Stock Trades 101

[Coldspring]

One thing about the Mad Money guy says that is true, "Mad Money" is the money you have left over after you've put money away in "sound" investments (mutual funds, bonds, treasuries) and saved for your kids college education. It's money you can play with. Wish I had some!

I'd say about all of the trading methods that you see advertised are scams. If anyone has a method that works successfully, why would they give their secret away? And backtesting? Hindsight is 20/20, as they say.

Seriously though, fund your Scottrade account, install their trading platform, and just start pushing buttons. Don't get crazy! I recommend trading ETFs to get a feel for index funds, commodity funds, leverage, the ability to short w/o actually shorting. Scottrade even has an office in Springfield, so if you need to go in there and start yelling at someone you can...it's not some fly by night based out of the the Bahamas or something.

There's a whole LOT to it! There's is nothing simple about it, well nothing simple about actually making money. After you get a feel and increase your learning curve, there's a whole world of trading...futures, commodities, currency exchange, options, etc... Just get your feet wet and satisfy your curiosity, you gotta find out what it's all about. Still say it would be cheaper to buy an antique Payne bamboo flyrod and take it to Crane Creek to catch some mini wild trout for releasing, and if you broke it, still cheaper. Buy a bar of gold and keep in your car trunk while you're fishing, then you'll have that feeling of being rich, instead of watching some numbers on a screen turn red with negative signs in front of them.

[ness]

Oh, and here's a coupla quotes from some dude in Nebraska that seems to know what he's doing:

"Buy companies with strong histories of profitability and with a dominant business franchise."

"Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."

"Lethargy, bordering on sloth should remain the cornerstone of an investment style."

I've never felt the average Joe with a computer had very good odds of winning though trading stocks. But, not everybody looses, right? And, I'm not saying you're just average, Phil.

[Phil Lilley]

I've been watching Ford. Since the first of the year, they're up 20% and have been up as much as 40%. They are a solid company, especially compared to the other car companies.

[fly2fish]

Today would be a good day to buy, everyone else is taking a beating. The way I look at it and I heard this from an investor when we lived in Connecticut back in '87 during Black Monday, that if it had not been for that day he would not have been able to afford to get into the stock market as much as he would have wanted. Usually someone elses loss (seller) is someone elses gain (buyer). Just my .02 cents worth, oh and that is only worth .01 today

F2F

[Gavin]

Buy low, sell high and time in the market usually trumps timing the market over the long haul. Remember that the market is forward looking...The pro's base their buy/sell decisions on valuation models based upon future expectations, not past performance. The current price of a stock often reflects those expectations.

Learn the tax aspects of investing too. In a taxable account, you probably want to avoid stocks that pay dividends, and offset gains and losses to minimize tax. In a tax deffered account...you probably want dividends, and you want to avoid losses because you will never be able to deduct the loss. Lastly, a little tax planning in Nov/December never hurt anyone. Cheers.

[crappiefisherman]

Invest in BP (British Petroleum, if they get out of this one they will be the best oil company in the world..........

[snagged in outlet 3]

This is just my opinion. I've given this advice on here before.

Learn to manage your trading money so you can stay in the game long enough to learn something about trading. Go buy William O'Neil's "How to Make Money in Stocks"

It will teach how to hang onto to your cash. When to buy when the odds are in your favor (somewhat), and more importantly when to sell. Especially when to sell when you are wrong.

It answers the most important question in trading. You've bought a stock, now what is your exit plan? When will you take profits? How big of a loss are you willing to take?

Are you aware of the tax consequences of taking a loss on a stock and then trading it again withiun 30 days? If you do, you can't take the loss on the first trade. It's called the wash sale rule.

Also consider a trading platform that does year end tax accounting for free. At Ameritrade you get access to Gainskeeper for free. I can't tell you how much that is worth to an active trader.

I could go on, but the bottom line is, conserve your money long enough to learn something.

Because you will be wrong eventually.

SIO3

[Coldspring]

the bottom line is, conserve your money long enough to learn something.

Golden advice there. I really wasn't sure if you were wanting to buy and hold till a stock "goes up" or if you wanted to trade often. There's probably more money made, by traders, in shorting stocks and option strategies on those same stocks than there is in buying and then waiting on them going up. Sell high, buy lower. If you're thinking it is easy to make 2% a week, think again, if it was that easy we'd all be rich. Making 2% a week gets really difficult when you have a 20% loss on some of your stocks, of course you might wait a couple of years for that one to rise again, but how are you going to get back to 2% gain a week on your account? Read up on the tax issues, before you give yourself a big headache. I was also assuming you really wouldn't have to worry about capital gains for a while. If you have the bug (you mentioned you like to watch stock prices change) make a few trades, it's interesting to watch charts and be in the action. You can do simulation accounts, but to me that's like playing poker for beans...and don't think that if you can show a profit on a simulation that you can succeed with real money...when it's real emotions change and they will make you do things that don't make sense. IMHO, watching stock prices change w/o being active and involved is about like watching a bunch of trophy trout swimming around and not having your fly rod. You can even do mobile and trade on the lake if you're so inclined, having a clear mind would help with decisions. But don't go crazy, just see how little money you can lose, and don't eat yourself up on commissions...you don't really want to spend over 2% of a trade on commissions, getting in and out. There are thousands of stocks to choose from, and if you're trading instead of investing, it doesn't matter if the company sucks, the key is that you want to price to change. Anyway, just get started and try not to lose too much!

[Phil Lilley]

Report:

Me and a friend opened an account at Scott Trade on July 1. We deposited $4000 initially- added another $2000 a couple of weeks later.

As of today, our account is up to $6600. We've traded Ford, BP, San Disk, Harley Davidson, Halliburton, HSW International, Inc. and Compass Minerals International, Inc.. We're still sitting on Ford.

I understand we've traded in primarily a bullish market so far... for the most part it's gone up. Our buy/sell trades are mainly same day making 2-3% on each trade.

We had to learn about settling... we broke the rule the first time and got a warning.

[snagged in outlet 3]

Report:

Me and a friend opened an account at Scott Trade on July 1. We deposited $4000 initially- added another $2000 a couple of weeks later.

As of today, our account is up to $6600. We've traded Ford, BP, San Disk, Harley Davidson, Halliburton, HSW International, Inc. and Compass Minerals International, Inc.. We're still sitting on Ford.

I understand we've traded in primarily a bullish market so far... for the most part it's gone up. Our buy/sell trades are mainly same day making 2-3% on each trade.

We had to learn about settling... we broke the rule the first time and got a warning.

Is there a specific method you are using? Technicals? Fundamentals?

SIO3