Trading on the Stock Market .. Where do I start?

metroman

I confess to not knowing much about the stockmarket, but having come into a little money I wouldn't mind having a little dabble to the tune of about £5,000.00 .. Maybe even £10,000.00 if I feel that confident.

Im guessing I will never gain the information I need to do trading solely on my own, and bearing this in mind I wondered what sort of help there is out there.

I know there are Companies on the internet like e.g. Fatprophet, and Selftrade which both (in my naivity) look very interesting ... but maybe someone could give me their views on what they think of these set ups, or any others like them, or indeed any other better ways to go.

Also, one last question, as far as trading in stocks and shares is concerned, I know the general idea is to leave them locked up for at least 5 years for the hope of maximum profit, but can you also constantly buy and sell shares to make small amounts of profit to give an income??

Many thanks

tradetime

Also, one last question, as far as trading in stocks and shares is concerned, I know the general idea is to leave them locked up for at least 5 years for the hope of maximum profit, but can you also constantly buy and sell shares to make small amounts of profit to give an income??

Leaving money in shares for at least 5 years would be called investing, generally "trading" would tend to be of much shorter terms, ie daytraders, swing traders and position traders (though the latter group can spend quite long times exposed) and yes you can make an income from it if you are prepared to do the work, but it is worth knowing up front, that it is generally accepted that statistically between 80-90% of people who set out to do this lose money

JDinho

metroman wrote: »

I confess to not knowing much about the stockmarket... Also, one last question, as far as trading in stocks and shares is concerned, I know the general idea is to leave them locked up for at least 5 years for the hope of maximum profit, but can you also constantly buy and sell shares to make small amounts of profit to give an income??

Many thanks

On the sums you're talking about you'll lose more on trading costs than you stand to make, even if you use the cheapest brokers.

If you want to invest & learn, start off with funds. You'll find you learn more and won't get your fingers burned.

Maybes even run a dummy portfolio of shares for 3-6 months and see how do. If you beat the interest rate your cash will earn in that time go for it.

Aegis

JDinho wrote: »

On the sums you're talking about you'll lose more on trading costs than you stand to make, even if you use the cheapest brokers.

I'm not quite sure this is true... Even at £1000 per company, you only need a 1.3% growth to offset the £6.50 trading fees each way at the cheapest broker, and 2.5% at somewhere like Selftrade with sporadic trades.

Either way, you could potentially see more growth than that in a day!

If you want to invest & learn, start off with funds. You'll find you learn more and won't get your fingers burned.

Funds aren't a bad idea to start with, but there's still no guarantee of not getting your fingers burned!

Maybes even run a dummy portfolio of shares for 3-6 months and see how do. If you beat the interest rate your cash will earn in that time go for it.

Running a dummy portfolio is a good idea, but certainly isn't a necessity, especially when you consider that one 6 month period will not be the same as another, so what works at one time could go horribly wrong later that same year. Still, it's a good idea if only to work out how trading and share dealing actually works, and how to account for the spread, etc.

tradetime

I'm not quite sure this is true... Even at £1000 per company, you only need a 1.3% growth to offset the £6.50 trading fees each way at the cheapest broker, and 2.5% at somewhere like Selftrade with sporadic trades.

That would cover commission fees, but since your likely talking about UK shares you would also have to pay stamp duty, whatever that amounts to.
If you are talking about US shares then that would be a different thing, though to daytrade shares on US exchanges requires a minimum account balance of $25,000 as per NYSE and NASD rules.
Whilst you can see better than 1.3% move in a day, you'd be pretty optimistic to consistantly nail it to the degree of making an income (assuming income = living) as the OP has referred to after covering all your costs.

dunstonh

Funds aren't a bad idea to start with, but there's still no guarantee of not getting your fingers burned!

True but at least you wont suffer a Polly Peck or Northern Rock on all your money.

purch

as far as trading in stocks and shares is concerned, I know the general idea is to leave them locked up for at least 5 years for the hope of maximum profit

You are confuzzling 'Trading' with 'Investing'

I confess to not knowing much about the stockmarket

Leave 'trading' to the experienced, or professional

Investing......there are lots of Books, Magazines and Websites that will teach you most of what you need to know (search the Forums they are mentioned on here time and time again). Starting with UT/Oeic/Sicav is probably the best way, but only after you really understand what they do and how they work....jumping in without proper research could easily make you money, but just as easily lose you money and not knowing the real reason for either the gain or loss won't help you in the longer term

jamesd

For shares you could use the Interactive Investor Self-Select ISA. That way you can do regular small buys without the need to track them for capital gains tax or be concerned about tax on dividends, particularly useful if you're a higher rate tax payer. Their Portfolio Builder service offers very cheap buy trading, 1.50 per buy if you buy on their regular trading days four times a month but free until June.

Outside the ISA wrapper their share dealing account also offers the Portfolio Builder service.

Portfolio Builder is comparable to the Halifx Sharebuilder service and it's rebranded Motly Fool equivalent and may also be powered by Halifax behind the scenes. Interactive investor appears to offer a cheaper package than the other two, with more flexibility than some other options.

For any of these, making regular small purchases over the course of a year would be prudent this year, since markets are going up and down a lot and it's not certain that we are at the low point in prices - probably not in some areas. The problem is knowing just when the lowest price is... since you can't, you can start regular buying at a low price and buy through and after the low point.

If you want high risk you might consider bank (but not Northern Rock), retail, consumer (pubs etc.) and property firms. All are likely to resemble yo-yos this year but many are likely to recover over a few years... though some may go bust and others could drop to 25% or less of their value, possibly not recovering for a long time, if ever. So spread your risk over many companies! Or pick something less volatile if you can't sleep with such a level of risk.

If you prefer funds, Hargreaves Lansdown is cheaper.