Comments by "Magic Beans" (@Magic_beans_) on "The Active Vs Passive Investing Debate" video.

  1. Recently we’ve seen a move toward zero commissions (our host has a video on that and how they make money) but before that it was a couple of things: 1. Some brokerages have tiered schedules so that more active traders pay less per trade. So maybe your first 50 trades in a month were $7, then the next 50 were $5, then $4. 2, There are also some deep-discount brokers that provide basically no analysis or charting tools (assuming you’re already paying for your own) so they can charge less in commission. 3. Having a bigger portfolio helps, so you can make bigger trades without risking too much of your money at once. Let’s say trades are $5 each way. To buy and sell a $500 position means giving up 2% of your money to commissions; that’s going to be hard to beat. Scale that up to a $2,000 trade and now commissions are only 0.5%. Lots of stocks move 0.5% in a day. A couple of side notes: 4. In addition to day trading there’s also swing trading, which is similar in its methods but holds stocks for days or weeks. 5. Traders (who know what they’re doing) also place limit sell orders on the upside and downside to avoid holding too long. Structured properly, your their average loss should be less than their average gain. That way even if they only have coin-flip odds of guessing which way the stock will move they should come out ahead overall.
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