‘How to easily double the money you make on the stock market’. I was in two minds about using this title for this article. On the one hand, the title of an article should give the reader an idea about what the article is about. On the other hand, it just sounds so click-baitey...or worse, get-rich-quick-schemey. Yuck! Two things I dislike very much. (For the record, trading on the stock market requires knowledge, intellectual effort, investment and involves inherent risk).
In the end, I’ve proceeded with the title. I hope it does what it says on the tin.
If you’re an active stock market trader in the UK, chances are you’re glued to a screen at 8am. At 8 o’ clock, the stock market opens. You can trade non-stop from 8am to 4pm. Then, that’s it, time to call it a night. Or is it?
When I first started trading, I was so focused on trying to find a winning stock and seeing how my stocks perform on the market that other things, such as the news, didn’t matter to me so much. The excitement of it all gripped me (at first anyway). The wider economy didn’t matter so much and other stock exchanges certainly didn’t matter. I’d read loads on the stock of interest to me, but would neglect looking at other peripheral things. Never mind tunnel vision - that wouldn’t have been so bad; my vision was more akin to looking through a straw!
A couple of months in, once the excitement started to wane, the straw vision had changed. I started looking at other things, too. Things that affected the wider economy, the stock market overall and my individual stocks. The stock market is affected by so many things, such as a bad news report on a company, changes in oil production, a change in legislation and even how the NYSE and Nasdaq stock markets are doing in America. Talking of the Nasdaq and NYSE, it’s precisely those exchanges that have helped me to more-or-less double my trading income.
At first, I would just trade on the British stock market and call it a day when the stock market closed. On some days, it could be that I didn’t believe there was an opportunity to make money (perhaps because the price of stocks were too high) and thus I’d have unutilised money sitting in my trading account. If lots of time passes where funds are under-utilised, it may mean opportunities are missed. It’s not that I hadn’t known about overseas stock exchanges- everyone knows they exist. But something was putting me off. American stocks on average cost a lot more to buy. I found that off-putting. Also, there’s the exchange rate to contend with. I also found that off-putting. Finally, there’s the admin side of things. Very off-putting. I soon realised that none of those things were as big an obstacle as I had made it in my mind. Sure, buying a share in Amazon may very well cost north of $3,000 dollars (at the time of writing this article), but there are plenty of other stocks that are more affordable for the beginner investor. Take Cloudera (CLDR), for instance, which at the time of writing this article trades for around $12.50, which converts to £9.37. Whilst American stocks cost a lot more to begin with, you could potentially make a lot more money, too. I’ve found that American stocks are a lot more volatile. This means there are more opportunities to buy low and sell higher.
Currency exchange rates are always fluctuating. It may be that you actually benefit from those fluctuations! But of course, there’ll be times when you lose out. In any case, I find the higher profits you’ll make on a stock more than covers exchange rate costs and loss of value in your home currency.
As for the admin side of things, it was a lot easier than I thought. I have opened a few trading accounts across several platforms: Interactive Investor, X-O, Freetrade, HSBC and eToro. I opened up my Interactive Investor account some 10 years ago, but the others were opened in 2020. Nowadays, the ‘admin’ involves checking a box. And that’s it. Trading on the American market has an additional benefit for me. It closes at 9pm (GMT). That’s great for someone like me because I am not a full time trader. I trade to supplement my income from my full time job. I can’t be glued to a screen all day long (and nor would I wish to be). I check the markets in the morning, and throughout the day as and when work allows (on breaks, etc.). Having the opportunity to trade until 9pm is great because there will be days when work will not allow me to do much trading. So being able to look for opportunities after work is very welcome.
Trading on the American market has an added bonus. If the American stock market does well and closes at 9pm, you can be pretty sure the FTSE 100 will do well the next day. So in essence, being familiar with the US market makes you a slightly better investor on home soil, too.
So all my concerns were answered. In hindsight, it seems silly that I was put-off by things which in actual fact were not obstacles at all. I now trade regularly on the British and American stock markets. Having funds available but not utilising it can really hold back earnings.
If you're looking for a way to supplement your income and would like to lean more, then sign up to my 30 Day Trading Programme. It's free with no hard sell at the end.
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