On March 23, The S&P 500 Index stood at 34% below its peak, just before the Federal Reserve relief measures were announced. The stock market has been on an unpredictable ride so far this year. During the COVID-19 crisis, nearly 20 million workers have been laid off, furloughed, or in some other fashion, displaced. Add to the mix that unemployment has created bored, and restless minds, eager to look for new ways to make money.
How to Make a Quick Buck
Investing seems like a quick way to make a profit. The risks and competition associated with it have filled a space typically relegated to sports. Young and new investors see the potential for opportunity. Investing apps and brokerage apps have seen an increase in accounts being opened.
According to Axios, "TD Ameritrade reported a record 608,000 new funded accounts in the first quarter." The Robinhood app, which has streamlined the investing process and enables free stock trades, saw March 2020 with nearly $60 million in revenue, three times more than in February.
With all of this upswing in activity and new investors coming on the scene, many people, especially through Robinhood, have been engaging in risky trade options and at much higher rates. Traditional buy-and-hold investing is pretty basic; you buy a stock and hope to sell at a higher price at some point in the future. With options, you basically rent a stock and bet on its price movement within a specific time frame. So you not only need to be right on the direction of the stock price, it has to happen within a set time frame. Most people don’t get both right and lose.
How to Weigh the Risks
The allure and danger comes with leverage. One option gives you control of 100 shares at a fraction of the cost which enhances both the wins and the losses. Successful option traders hone their skill through education and collaboration, but too many new investors jump in overtaken by the fear of missing out.
People have been using these simple apps to invest wildly, expecting high profits but resulting in losses, and many are acting in the dark right now. Because of this increase of new accounts and increase within investing, as well as the potential risks that come along, it's wise to brush up on investing.
Being completely new to investing can be especially daunting, which makes apps like Robinhood and Stash even more appealing. However, if you are serious about investing, then you need OptionsSwing Inc, a small business and educational community whose mantra is "Education first. Profit second" and is focused on teaching traders of all experiences how to be more disciplined and profitable in the stock market.
The CEO of the company says, "Starting with the problem as a whole, with the rise of new trading apps like Robinhood and Webull, the entire landscape of what we call ‘retail traders’ has shifted where anyone can now hook up their bank account and transfer money into a brokerage account and start trading today. Especially with the flashy and sleek UIs that make it extremely easy for anyone to learn how to place, buy, and sell orders."
OptionsSwing educates members on trading basics, and on strategies, like Swing Trading and Day Trading. They define ETFs, give general trading strategies, explain Relative Strength Indicator, and help new traders understand Class B divergences. They also sponsor a livestream three days a week for their followers.
There’s a small group of educators on staff and offers a premium learning and trading experience. They also offer important tools like options scanners, bots, and hand-curated watchlists every single day.
They recommend having a minimum of $2000 expendable money in your account, but they have plenty of members with less, who paper trade for practice and use the month to learn as much as they can.
The wild investing ride of 2020, courtesy of COVID-19, is one of possibilities but with plenty of risks. Robinhood, Stash, Webull, and others have made the process of investing easy. But novices who are serious about investing, and even those who have been around the block but find the unexpected swings induced by COVID-19 leaving them wanting a one-stop option stocked with resources, should check out OptionsSwing.