to trade between 5 to 10$ range?
- Thread starter cashclay
- Start date
You are aware, right, that a nice day with a 1% gain on a $ 7 stock will get you 7 cents ?
A 1% gain on a $ 100 stock will get you $ 1.
You will have to buy 14 shares of the $ 7 stock to get you within 2 cents of making that $ 1.
If God said I guarantee you a 1% gain today, which will you choose ? Short answer is probably won't make a difference in absolute dollars gained on the position. But why blow a sure thing ? To the extent you have or can get the money, would you rather buy $ 5,000 dollars of the $ 7 stock or 50 shares of the $100 stock ? Either way you are paying five thousand dollars.
Consideration:
Would you rather pay commission on 50 shares of the $ 100 stock = $5,000 ?
or
pay commissions on 714 shares of the $ 7 stock = $4,998 ?
A 1% gain on a $ 100 stock will get you $ 1.
You will have to buy 14 shares of the $ 7 stock to get you within 2 cents of making that $ 1.
If God said I guarantee you a 1% gain today, which will you choose ? Short answer is probably won't make a difference in absolute dollars gained on the position. But why blow a sure thing ? To the extent you have or can get the money, would you rather buy $ 5,000 dollars of the $ 7 stock or 50 shares of the $100 stock ? Either way you are paying five thousand dollars.
Consideration:
Would you rather pay commission on 50 shares of the $ 100 stock = $5,000 ?
or
pay commissions on 714 shares of the $ 7 stock = $4,998 ?
He may be liquidity-impaired and unable to trade a roundlot of a $100 stock.
You are right .... that probability is distinctly so.
However,
I went through the exercise for his benefit for when the day comes he won't be so restricted.
Also, within his capability now, he has a choice between the trade with LOTS of shares using the lower price stock or the ONE share using the higher price stock. "Commissions" charge is what I am pointing out.