“So how can an individual know which stock to trade and make money doing it?”
The one advantage individuals have is they are (almost always) way smaller than the big firms, so we can buy significant (to us) shares of stocks without moving the price of said stock. Being nimble definitely has its advantages. It also allows us to invest in small and micro cap stocks, which over time typically outperform the S&P 500, admittedly with more risk.
Of course, it’s easy to make money in a bull market. High risk, high beta stocks tend to outperform in both directions. The true test of traders probably comes during bear markets.
I guess the other advantage individual investors can have over institutions is a willingness to carry cash when the market is overinflated and be patient. Mutual funds are paid to buy stocks, not just carry cash, hence the saying “cash is trash”.
I imagine being a professional trader is very challenging. I’ve been able to do fairly well with my modest stack of “mad money” for fun, but I haven’t been doing it that long, so I may just have been lucky or simply buying higher beta stocks.
