Can mutual funds be bought and traded just like stocks?
There are many people who make a living by trading in mutual funds.
Mutual funds are best described as a reservoir full of money rather than water. The mutual fund money reservoir is professionally managed to keep the level in the reservoir high while distributing a steady supply of money to the shareholders of the fund. The investors in a mutual fund own a part of the reservoir and their part grows or shrinks with the value of the whole reservoir/fund. Mutual fund reservoirs vary in nature. Some have a concentration of stocks or bonds or cash, or more likely a mixture of all three asset classes.
Trading of mutual funds is like taking glass of water to the reservoir, throwing it in, and then using a bucket to take away more water. This is successful trading of course. There is a risk you could throw in a glass full of cash and come away with a thimble full.
Day trading mutual funds involves buying (or indeed selling) a part of a mutual fund at one moment in time and selling (buying) it at a profit within 24 hours. The day trading of mutual funds is entirely electronic and instantaneous via computer trading platforms. Do enough trades or make enough profit from each trade and day trading in mutual funds can provide a good way to earn a living.
The trading of mutual funds is only possible because mutual funds are a valuable financial product. Mutual funds allow diversification of an investor portfolio. Mutual funds are expertly managed by people who understand the stock markets. Mutual funds enable economies of scale when trading stocks and finally mutual funds offer ‘liquidity’ or quick access to cash.
A lone investor looking to grow their IRA could not hope to achieve the diversity of stocks that a mutual fund can. A lone investor could not focus on the stock market movements and respond quickly to opportunities in the way mutual fund managers do. By being part owner of the fund the lone investor gets to spread the stock dealing costs with all the other investors.
Because the volume of cash in the mutual fund reservoirs is so large and because there are so many different reservoirs, the trading of mutual funds has become a big business in it’s own right. The market for trading of mutual funds is entirely in cyber space and you can watch the price and volume movements of mutual fund trading on your PC at home.

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