So I'm far from an expert in trading, but if I've learned anything, luck and suppressing impulses go further than human intuition and, frequently, research. How about a trading bot that does the following:
- Picks a stock
- Buys a lowish set amount, say like 3% of your available buying power or a set dollar amount
- Sells when that stock goes up by a very low set amount, say 1 or 2%. This limits gains but removes human emotion.
- Holds if it doesn't ever go up by that amount above purchase price
- Maybe alerts you if it's held that stock for more than a week or so
Essentially this would make money off small fluctuations automatically, and would only sell for a loss if you choose to. It would prevent impulse decisions, and choosing stocks based on excessive hype/FOMO, which usually fail me. This assumes the price eventually increases, which is obviously not a given but for this to lose money it would require the moment of purchasing to be the highest point of the following 7 days, which is unlikely depending on how the bot picks stocks. Of course this can happen, but if the bot only invests a small amount and diversifies what you invest into, risk can be limited. To increase profits, scale up the bot's number of stock purchases.
Further considerations:
- Trading fees
- Day trading limitations
- Time to exercise
- Inflation
- How the bot picks stocks. Randomly? Within an industry? Based on recent growth? By popularity? Low or high volatility?
Is this worth looking into? Is this fundamentally flawed? What are your thoughts? How could it be improved?
I might try this out manually for a bit and gather some data. Or even build a basic version and limit its spending to only a few bucks per purchase.
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