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[–] PraiseIPU 0 points 7 points (+7|-0) ago  (edited ago)

You are going to get fees no matter what.

The smaller the transaction the bigger the bite out of your assets they will be taking percentage wise.

a $100 trade is worth less than pennies to any broker. Really need $1,000 to make anything significant.

http://www.fool.com/ has more info than you can read in a lifetime.

/v/investing

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[–] Peynus [S] ago 

So I should read up on, and practice simulations before ever spending anything, then take the plunge for £100s?

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[–] billdred 0 points 1 point (+1|-0) ago 

Stay out of stocks. Way to volatile. Go with something that has guaranteed return, like a MYGA. Some of them have 3% guaranteed returns. Liquidity is a little lower, but you can't lose any money.

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[–] sinjinsmythe 0 points 4 points (+4|-0) ago  (edited ago)

Best advice - Use a low cost online trader (Ameritrade or similar), slowly put the same amount of money each month into the following index funds in the following proportions:

VTSMX - Total Stock Market 30%

VFINX - S&P 500 30%

DIA - Dow Jones 30%

VTWO - Russel 2000 10%

These are index funds that mirror the movements of each index.

You will beat 85% of every fund manager, money manager, finance guru, whatever over the long term. These are very low cost index funds that mirror the broader market. Put in a bit more if you have it when the market is low (like now) but stick to this plan, rarely sell unless you need cash for something, and don't deviate from the plan.

You will thank me in 20 years.

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[–] Dereliction 0 points 4 points (+4|-0) ago 

Don't practice with your money. Practice on a simulated stock market so you can exercise your investing muscles before entering a real "race." This lets you gain experience without risk. There's no reason to rush into investing and it's not a thing you should practice with money you can't afford to lose, especially when there's no need to lose money at all.

(I'm guessing that the Investopedia simulator may be decent. Google will readily produce other examples. Maybe someone here can recommend a good one.)

Beyond that, once you get a feel for it, try three or four practice accounts, each with a specific strategy outlined before you start. This is important! Good investment practices find a trader setting clear guidelines that are adhered to strictly. Compare your strategies against one another and integrate what works into a cohesive and unambiguous plan.

With that as a starting point, I offer you these additional tips:

  • Determine your tolerance for risk and your investment goals. This governs the investment vehicles and stock types (e.g., blue chip stocks, penny stocks, stock options, dividends) you should consider and the returns you should expect from them.
  • Develop an investment plan. Seriously. Test it. Test it again. Test it some more. When you're satisfied with its potential, its time to start for real.
  • Include trading fees when figuring out how well your plan works! Fees add up and are a mistake to ignore.
  • Emotion is a trader's worst enemy, and investing has a way of invoking powerful emotions. This is the most difficult lesson for new traders and investors to overcome--one that is often failed.
  • You will have losers. Stick to your plan. If it's time to get out, get out. Don't hang on to a loser hoping it will recover. You developed a plan for a reason. (Consider using stop orders to exit positions that reach a profit or loss threshold.)

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[–] Peynus [S] 0 points 2 points (+2|-0) ago  (edited ago)

Is that based on the real market or is it simulated? So, real-time or not? How long should I use these simulations? And should I therefore diversify my portfolio instead of going on one? Or is that part of the 'testing' you were speaking of? Edit; also, what's your recommended site for when I try for real?

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[–] Dereliction 0 points 2 points (+2|-0) ago  (edited ago)

Simulators are based on either current ("real") markets, or in the case of some software options, on historical market data which can be used to create and test complex trading strategies. The latter option is also known as "back testing" and is commonly used by day traders and some swing traders. (An example is Tradestation.) That level of testing is overboard for most investors, and you shouldn't worry about that.

Use a market simulator until you feel that you have a solid grasp as to what is happening and have shown "on paper" that you've developed a working strategy. Given that you're new, don't focus on anything too complex. Start by coming up with a few simple rules and then experiment to see how things play out. You can afford to trade any strategy on paper!

Diversification? Some will tell you that it's important (often someone peddling mutual funds) but it is possible to over-diversify and mute a strategy that could otherwise prove fruitful. This is where testing and risk tolerance comes into play. Having fewer positions means more risk but can make it easier to capture larger gains. Having many positions will make your portfolio less "swingy" (prone to rapid ups and downs) and be able to sustain more failed picks, but also tends to reduce profits. Said plainly, level of diversification is part of risk management. Just don't manage yourself right out of a profit.

(Note, too, it can be harder to manage a portfolio of dozens or hundreds of stocks, but also downright expensive with transaction fees. And don't mistake it--with active trading strategies, transaction fees can eat your profits right up!)

I'll let others answer your question about a recommended site. I retired from this sort of thing a decade ago, so I'm not in a position to offer that sort of current advice.

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[–] multidan 0 points 3 points (+3|-0) ago 

Wall street survivor. Do it for about a year before you start actual trading.

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[–] Peynus [S] 0 points 2 points (+2|-0) ago 

Do what? Simulations?

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[–] multidan ago 

Yep. Learn from that before diving in.

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[–] Womb_Raider 1 point 2 points (+3|-1) ago 

Try penny stocks, and only buy small amounts. They're higher risk, so they give you a better perspective of how easy it is to lose money in stocks. Then move on to larger, more stable stocks and see how you like it.

Take it slow or you will regret it, as I did. Damn you, NIKE stock! Damn you to hell!

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[–] PraiseIPU 0 points 4 points (+4|-0) ago 

Word of warning to penny stocks. Some trading companies will tack on an extra fee for any stock worth less than $1. On top of the usual $4-$7 per trade fee.

This can pay off like in the case of Fanny Mae/Freddy Mac which were trading below $0.20/share at the bottom and spiked to $5/share at one point. But these cases are extremely rare.

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[–] Womb_Raider ago 

Oh, jeez. Stock fees were always a racket.

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[–] RedditDead2005-2015 ago 

For a novice investor, penny stocks is not the place to get started. It's an incredibly risky and volatile market where you can lose everything overnight (which rarely happens with stocks listed on the NYSE or Nasdaq). It's also incredibly difficult to do research on those companies, and scammers doing the pump-and-dump are all over the place...and it's usually the underwriters.

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[–] Womb_Raider ago 

I only advise it so that he gets to experience losing without actually losing a significant sum of money. He'll learn caution with stocks which I think is paramount

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[–] Peynus [S] ago 

I watched 'Wolf Of Wall Street' ain't nobody getting 999 crazy commissions off of me!

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[–] rwbj 0 points 1 point (+1|-0) ago  (edited ago)

The educated opinion would be to not bother trying to personally beat the market. There are a lot of reasons for this but in general index funds (which are basically a blank investment across a wide array of major companies) tend to outperform any given individual. Buffet is now going into the 8th year of a 10 year million dollar wager he made with another individual. Previously mentioned individual got to pick out any group of hedge funds he liked. Buffet picked an index fund. Whoever was ahead after 10 years won. Here are the details. Here's an interesting writeup on it.

The index funds, as always, are stomping the hedge funds. And hedge funds are run by professional investors who are not infrequently busted engaging in insider trading and other such shenanigans. Yet they still can't beat the basic market. Play an investing simulator or whatever and you're basically just randomly gambling. It'll result in huge variance and if you end up on the positive side, which you will eventually, you'll think you're an investing genius when the reality is in today's market - nobody is.

Go with an index fund. It will be literally impossible to lose all your money, or even any major chunk of it, unless our economy completely flops in which case it will generally come back in short order as we artificially fill that bubble back up like after the 2009 recession through various economic games like quantitative easing or 'dumping tons of money into the economy and hoping things work out.' It's probably screwing our economy in the mid to long run, but it's basically viagra for stocks in the short run as when people have far more money than they know what to do with stocks are an easy option, and that creates artificial demand which artificially inflates the prices and makes all of our economic indicators look nice and pretty.

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[–] Peynus [S] ago 

Great advice, thank you. However, I get the impression Index would follow the economy and go at like 2-3% per year? Isn't that basically a bank that barely beats inflation? Wouldn't a (mentioned below somewhere) MYGA be better?

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[–] RedditDead2005-2015 0 points 1 point (+1|-0) ago  (edited ago)

If you don't think you'll have the time to read a "How To" book for the basics, there's plenty of Youtube vids with tutorials.

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[–] RedditDead2005-2015 0 points 1 point (+1|-0) ago 

The best way to learn about the stock market is to start reading the financial news online or watching CNBC and other financial news shows on TV. If you don't have the time to follow them, then you shouldn't be trading stocks. You should just stick the money into a mutual fund.

First of all, which country are you in? In the U.S., there's places like E-Trade and other online discount brokerages. A 3% commission sounds too high even for a full service brokerage. Usually, people just getting into the stock market should stay away from individual stocks and stick with index stocks that follow a particular market index like DJIA, Nasdaq 100, S&P 500, etc.

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[–] Peynus [S] ago 

I'm UK atm. Move about Europe a bit. Any suggestions, then? Also; is there a free service of people monitoring stock prices?

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[–] RedditDead2005-2015 ago 

The free stock monitoring sites usually show prices which are delayed 5 minutes so it's not that useful for trading. I don't have the bookmarks with me right now, but you can find places of Yahoo Finance, Bloomberg, CNBC, etc. for them. This place is also good for an market overview.

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