We have written a lot recently about trading cryptocurrencies, but it turns out that when the crypto markets lack any trading volume to create big price swings, the more traditional instruments – stocks – are also very attractive. Why not trade the most exciting companies, such as Facebook, Apple, Amazon Netflix, and Google (that is the Alphabet) – so-called “FAANG”.
There’s plenty of room for reactive trading. Many of you are direct users of these companies services. You hear about them in the news and have your own opinion about the new products, strategies, or the last public affairs crisis they came through. It’s all in the news.
As with any other assets the big advantage of day trading is the ability to take short or long positions with ease. You don’t have to act as Warren Buffett, and only look for the companies you believe in long-term. You don’t have to wait for the right moment to enter a market. You can do it at the highest price, at the peak of the bubble.
Earlier this week the “FAANG” stock dropped heavily. The five stocks lost more than $1 trillion since the recent highs. The tech giants lost much of their value in October, and November so far proved to be even more volatile.
Since August 17 Facebook has lost 23%, Amazon 20%, Netflix 18%, Apple 16.5%, and Alphabet 16%. All the FAANGs underperformed in comparison to S&P 500 and Nasdaq Composite, which lost 11.5% and 7% in that period.
Will they bounce back? It’s difficult to say since each company has its own problems and possible solutions. Each one of them is disrupting markets causing anger of some social groups, and some like Facebook and Google are directly involved in politics.
Large fundamental investors buying this kind of stock are looking far ahead into the future. All this should bring a lot of daily volatility. Probably the chaos will continue giving margin traders endless opportunities to profit.
Some analysts point that during the stable growth that took place in the first 3Q of 2018 were, in fact, an anomaly.
“This market has just gone back to normal. We’ve gotten used to an abnormally calm market, with low volatility, but that’s just not reality,” said Dan Wiener, cofounder of Adviser Investments. “We were spoiled”, he added.