What if I were to buy nearly 100 stocks in different companies and build an algorithm to sell them the minute I make money, and then buy a stock again, but different from the one I had just purchased. Wouldn't the build-up of all the stocks being sold and bought cause a rapid increase in profit? Sorry if this seems like a dumb question. I am 16 and I just had this question about how to exchange market works and if this is plausible.
For such a strategy to work at the least following two conditions must hold:
- each time you transact, you need to correctly pick a stock that would eventually rise in price by enough to offset the bid-ask spread and transaction fees you would incur for trading,
- and that would rise in price fast enough to offset any opportunity cost of holding it (for example, you could have earned interest by putting and keeping your money in a savings account during the time you are holding the stock) I haven't heard of anyone who has (or had in the past) such profound prophetic ability. Sooner or later you end up picking a stock that wouldn't rise in price by enough soon enough.