Share trading for beginners

ian-d

Thinking of making the bold step in to share dealing in the hope of a long term investment. As a complete and utter newbie what share trading services would you recommend as simple to use without hidden/overly complicated charges?

My intention is to buy a reasonable amount of shares and leave them for a few years, maybe putting in and taking out every now and again to spice things up but the main plan is large trades very few times.

I've looked at Selftrade but they seem to be introducing a £35 annual charge as well as £35 withdrawl via CHAPS (minimum £2,500 huh?) plus £12.50 per trade. Hoodless look ok other than the poor reviews they get on here; and iii seems to be £10 per trade but then has countless more cost options which I don't know if apply or not!

Just want a straight forward online dealing service with live prices and easy to understand fees. Any help please guys?

JoeCrystal

Ahh? Well, maybe you can have a look at Halifax Sharebuilder with £1.50 trade fee but it can only be used on one day every month at your choice. There is no annual cost though. :beer:

I am sure others got good suggestions as well.

Lokolo

They're all pretty easy to work out fees.

The cheaper brokers obviously have limits, such as Halifaxs you can only buy one X day.

If you want ones where you can buy at 1pm on Monday then you will be looking at £12.50 per trade + annual or quarterly fee. TD Waterhouse are another one, I know they do live stream but anything under £5k in your holdings and they charge quarterly fee.

CHAPs is a same day bank transfer. BACs is the normal one which takes 3 days. If you are happy to wait 3 working days then the CHAPs charge won't apply to you.

- A trading fee (usually £10/£12.50) is the cost to buy or sell units. If you want to spend £150 on shares, £12.50 will be taken off of that, so £137.50 left to buy the actual shares. You will be charged £12.50 on selling as wel.

- A quarterly fee, this is just the basic running of the account.

They are the 2 main fees you will come across with brokers.

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There are other non broker fees which are relevant to any stock you hold such as tax on dividends, stamp duty and capital gains tax.

turbobob

Lokolo wrote: »

I know they do live stream but anything under £5k in your holdings and they charge quarterly fee.

Not sure if you use them but the fee is for inactive accounts if under 5k in them. If you do a trade every quarter you won't get charged. Not ideal, but personally I've not paid an inactivity fee. As for live streaming, its not included in the basic account (unless you know otherwise and I'm missing something ). The basic trading account gets you a facility where you click for a quote which you have a number of seconds to accept in the dealing screen. Anything else is subject to the usual 15 minute delay. They do have upgrades available but they cost.

Sites like Digital Look and ADVFN have limited free access to streaming live prices.

tradetime

Avoid brokers that are charging any annual fee, it is an unnecessary ripoff, also watch out for inactivity fees, another rip-off which can be costly if you are not planning on making regular purchases. If you are a longhaul investor, consider some of the £1.50 a trade offers like Halifax and iii on their portfolio builders..

ian-d

Thanks for the replies, to be honest, I want a service where by I can trade at any given time, so am ok with the £10-£12 trade price, as I'm talking '000's, not a few quid. This leads on to the question, which brokers are ideal for a newbie looking for online trading? Are Hoodless ok, or Selftrade with their annual charge, or another?

cheerfulcat

Hi, ian-d,

It's partly a question of how you intend to trade. If it's a question of buy-and-hold, with the odd top-up as cash becomes available then Selftrade or similar should be OK.

If you are intending to trade in conditions of unusual volatility then a cheap broker is likely to be worse than useless - a full service broker like Hargreaves Lansdown, while more expensive, is probably a better choice.

There is a dedicated Brokers board on TMF which may be of interest - sorry, can't do a link but if you go to the main discussion boards page and click on the A-Z list it should be there.

magpiejay

A lesson I have learnt (still as a beginner - though now at least in profit) is to time your entry right, and don't put all your money into a share in one go, this enables you to 'average down' on the dips. It's definitely worth reading the discussion boards on sites like adfvn and iii on particular shares to get a feel for what's going on behind the scenes for that share.

Also, I've recently found looking at the 'javacharts' on iii invaluable - they help you get an idea for the 'support' and 'resistance' prices for each share. Once a share is in a 'trading range' (generally during times of greater stability) it's a good idea to try and buy on support. I'm no expert on charts, but you'll see particular prices a share keeps coming back to regularly at both high and low points.

There's so much to try and take in as a beginner - and then you get something like a 'right's issue' dropped on you and a whole new can of worms gets opened up to learn about. What I can say though is it's incredibly exciting seeing your money going up (or down) every day. The simple question I ask myself with a share its: "I can get 3% in a year in a savings account - do i think this share will go up in value by at least 3% in the next 12 months?". At the moment, i think the answer is likely to be a yes for most shares out there.

The hardest (but often most profitable) thing to do is buy on days of doom-mongering when 'financial meltdown' is headline news. Days like those would have got you Barclays for 57p, Xstrata for £2.90 and Kazakymys for £1.80. Of course, if you hold shares like those, the next hard part is deciding if and when to sell.

By the way, I'm with Hoodless. £8 per trade. They give you a 15 min guide price, then a live one, with 15 seconds to go for it or not. In terms of reliability, they're generally very good (and also answer the phone quickly if needed) but on 'meltdown days' it can be tricky to get online quotes. I hear iii also suffers on this. On some of the smaller shares, iii is also said to have wide spreads (the price is slightly higher than it should be to buy or lower than it should be to sell).

Good luck!

turbobob

Some good points there magpiejay. Have you read the Naked Trader book? Its a good read and a good starting point. The author of that recommends against "averaging down" generally although in the recent volatility its easy to find examples where this could have been profitable

tradetime

On some of the smaller shares, iii is also said to have wide spreads (the price is slightly higher than it should be to buy or lower than it should be to sell).

Whilst I would not be prepared to dispute whether or not that is the case as I haven't compared their prices to live data, it should not be, iii is a broker, it does not set the bid / ask price, the market does, a broker takes a commission for facilitating the trade, they should not be skimming extra spread.

Blah99

I use iii and I've certainly never seen them offer wider spreads than the market sets (ie: comparing between ADVFN and an iii quote price).