Trading.

Bantex_2

Seems to be a bit of a grey area between trading and investing in shares.

Masomnia

Drp8713 wrote: »

For all IG users, spread betting, as far as I can see on the site for share markets there is a minimum £10 fee for trading, but for non share markets, it is only a % fee? Is that correct?


So you could have a £50 pop on this for a laugh without losing it all in dealing fees?

On spread betting (I don't know about their broking) there is no fee. A lot of markets you can go in with a pound a point and if you use a stop you might only need £20-£30 in margin. So, it's certainly do-able with £50.

Not sure if it's a good idea though

Masomnia

Actually now I think about it the minimum you can fund your account with is £100. You maybe be able to instantly withdraw £50 though, I don't know. Or put £100 in but not use £50 of it.

brendon

Masomnia wrote: »

On spread betting (I don't know about their broking) there is no fee.

Of course there is a fee, it is in the buy-offer spread.

bowlhead99

brendon wrote: »

Of course there is a fee, it is in the buy-offer spread.

Yes clearly there is a fee baked into the price. But it isn't a fixed flat fee - so while 5 trades at a tenner fee each would entirely wipe out your £50 if you were sharetrading real shares, the small percentages on spreadbets would not.

There are minimum bet sizes and minimum margin on everything. So if you wanted to place a bet of FTSE100 daily price, you need £2 a point which with FTSE at 6800 is like a virtual investment of £13600. If the FTSE ticks up or down by half a percent, that is 34 points or £64 so clearly £50 is not going to be enough to trade that market. Similarly GBP/USD the rate is about 1.625, so minimum bet is £1 per point on 16250 which represents thousands of pounds invested and a movement of a under a third of a percent wipes out your £50.

With £50 you could bet £1 a point on something like Tesco share price, which is only trading at 191.3-191.7p. If you bet on it going up, your virtual £191.70 is instantly worth only £191.30, so you've lost 40p (almost a percent of your £50 bankroll) to fees, and more if you are betting controlled risk with a guaranteed stop. However, it is certainly more feasible to deal in Tesco that way via making bets, instead of paying £10 to buy £50 of real shares and 25p stamp duty and then later £10 to sell the shares, which would be a monster percentage that could never work for a trader.

Masomnia wrote: »

Actually now I think about it the minimum you can fund your account with is £100. You maybe be able to instantly withdraw £50 though, I don't know. Or put £100 in but not use £50 of it.

You can withdraw £100 minimum unless you have less than £100 in your unspent balance in which case you can withdraw that amount. So theoretically you could put in £100, place bets using up £50 of margin, then take out the rest. Of course, there is no need to take out the margin right away if you're not going to bet it, you could just leave it there doing nothing and take it out later when you close the account having won or lost big.

sorcerer

LannieDuck wrote: »

It was really interesting.

I quite fancy having a go on one of the dummy accounts the nurse was using at the start. Did anyone recognise the website she was using, or know of a good place to find a dummy account?

I know one of them was using CMC Markets, I used to use them. I saw their logo.

C_Mababejive

A very interesting series..i wish they had made more episodes !
I do hope lots of people dont pick up their ipads and go sign up for accounts doing crazy things they dont understand for most of them will lose money and suffer a very painful learning curve.

A lot of this programme was simply what i call a d ick comparing competition. Testosterone at its best,and literally in the case of iron man. WE never really knew though who iron man was. We knew he traded but did he start in a caravan or rented flat and has now made the big house and porsche through trading or is the house rented/mortgaged and is he expecting the gasman next week to fit him a prepay meter?

One of my sidelines is pursuing debt and i go to homes far far bigger than i can afford in nice areas where they are clearly in a fur coat and no knickers situation and dont have a penny to their name.

Its all about outward appearance.

Showing the right front can win friends and influence people. It can draw people to you, make connections and you can benefit fro this.

A flash car, a sharp suit, good grooming, good patter and a whiff of quality aftershave can go a long way and you might only have a few quid in your pocket.

So many of them gave off that aura..the modern day Gordon Gekkos . It was so important to have the right set up, the big bank of screens,a kind of replacement phallus.

Take the antiques dealer. In the intro we were led to believe he was the real deal high roller. Im sure he is a nice guy but once he sat at the desk, the story unfolded that he had bought the phallic console,started with X a few years ago and now had Y..which was considerably less. If he continues i will bet a month of my boring wage that he will have Z..i.e Zero.

And the same will go for most of them.

Why?

Because they are in fact bottom feeders. They are not at the coal face of the industry and therefore before they get the chance to click a mouse, others have had first bite and even when they do click, they are exposed to charges, spreads and other costs.

Me,,i keep it simple. I get up every morning , i go to work, i optimise my income from work and i optimise my expenditure.

I know Im paying an effective tax rate of 40% but then im just a slave on the UK slave trader ship HMS Great Britain.

Any shares i have i auto reinvest the divi.

I trust to lady luck via premium bonds and lottery to make me a millionaire becuase i know it wont happen trading forex !

And that is why im not daft enough to sign up for some con mans £3000 sales patter course.

spender

That is a very sensible post. I do not talk to my friend now unfortunately (his new lady doesn't like the old friends) but I often wonder how his trading of redundancy money is going. I know he trades forex but what screens etc he has I do not know. I also worry that he is keeping himself out of the job market as time goes on. However it is 10 months on and he reckons that he is earning his salary and then stops and enjoys life.

I just hope that it is not a run of good luck followed by a fall.

Kaimoo

Any advice on who to use as a total newbie to buy shares? Not a massive amount just around £1000 for a maximum of six months, it would be a total guess what I'd buy however I would do a little research but it would be a gamble. I know any share buying is a gamble but more so for me since I'm completely new to it.

I can afford to lose it all but is it possible to actaully double your money? Or is that extrenly unlikely unless you buy into the next Microsoft or Apple?

bowlhead99

It is possible to double your money on shares, yes. Some shares go up by multiples of their start price if you start at the right time; others go down by 100% if you start at the wrong time. An average basket of major shares would have doubled or more over the last five years as we came back from the depths of recession and a market crash. Of course, now we have come back from the depths of recession and a market crash, it's unlikely that the average share will double again in the next five years.

Typically it might take 10 years to double your money including capital growth and dividends received reinvested along the way; that would be a 7% annual compound return. But in a period of just 6 months, more like a 3-4% return or less, which is £35. This will be mostly (or completely) eaten up by trading fees and stamp duty if you're buying shares and selling them again within the 6 month window. So, expect a zero return, and then luck and randomness of what happens to the stock market over this extremely short period will perhaps make you some money or lose you some money. More likely the latter, as you admit it will be pretty much a total guess, while the more experienced people in the market with whom you are competing, are making educated guesses and judgements based on experience and a lot of research.

It is perfectly possible, though very unlikely, that within the first company or two you take a punt on, you might well find that you DO discover the company next Apple or Microsoft which proceeds to go up by 10x, 20x, 100x in the next 20 years. There are not many around, but if you stick a pin in the list of the top 3000 companies around the world, or the next 10000 below that, you might find one through fluke. However, if you are going to have to exit after only 6 months while the shares are flat or even down from where you bought them, before they strike it big, you won't see a penny of that and might just take a loss.

Great research about what should happen to a company's share price or performance is of limited value if you are not actually in a position to stick around and wait for your predictions to come true. The market can stay irrational longer than you can afford to wait around, if you need that money back in a few months.

Few thoughts:

* Selecting individual stocks can be seen as a gamble (particularly for someone who is new to it). With relatively high fees to pay on short term low value trades and no knowledge of what you are doing, the odds are stacked against you and - like going to a casino - the house generally wins.

* However if you change the view point and timescale - away from trying to guess individual stocks over 6 months, and look at investing in investment funds which have a broad exposure to hundreds of shares on the global stockmarket, for a period of 5-15 years, the odds move in your favour. Because in the long term, the house does not win, the investors win, as long as they hold a broad exposure to the stock markets, because the stock markets go up and pay dividends along the way.

* You mentioned in a previous post that you had an inheritance of £100k+ earlier this year. So excuse me for asking but how it is that you're only able to commit £1k to investments and then only for a tiny fraction of the time needed to produce any meaningful return?

If the answer is because you are being very sensible and investing most of your windfall in something else for your retirement, then it seems strange that you would look to just throw £1k away in the hope of turning it into £2k overnight and acknowledging it was a complete gamble? On the other hand, if the answer is you needed the cash to clear debts or start your own business or just pay for an expensive lifestyle, it might be sensible to put this £1k to use for the long term - i.e., use the stock market, but access the stockmarket returns through investment funds (perhaps within an ISA or pension) over a long period. Rather than digging for gold in random bits of ground hoping to strike it rich by finding the next big thing within a tiny window of time.