Broker recommendations for small AIM stocks.

Thrugelmir

DireEmblem said:

I would say the same for Bloomberg.  It’s becoming more expensive, but the quality of information seems to be going the other way!

I've found errors on HL's pages far too often. (Though in their defence the data is provided by a third party source). 

Eccles04

Been using LSE for a couple of years £9.95/trade but no holdong/annual charges and quite a lot of free useful information.

maxsteam

It's a 6% spread and it may be illiquid. It's possible that the spread will be better in the middle of a trading day but it's still going to be far too much to interest many investors. I won't apologise for mentioning it again, the spread on FTSE100 stocks is less than 0.1% which is an amount that is insignificant compared to daily price movements.

The bid/offer spread should be the same, in theory, during a trading day. However, some brokers provide after hours trading at higher spreads while others show Friday's closing prices over the weekend. It's not the best time to compare spreads when markets are closed.

Thrugelmir

maxsteam said:

It's a 6% spread and it may be illiquid. It's possible that the spread will be better in the middle of a trading day but it's still going to be far too much to interest many investors. 

Spreads move in line with supply and demand. The fact that investors shy away from buying some stocks is a bonus. Means that the price doesn't rise much and allows the building of a decent stake over a period of time.  

maxsteam

Thrugelmir said:

The fact that investors shy away from buying some stocks is a bonus. Means that the price doesn't rise much and allows the building of a decent stake over a period of time.  

It can also mean that you lose an unnecessary 6% in fees and it can mean that you have problems selling when you want. I've not heard many people say that it's a bonus when the price doesn't rise much. Perhaps you mean on a positive company announcement. There are large company stocks that don't move much on (unaudited) interim results. With a large company, if you change your mind and sell up promptly, you lose your £6.95 (or whatever the commission is) plus 0.1%. With a small company like this, you also lose 6% of your investment.

Thrugelmir

maxsteam said:

Thrugelmir said:

The fact that investors shy away from buying some stocks is a bonus. Means that the price doesn't rise much and allows the building of a decent stake over a period of time.  

It can also mean that you lose an unnecessary 6% in fees and it can mean that you have problems selling when you want. I've not heard many people say that it's a bonus when the price doesn't rise much. Perhaps you mean on a positive company announcement. There are large company stocks that don't move much on (unaudited) interim results. With a large company, if you change your mind and sell up promptly, you lose your £6.95 (or whatever the commission is) plus 0.1%. With a small company like this, you also lose 6% of your investment.

I'm surprised that you are investing in individual shares at all if 6% swings and £6.95p commissions are a concern. I'd recommend sticking to collective investments until your portflio grows in size. Investing is akin to going fishing. Patience is required.  Small companies don't always grow quickly.  

eskbanker

Thrugelmir said:
Investing is akin to going fishing.

Indeed - both stereotypically involve participants wildly exaggerating their successes ("it was THIS big!") while conveniently glossing over their failures....

Thrugelmir

eskbanker said:

Thrugelmir said:
Investing is akin to going fishing.

Indeed - both stereotypically involve participants wildly exaggerating their successes ("it was THIS big!") while conveniently glossing over their failures....

No one likes to admit their failures. Learning to brutally cut your losses shouldn't be underestimated. Far too many investors hang onto shares in the sentimental hope that they they will recover. Over time they well do. Though in the intervening period better opportunities may lie elsewhere. The best short term returns normally arise from investors exuberance for a stock or a takeover situation. Finding and backing small companies with potentially a 5-10 year investment horizon to reap the rewards requires a very different investment philosophy to trading the highly monitored large cap companies. 

maxsteam

Thrugelmir said:

I'm surprised that you are investing in individual shares at all if 6% swings and £6.95p commissions are a concern. I'd recommend sticking to collective investments until your portflio grows in size. Investing is akin to going fishing. Patience is required.  Small companies don't always grow quickly.  

The 6% "swing" is instantaneous and unnecessary. It may seem fun to "build a stake" over time. To invest £50k in a small company may involve buying £2k worth of shares each day. In a large company, investing £50k is just a matter of clicking "buy" when the price is right. A huge issue for me, on top of the large spread is that, when it comes time to sell £50k worth of shares in a large company, you can again just click "sell" whereas in some small AIM companies, you must wait for buyers and, in some cases, you may only be able to sell a few shares, or sometimes no shares, each day.

A £50k holding in a large company will often show a profit, after dealing costs, on the day that it is bought. This will not happen with an AIM company and a 6% spread.

If a thinly traded stock is mentioned in a popular tip sheet or social media platform, the fact that it is mentioned is often enough to make the price move up significantly, even if the company is having problems. I deliberately try hard to avoid trading small company shares. imho it's an easy way to make everyone else in the loop, except me, rich.