posted
Hello all, I have been lurking and reading the posts here for a long time, occasionally posting. However, I have not had the chance to open an account until now.
I'm opening this account for my 17th birthday and it's looking like I'll have about $600 to invest initially.
I was wondering if you could give me some general advise. With this amount of money what types of stocks do you think would be best to buy? Would I buy lots of cheap penny stocks or take it slow and invest in more expensive, long run stock, or do something else?
Also, if you have read a book on investing that you have found helpful, or if you have any other general tips, would you mind sharing ?
posted
The answer to your question is going to depend on what your investing goals are. Do you want to invest for the long term, meaning you want to see this money grow without the need to touch it or do you want to make short term gains? If you clarify a little further, I'm sure some people on the boards can help.
------------------ David C. Arena
Posts: 28 | From: Westlake, Oh, USA | Registered: Mar 2004
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posted
Well, I'd like to see immediate gains, but I know that is much more risky . I think I would like to start a long term portfolio as well as have a short term one to try my hand at that. However, since I have such little money to invest, I was thinking maybe short term investing would be right for me to try and raise it a bit quicker.
Posts: 21 | Registered: Mar 2004
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posted
New T... this is only my opinion and suggestion.. but going for long term investing (holding for years etc.) is kind of boring and not as profitable as swing (holding stock for between 2 to 5 days) or position (holding stock for few weeks)trading... for long term investing you would have to hold it for years and have vast amounts of any one stock.. though this isnt always true but in my own experiences in the past it was.. Anyways my suggestion is to swing or position trade (penny/pink stocks for now till you have more in your account for Nasdaq Level II stocks)... the books below can help you learn as well as asking questions here on the board what you dont understand in the books themselves though the books are quite easy to read.. and for brokerages ill suggest 2 ..
Books:
1) A Beginner's Guide to Short-Term Trading by Toni Turner
2) How to get Started in Electronic Daytrading by David S. Nassar
posted
Thanks a lot for your reply, Machiavelli. Yeah, I was thinking about opening my account with low trades. I've heard good things about them. I think I'll order though books from amazon.
Posts: 21 | Registered: Mar 2004
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posted
NT All trading is long term. Short term trades can create profit ,but a portion of short term Gains should be moved to long term hold. I think a lot of newbies make and then lose big numbers which means "GREED" ie: I made $750 yesterday in one trade, but only 500 of it was reinvested short term. Do not view long term money as buy and hold, because that is when many investors rode the market into losses a couple years ago. Those long term investments should ALL have trailing stops to protect your hard earned short term trading gains VAN
Posts: 1424 | From: Peoria, IL. USA | Registered: Oct 2003
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posted
It's pretty much every brokerage's policy that in order for you to daytrade you would have to open a account with $25,000... i believe its the law.. anyways since your just starting out you wouldnt want to daytrade till you get your feet wet .. and nothing is better then to swing/position trade to get your feet wet.. and as long as you have trailing stop losses you can limit your losses.. above all dont get greedy and do your own research... keep "stock tips" under advisement but do your own research and decisions from it.. dont go out and buy 500K of a stock just cause you hear on a bulletin board it will go up ... trading like this will cost your account dearly... VN you are so right on that lol i jumped on the Tech bandwagon in the late 90's with no stop losses and doubled my account but went belly up when the companys i had invested in went bankrupt or just went down alot in stock price.. i learned a severe lesson back then that i dont intend to repeat nowadays...
Posts: 4669 | Registered: Mar 2004
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i don't know if u need to be a daytrader to buy/sell the same stock in the same day. i know my broker used to let me (tradingdirect) but does nto any longer. i read others saying if they had a margin account with Ameritrade they could buy/sell on the same day.
one thing i do know is that if u are a daytrader u can buy on the margin 4:1 instead of 2:1
posted
Forget Lowtrades - they have an extra misc.fees (up to 1%) for trades with quantity above 100000 (very easy with sub-pennies)
Try ChoiceTrade ($5 unlimited quantity) and quoted also by Barron's
quote:Originally posted by NewT: Thanks a lot for your reply, Machiavelli. Yeah, I was thinking about opening my account with low trades. I've heard good things about them. I think I'll order though books from amazon.
posted
Choicetrade seems fair enough on their fee's.. i might consider them though im not too thrilled that they charge $2 for trailing stop losses or $25 for domestic wire transfers and other miscellaneous fee's.. but ill probably do a printout of all brokerages im interested in and compare them side by side .. all i know is im not opening a account with scottrade lol $22 for pennies(broker assisted only) .. only other thing i didnt like about Choicetrade is that other then a $25,000 minimum (which all brokerages have) for daytrading you also must have either a income of $35,000 per year (how can i daytrade if i have a dayjob then? lol ) or net worth of $75,000 i think it said... i could be wrong on my facts but check out their FAQ's etc...
Posts: 4669 | Registered: Mar 2004
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posted
NT I"m with Ameritrade. I am not a daytrader. Sometimes I buy and sell same day. As long as you have settled cash to buy there is no problem(except taxes which don't apply to IRA accounts till later). VAN
Posts: 1424 | From: Peoria, IL. USA | Registered: Oct 2003
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posted
I am with Trading Direct $9.95 per trade no minimum to open account) and often trade same stock same day. To not be caught up by daytrading rules you must follow certain basic rules.
A trade is a daytrade if: you buy and then sell the same stock or if you sell,buy and then sell same stock. You may sell and then buy without it being a daytrade.
If you have more than three daytrades in a five day period and you do not have daytrade account. Your account will be frozen for I believe 60 days, so is a serious matter.
With only $600 to start you will be opening a Cash Account (These rules are set up by boards and SEC so is true whichever broker you use). This is fine and in my opinion the best way to start. When your equity or cash position is maintained higher then $2000 you may open a margin Account. This allows you to 'borrow' from your broker amongst other things. They tell me it also relaxes somewhat the daytrading 3 of 5 days rules. To actually daytrade you must maintaing $25000 in your account and have a margin account. I currently am well over $25k but still am using cash account.
I simply try to not buy and sell same stock same day very often, and it has worked alright so far.
As far as what type of stock to buy you need to develop your own style. Obviously try to minimize your risk while picking stock that has a good upside.
My advice to anyone getting into the stockmarket is buy and READ (At least once and over time several times) Peter Lynch's book 'One up on Wallstreet'. It will set you on your way to understanding the market and if take principles to heart, it will help you immensly in any type trading you do.
I trade penny stock and look for those that tend to be seriously undervalued. With shares that sell under .05 that is often very hard to tell. In Lynch's book he says 'if you are right 50% of time you can do very well in stock market', and the same is true in Pennys. It only takes two or three big winners a year to make the year if you are only making a small profit through rest of your stock. Learn to do your own research while taking advantage of others as well.
Message Boards are dangerous and to be avoided if you cant filter the 90% junk and fluff and pumping from the good stuff. I never looked at a message board for first ten months and I think that helped me immensly.
Stock for you to look into that I believe may have good future success is; ERHC - closed today at .59 and up about 50% for week. Special circumstances oil stock. By far my biggest holding at this time. I am very confident this is a good one. You have to look beyond the financials to see its value. Research present and past news for last year. CDED - company in beginning stages but prospects look good. CIRT - I like a lot. Should be profitable in next quarter or two. Thats enough for now.
Posts: 222 | From: Victorville,CA USA | Registered: Mar 2004
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posted
Qbid has been bouncing off the resistance but if i were u i wouldnt risk ur first trade on that stock.. if for some reason it crashes it wouldnt take much for it to be worthless and the old saying about it wouldnt be worth the paper its written on would be true... as for stock tips, i have mentioned it before... do your own research and pick your own stocks.. not someone elses.. because if u buy based on a "tip" and it tanks/crashes you have no one to blame but yourself... as for papertrading.. i agree on that.. you can papertrade or you can get Simulator software...
Posts: 4669 | Registered: Mar 2004
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posted
I'm actually going to open my first account soon as well. I've been looking at Lowtrades, Choicetrades, and Ameritrade. I'm pretty sure I've ruled Ameritrade out, but as for the other two. Someone mentioned that there were some misc fees with lowtrades for trades over a certain #shares. I haven't found a breakdown on their site, can anyone clarify this. And, Choicetrades doesn't say much of anything about commissions other than $5. Do they really charge ONLY $5 per trade, regardless?
posted
Lowtrade - I confirm these misc.fees It is now written in their site:
Additional Notes on Fees:
Our commission is a flat rate $5 on all transactions (market, limit, stop, stop-limit). Other fees to consider are the NASD Trading Activity Fee and the SEC fee. These are both charges levied by the NASD and the SEC on some sell-side transactions. The TAF fee is $.0001 per share capped at $10 per execution, and the SEC fee is $.0000468 per dollar of the principal.
Block Trading Fees applies to all orders for OTC-BB and Pink Sheet stocks of 100,000 shares or more. This fee is $.0005 per share or 1% of the principal, whichever is lower.
quote:Originally posted by mlove001: I'm actually going to open my first account soon as well. I've been looking at Lowtrades, Choicetrades, and Ameritrade. I'm pretty sure I've ruled Ameritrade out, but as for the other two. Someone mentioned that there were some misc fees with lowtrades for trades over a certain #shares. I haven't found a breakdown on their site, can anyone clarify this. And, Choicetrades doesn't say much of anything about commissions other than $5. Do they really charge ONLY $5 per trade, regardless?
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