Stock Trades 101

[Phil Lilley]

I know very little about stock trading - I watch my stocks every day along with a few others just because I like to watch them.

I'd like to start trading, I think. But know nothing about it.

I've opened an account at Scott Trade but haven't deposited any money in it yet.

Anyone willing to do a little trading 101 education?

Just the basics. I have some real basic questions.

1. Can you buy and sell stocks at any time or do you have to buy when someone wants to sell and sell when someone wants to buy?

That's good to start.

[denjac]

Do the opposite of me and you will make a ton of money!

[rps]

You can buy anything that has been offered for sale at its offered price. You can offer to buy anything at a selected price. You can offer to sell at a selected price. You can sell at market price (what ever that may be) by placing a sell order for execution.

Sales price is compared to your cost of acquisition (basis) to determine gain or loss. Tax rate on gain and deduction of losses are determined by the status of the gain/loss i.e. long term or short term. Any dividends paid to you while you hold the stock is a separate category of income from wages or business profit.

Based on experience I strongly urge you to treat all investments which you plan to watch and trade frequently the same way as you treat bets in a card game - never bet more than you can afford to lose and smile when you walk away.

The best investment strategy for someone who is not a full time professional (or the very rare amateur who has learned as much as one) is to buy, hold, adjust, hold, adjust, (repeat as needed)and sell as needed after retirement. Long term investment is the only protection we have against market fluctuations and stock manipulations.

One more thing. My father in law's advice: Buy low; sell high; don't aim for the peaks or bottoms; aim for the middle of the trends.

The quiz will be Friday. :-)

[Gilly]

I like to buy stocks of companies that I believe in and use. That puts Coke, Proctor & Gamble, etc. in ones portfolio. Most of those companies would work with the buy and hold scenario. For the riskier stocks I subscribe to the Motley Fool, a news letter that covers those type of stocks. They do the research and recommend accordingly. Have patience, study and accept the downs as well as the ups.....or find a trader you can trust.

[Coldspring]

Keep your money! (Even though we may have hyperinflation in the near future) Go to Vegas, buy gold bullion and more fly rods. You'll thank me later.

The markets are probably a bit propped up now...with the money printers going full steam who knows if the Dow will hit 30,000 or dive back to 3,000 or less, where it probably should be. I think the old days of buying and holding maybe just that, the old days. This whole economy is overleveraged to the max, indebted way past the max, and unsustainable. You saw how easily things can happen, last weeks "Flash Crash" comes to mind. Don't ever think that everything is transparent and there's not manipulation behind the scenes. Most of the volume isn't coming from investing, it's happening from computers that are swapping shares back and forth in the blink of an eye. These big fish(with eyes in the back of their head that see into next week) are the ones that are making the money, and they nearly always make money, slowly leaching it out of the little minnows in the market, who get chewed up and spit out in the slightest turmoil.

Books can't teach you, chart analysis can't teach you, patterns are nearly meaningless, fundamentals are out the window with all the cooked books. I think it's something like over 90% of active traders end up losing, and the one's that succeed lose about everything more than once before they figure it out. Then most of them end up losing it eventually. Sorry to sound like a pessimist.

[jdmidwest]

Buy high and sell low, no, wait a minute, buy low and sell high.

[Phil Lilley]

I have investments in stocks through Edward Jones- not a whole lot. To be honest, our investment is this business. We invest by pouring money in improvements- that and treating people right keep guests coming back. So I'm not too worried about my "retirement", something I don't really believe in anyways. If I'm not working and productive, I'm dead.

I digress.

This is money I can afford to lose... I understand that.

I've watched a couple of investment youtube videos- there are some good ones out there. I like the concept of making alittle bit at a time- not going for the highs and lows. If I can make 2% per week on my money, that's not bad.

I see being disciplined is important - settling for 1-2% gain when it may look like it may go 4-5% higher.

I have alot to learn though. I may look for an online course just to learn the basics.

[Trav]

Roth IRA is the safe way...but if you really want to know a boom ready to prime...(like within the next five to ten years), think real estate. If you can buy up some of the forclosure short sales and manage to pay the taxes for a few years, the boom will return.

[Gilly]

Roth IRA is the safe way...but if you really want to know a boom ready to prime...(like within the next five to ten years), think real estate. If you can buy up some of the forclosure short sales and manage to pay the taxes for a few years, the boom will return.

Trav,

You are absolutely on target, I've been doing that for years. My son has gone full time on his own doing remodels for us and is building a decent clientele off of the people who buy our homes due to the quality of his work. Real estate has always been a decent investment but once again you need to know what you're doing.

[ness]

I know very little about stock trading - I watch my stocks every day along with a few others just because I like to watch them.

I'd like to start trading, I think. But know nothing about it.

I've opened an account at Scott Trade but haven't deposited any money in it yet.

Anyone willing to do a little trading 101 education?

Just the basics. I have some real basic questions.

1. Can you buy and sell stocks at any time or do you have to buy when someone wants to sell and sell when someone wants to buy?

That's good to start.

Kinda depends on the stock. If it's actively traded, you'll be able to execute immediately. If you're dabbling in lightly traded stock -- and I mean really lightly traded -- you may have to wait.

There's a couple ways to do a trade: a 'market order' means you just buy or sell it at the best price the dealer can get you at that time. Or, you can request a 'limit order', and set the price you're willing to pay or receive. Then, depending on how the price moves, you may, or may not, get your trade done.