My First Three Months Stock Trading: What Did I Learn?

Brandon Moses
Brandon Moses

Investor. World Traveler. Blogger. Visionary.

Growing up as a sports bettor and spending countless hours partaking in fantasy football, I am a person who embodies the “high risk, high reward” philosophy. Draftkings.com and Bovada.lv were two websites that I often used to try and turn a quick profit. However, with the disappearance of sports in March due to the novel coronavirus, I found myself steering away from sports betting and into the stock market. The term “hedging” often came up in conversations surrounding the stock market, which simply means offsetting the risk of price movements. Hedging makes it harder to lose your money, and is a tool that is highly recommended; something that is not accessible in sports betting.

Coming in as a naive investor, I wanted something that was simple and easy to grasp. I stumbled upon the investment app called Robinhood, or sometimes said to be the new wave of investing. This commission free business has been deemed “a millennial app” typically used for those starting their trading careers. As a result of the virus, many stocks were getting pummeled, reaching all-time lows when I first downloaded the app. I thought to myself, could this be a good opportunity to jump in, or will these stocks continue to decline? I took a risk and decided to deposit $200 into my Robinhood account, feeling both excited and anxious. As a graduating college senior in a global pandemic, $200 is not something to throw around lightly. 

Before I purchased a specific stock, I wanted to get a better grasp on what investing actually entailed. One benefit from this pandemic was the ability for myself to stay home and learn new things that I would not have otherwise. After reading multiple articles on Investopedia and watching videos on Youtube and CNBC, I felt that I started understanding stocks on a greater scale. The $200 of buying power in my Robinhood account decreased to $129 when I purchased three shares of Inovio Pharmaceuticals at $7 per share, and two shares of Royal Caribbean Cruise Lines at $25 per share.

Source: Royal Caribbean

I bought Inovio because of the enormous upside the company had, being one of the lead coronavirus vaccine candidates at the time. Royal Caribbean was a bit of a more strategic buy. After talking to one of my friends who purchased a few shares of Norwegian Cruise Lines, it was obvious a lot of millenials were confident in travel industries surviving the pandemic. The cruise lines industry has been hit extremely hard, with a lot of them down over 60-70% of the past three months. I saw this as a solid opportunity to invest in something while it was down, in the hopes it would come back up in the coming months. In other words, I was “bullish” on this industry returning to old highs. 

It took me a few more weeks to buy my next stock, with fears that my money would disappear overnight. A little more research took me down the road of “Big Tech”, which according to almost every investor on CNBC is the future of our economy. Facebook and Apple were two popular stocks that required a lot of capital to buy a share, capital that I struggled to cough up. Therefore, I decided to look at cheaper options, one of them being Snapchat. Hovering at around $12 a share in early-April, I felt there was a ton of upside for this company to continue its success into the future. Snapchat has a solid grasp on teenagers and young adults, allowing for users to see what their friends and family are up all around the world.

With young adults transitioning into the global workforce, there are a lot of computer scientists emerging, it is a fear of mine that a competitor could easily appear. Even though I am skeptical of the app long-term, I see it as a short-term investment that still has room to expand in recent months. Snapchat is a good swing-trading stock in my opinion, which has potential to trade around $25+ in the future (as of 6/3 it is currently trading at $18-19). What is swing-trading you may ask?

Source: Snapchat

Swing-trading is a refined version of day-trading that thrives on volatility. But instead of focusing on each stock by the very second, and requiring a minimum of a $25,000 account balance, swing-trading takes place over a few days. It is accurate to say, the more money you put in, the bigger your potential profit will be. An individual is not going to get rich from swing-trading with a meager $200 in their portfolio, as many elite swing-traders only return about a 2-3% profit on their investments. Therefore, it is important to have a decent amount of capital on hand with this strategy, and of course you need to be comfortable with losing some of it.

Swing-trading really is a game of patience, strategy, and diligence, those who are not committed to the cause will more than likely not enjoy this type of investing. Generally when it comes to swing-trading, it is recommended that you find a strategy that you are comfortable with. In my case, I wanted something that could return an immediate profit, allowed me to understand the stock market better, and ultimately become more immersed in finance. 

When I realized the possible return swing-trading could provide, I decided to throw in some more money. A $300 deposit this time, I was confident in my ability and trusted the market to continue its upswing. With the 300 bucks worth of buying power, I dived into the world of ETFs, focusing primarily on oil. These highly volatile exchange-traded funds (ETFs) were hit extremely hard because of Covid-19. At one point back in early May, I remember oil literally selling for negative $37 a barrel. A really insane thing to think about, imagine paying someone money to take a product off your hands that you are trying to profit off of. Crazy!

Anyways, back on May 6th I bought 10 shares of Bloomberg Crude Oil (UCO) at $16.90, and 6 shares of United States Oil Fund at $20.91. I continuously swing-traded these two stocks and have made over $100 over the past three weeks by simply buying and selling a few days apart. Taking advantage of oil volatility played into my favor heavily. Due to our current economy’s situation, there still is plenty of time to get involved in ETF swing-trading. Even though it is pretty risky, I believe UCO and USO still have great potential to grow back to normal heights. Nuclear power, solar power, and other alternative energy industries could be substituted for oil if you are counting on its downfall. 

Swing-trading does take a good amount of time and research to be successful, however I find it exciting and a way to learn something new. There are plenty of resources out there, like Stock Screeners that give you an upper-hand on knowing what stocks and doing well and which are not. Be sure to read up about swing-trading before you get involved in it, there are a ton of professionals who have made millions from doing very little. 

If there are four tips I could leave you with today, I would say this:

1) Stay committed to your cause. Do not give up after one bad trade. Do not sell your stocks in fear that they may go down a couple of cents. Know when to cut your losses, but also remember your successes. The stock market can be a pretty intimidating place at first glance, but it really is an opportunity that can provide you with long-term profit and knowledge. Create an investment plan if you’d like, but as many financial advisors say, “let your money work for you!”. 

2) Do your research before trading a stock. Try not to act on emotion or instinct. The worst trades I have made came from acting on emotion. Use stock screeners and news sources to your advantage. The little bit of effort it takes to read an article or watch a video is worth offsetting a bad investment, or a way to further maximize your profit. I would recommend watching “Mad Money” at 6pm EST on CNBC. Jim Cramer is an entertainer and genius investor, so check it out!

3) Diversify your portfolio! Unless you are fully committed to a specific sector like travel, healthcare, or energy, try to buy across industries. Especially during this pandemic, some days certain sectors in the economy will do well, while others will rapidly decline. Having a diverse set of stocks offsets your risk for huge potential losses, while also providing a bit more exciting portfolio. A great article for tips on diversification can be found here: Investopedia’s Tips for Investing

4) Sports betting and gambling are not healthy ways to turn a profit. Draftkings, Bovada, the MGM all take advantage of you. They are businesses who rely on your money to survive. If you are going to partake in these activities, realize that gambling is more of an exciting/ fun activity to do rather than a way to build your asset column. If you want to make money on the side, start investing today. You do not even need a ton of money to begin with! As Warren Buffett says “Never depend on a single income. Make investments to create a second source.”

If you are considering downloading Robinhood, use the link below to get a free stock for both of us: https://join.robinhood.com/brandom7881

Thanks for reading!

Share with friends:

Leave a Reply

%d bloggers like this: