How Trading Fees Add Up
You will see many published and online individuals telling you to buy 20-30 stocks to diversify your portfolio. Say you have 20,000 to invest. Now say you listen to this diversify idea, follow it, and conservatively do 20 trades to initially start.
20 trades at $10 a trade for buy and sell. That is 20 x 2 x 10 = $400
Just to break even, you would need to make 2%. If you were to choose 3 good stocks that had great fundamentals and good technical setup, you would save money. 3 x 2 x 10 =$60. That is a $340 save.
Also, you have to think how hard you’d work while trying to keep up with 20 stocks. Can you really focus on just one? Do you really know what is going on with the stock? Just make sure you cut loses, such as the ones mentioned here. If you have hundreds of thousand of dollars and all day to research diversifying, this much is definitely possible and great. But, if you have limited funds the fees will eat you alive.
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