aja asked:
I’m 18 years old, saved a few thousand, really trying to find alternate ways to secure financial stability on the side of a good career. Heard about investing in stocks before, but not quite sure what I’m doing. What site would be best for me to purchase stocks from, and how do I decide which stocks to buy?
Chaya
Jack H asked:
I would like to open an on-line trading account, but would like some info as to which one and why?
Penelope
Micheal James asked:
A Safe Bet
Trading in stocks and shares is the best option for those who do not have sufficient funds and experience for doing any other business. You can start small, dream big and finally reach the stars. The initial investment can be ludicrously small. In fact ‘investment’ is too big a word for the amount of money you require to start trading in stocks at the initial, learning and experimental stage.
Minimal Investment
You can start with the cost of a pack of cigarettes or the price of a cup of coffee. All you need is a personal computer and an Internet connection. Surf through the net and you will find that there are hordes of online stock brokers. Read through their sites and decide on the one that suits you best. You can open your account online at free of cost. Besides, you will find the necessary instructions at the website to set the ball rolling. Tread the ground cautiously, have patience and try to learn as much as you can the new lingo of stock trading from the education tab of your stockbroker’s website.
Education in Stock Trading
The education section of your stockbroker’s website provides comprehensive details about various aspects of stock trading. Starting with the definition of a stock, the reasons to buy stocks, investment risks, types of investments and ticker symbols, the instruction material further explains how the stocks trade, the stock market, the primary and secondary markets, the major stock exchanges like the NYSE, NASDAQ, AMEX and OCTBB for Penny stocks. Once you are familiar with the basic functioning of the financial market, you will begin to understand the factors that drive the share prices such as supply and demand of the stocks and shares that you trade in. You need to understand the concepts such as ‘earnings per share’ and P/E ratio. The knowledge of these basic concepts will help you to evaluate the price of the stock of a company and its income potential.
Cautious Beginning
If you are a novice to the art of trading in stocks, your first step should follow the guidance of your stock broker. Become acquainted with the terminology associated with stocks such as bulls and bears and what they signify. You should also be familiar with the research tools and research reports that highlight the financial performance of the company you are interested in investing in.
If the price of your stock goes up, and your broker asks you to sell it and book profit, it is in your interest to do so. Do not be greedy and wait for your stock to touch the skies. The wait may become interminable and you may be stuck up just in one stock and will not be able to move further. Who knows the value of your stock may plummet in future and you are left wringing your hands in despair. It is always advisable to be dynamic, keep moving, changing, experimenting and learning. Since the initial investments are small, the risks can be affordable. Once the fundamentals are clear, you may shoot for the big.
Jaylin
Michael Comeau asked:
Having traded stocks for over 20 years I can tell you that it takes an organized approach. It’s not for someone who does put everything into what they do. It takes hard work and discipline.
Before the year 2000 it was much easier to make money, because the market was volatile and you could make nice money with the market swings using a proper plan, discipline and a quick but steady hand.
Since then it has become more difficult. Many of the day traders have gone by the way side for many reasons. Data still shows for the long term the stock market is the best place to be. I have put together just a few ideas of what I believe are good tidbits of information on the market and they are as follows:
1. Sell when you want to not when you have to.
2. Buy after the market has had 2 - 3 days of hard selling then takes out the high of the lowest day in that period. If your stock buy point matches then you got something to look at as a possible trade.
3. Sell after the market has had 2 - 3 days or wild buying then takes out the low of the highest day in that period. If your stock sell point matches then you got something to look at as a possible trade.
4. Use Discipline when trading. Have a plan that clearly states entry and exit points before you buy or sell a stock.
5. Understand your emotions. Greed will try to talk you out of taking a profit, letting the stock fall back before taking action. Fear of taking a loss will prevent you from taking action only to cause further losses.
6. Learn as much as you can by reading and taking seminars from someone who has been successful. Why learn from someone who is only talk. Check them out.
7. You trading plan should specify how much of your portfolio should be a risk for any given time.
I could go on an on. It’s amazing what you learn over the years from trading, reading, seminars etc. I cannot tell you how much I spend on the knowledge side. It was worth every penny.
If you will do your research you can find software that can help you automate the process. I found in my research that they have gone way done in price. It’s amazing what you can get now days for a fraction of what I use to pay. What should you do next?
Think about the above items, develop a plan, find software you like to implement your plan and hopefully you can automate the process. In doing my research I found some new exciting software that can not only automate the process, but help you with the decision making process as well.
Make your you do your research when looking for these programs by either using a website like mine, but not necessarily mine or do the work yourself. It is very important. Give your self a chance at success. Please feel free to read both this article or one of my many others by visiting my link in the resource box below. I always enjoy getting emails pertaining to my articles or my site. Your feedback is important to me.
I wish you the very best.
Miles
John W Murphy asked:
People who are interested in creating additional income often look to the stock markets as the most profitable route to follow. Our financial education teaches us that over the long term stocks outperform many other types of investment, especially for those who like to trade for themselves.
However, in recent years global economic crises have severely dented the image of stock investing as many hard working people have found to their cost. In this article I’d like to explore how stock trading compares with what I term online investing which for this discussion I will define as passive investments.
Stock Trading
Clearly, given the technology available today most stock trading is carried out online so it needs to be clear that my definition of online investing is different. And in fact if you ask anyone who trades stocks via online brokers I don’t believe they would consider themselves to be online investing rather investors who use online tools.
In its simplest form stock trading online can be undertaken by any eligible individual who opens a trading account with a broker and then funds that account. There are always restrictions on who is eligible to open an account and these would need to be considered when contemplating this form of investment. Assuming however that an account can be opened and funded it is a relatively straightforward process to trade stocks in a vast array of markets and companies.
The benefits of stock trading include:
1. Wide range of online platforms to use from well established companies
2. Accounts can be funded directly from individual bank accounts
3. Reasonable liquidity in markets
4. Choice of markets/stocks to trade is wide
5. Competitive trading costs on execution only basis
6. Potential gains can be high
Disadvantages include:
1. Sizable fund required to trade
2. Potential for significant losses where price movement unfavourable (although robust stop loss strategy can mitigate this)
3. Little or no advice available if execution account only
4. Requires close monitoring
Passive Investment
Next let’s take a look at passive investing and see how it compares. In essence I’m using an example where you open and fund an account and returns are defined in advance usually based on the sum invested. You are effectively handing your funds over to someone else to invest on your behalf and you are able to withdraw as needed subject to any restrictions on minimum holding periods.
The benefits of passive investment include:
1. Hands-off investment
2. Simple to open an account
3. Good rates of return
4. Compounding of returns is normally an option
5. No knowledge of trading required
Disadvantages include:
1. Offered by companies who are not household names
2. Passive nature attracts investors with limited investment experience
3. Depositing and Withdrawing funds can be a time consuming process
4. Need to keep accounts with several online payment processors
5. Difficult to carry out due diligence on the company and their operations
Is it worth the risk?
On the face of it passive investments are a greater risk and it will take a very long time for this to change, if ever. However, as an investor you should be looking to create a balanced portfolio and to diversify across a range of instruments so I’d suggest that passive investments should be considered.
The purpose of this article is not to dissuade current stock traders from investing money in that way, rather it’s an attempt to introduce them to an alternative source of investment that, whilst it certainly carries risk, also offers good returns when chosen carefully. Clearly, advice should be sought when considering any specific investment but the potential for introducing passive investment into an individuals portfolio should not be overlooked.
Adin
