Hello! Very early queries..

[Kenny0936]

Hi all,

Firstly, I would like to commend the efforts by so many on this forum who have provided such a wealth of material and imparted with so much knowledge to other users and would be traders.

I have began working my way through the New to Trading Stickies and associated posts/videos etc.

Now to put myself in the picture, I am at the very, very early stages of understanding the Stock Market, trading, etc. However, it's a subject that has fascinated me for a few years now. As I have grown up a bit in the past few years, I've come to realise that my hobbies and interest were no longer "interesting" me. I was spending time and money on pursuits which I had maybe grown out of.

Of late, I have found myself drawn to learning more about the Stock Market, Trading, the buying and selling of shares, understanding jargon, etc, and I have thankfully stumbled across T2W.

Many seasoned members continually say that a plan is a MUST. I am in the process of comprising that plan. Given the infancy of my learning, my plan for the next 8-12 months is fully based on just that, learning.

It is my aim to save a portion of my expendable cash to build up a decent pot to start trading. BUT, well in advance of any trading, I aim to "hit the books" and begin the process of learning as much as I can. I would think it will be another 6-8 months before I would be comfortable even in a demo environment, and I am in no rush whatsoever, I want to be armed with as much knowledge as I can before I begin to use real life money.

I feel passionate about the idea of trading, which type of trading I go into will depend. As a beginner, I understand that short term stock trading is a good option, to learn the ropes of regular trades, without the high intensity of becoming a scalper right from the off. Plus I have a full time job to contend with.

AS my learning has commenced, I have come across one or two (probably very basic) queries, that I would like to understand better before I continue to read on etc.

Question 1 When reading the stickies last night, I came across a comment regarding "Getting the price you want" for stock you are selling. This threw me a little bit, as I always thought you "got" what was listed as the BID price, and wasn't sure there was deviation with this. Am I overthinking it, or is there something I am missing?

Question 2 Will a trading platform identify which markets they can trade in? As I am in the UK, would I struggle to find a platform where US Stocks can be traded?

Question 3 Would a beginner always use "Market Orders?"

Any feedback on the above queries would be hugely appreciated. As I know, I am a mere infant in terms of learning and understanding this world, but I am eager to learn, have a positive attitude, and I find the subject matter hugely interesting and exciting.

Thanks for taking the time to read my waffle, I look forward to continuing my learning through the assistance of this site and it's seasoned members!

Cheers!

 

[Kenny0936]

Hi again! Apologies if this post is in the wrong place, if I should have popped it into one of the other forums, please let me know!

 

[timsk]

on etc.

Question 1 When reading the stickies last night, I came across a comment regarding "Getting the price you want" for stock you are selling. This threw me a little bit, as I always thought you "got" what was listed as the BID price, and wasn't sure there was deviation with this. Am I overthinking it, or is there something I am missing?

Question 2 Will a trading platform identify which markets they can trade in? As I am in the UK, would I struggle to find a platform where US Stocks can be traded?

Question 3 Would a beginner always use "Market Orders?"

Hi Kenny,
Welcome to T2W.

First off, you've posted in the correct forum, 10/10 so far! Regarding your questions . . .

1. This could mean different things depending on the context. If you provide a link to the sticky you read it in - I'll do my best to explain it. It could refer to price targets, be they entry or exit, or it might refer to limit orders which enable traders to enter positions equal to or better than a specified price. This FAQ explains all in detail: What's the Difference Between Stop Loss and Limit Orders?

2. It isn't the platform as such that determines the markets you can trade, but the broker you trade through. There are plenty who offer U.S. equities. The one that's best for you will be determined (among other things) by the size of your account, the type of trader you are or want to be (i.e. day, swing or position trader) and whether you want to trade actual shares or are happy to trade a derivative such as CFDs etc.

3. A market order is the most common type of order and the easiest to understand and use. That said, you are not restricted to it and, if you want to, you can use any order type that your trading platform offers. As with most things in trading, what matters is that you have a solid understanding of all the order types available to you and choose the most appropriate one(s) to achieve your trading objectives.

Hope that helps!
Tim.

 

[Kenny0936]

Hey Timsk!

Firstly, huge thanks for getting back to me, it is appreciated!

Point 1 - I will try and dig it out, but I am fairly sure it was just in the body of text relating to understanding the basics of trading and planning. Is it the case that your broker would tell you the current "best" price when buying or selling? (Or have this displayed if using a web platform/app)

Point 2 - Understood, thank you!

Point 3 - Very clear and taken on board, cheers!

I feel my head is racing with new information and I could potentially have a million queries, but I know I need to put in the hours and read up as much as I can. The only difficulty I am having in "learning" is sometimes jumping to sections or guides that are probably a bit advanced for my current knowledge level.

As it stands, I am doing my best to understand terminology, the process of buying and selling, and beginning to look at how to read charts, trends etc.

I am under no illusions, I would reckon I will have to study and learn for at least 8-12 months before I would use even a demo account, I don't want to confuse myself and end up frustrated.

As mentioned, there's no rush for getting involved. I currently see myself as being more involved with Short Term trading, rather than Scalping or longer term stuff. I would have guessed buying and selling "normal" stocks would be the easiest way to start out, rather than Options/Futures/Spreadbetting etc?

I am really enjoying logging into the forum and learning as much as I can, there really is a vast amount of info here that is invaluable!

Thanks again!

Kenny

 

[timsk]

. . . Is it the case that your broker would tell you the current "best" price when buying or selling? (Or have this displayed if using a web platform/app)

Hi Kenny,
The bid and offer displayed by your broker is their current best price. Note the emphasis. In other words, you might get a better price from another broker. An obvious example of this is the size of the spread - i.e. the difference between the bid and the ask. This will vary slightly from instrument to instrument and from broker to broker. If you plan on trading U.S. equities and if - for the sake or argument - you trade using a spread betting broker, then the spread could vary a lot. If you trade an equity index such as the Dow, it may only vary by a single point. That might sound insignificant - but it's not - and could have a big impact on your PnL. If you're taking ten trades a day then, even at just £1.00 per point, that's £50.00 per week or £200.00 per month etc.

Another thing to keep in mind about the prices displayed on your trading platform is that these are merely the current prices the instrument is trading at. For a whole host of reasons, don't assume the price displayed is the one that your trade will be executed at when you hit buy or sell.

Regarding your feelings about being overwhelmed with information and jargon etc., - don't worry about it. Just take your time, don't be in too much of a hurry, and bit by bit you'll pick it up. Well, most of it anyway. I still read plenty on here that's straight over the top of my little swede!

Tim.

 

[Kenny0936]

Hi Kenny,
The bid and offer displayed by your broker is their current best price. Note the emphasis. In other words, you might get a better price from another broker. An obvious example of this is the size of the spread - i.e. the difference between the bid and the ask. This will vary slightly from instrument to instrument and from broker to broker. If you plan on trading U.S. equities and if - for the sake or argument - you trade using a spread betting broker, then the spread could vary a lot. If you trade an equity index such as the Dow, it may only vary by a single point. That might sound insignificant - but it's not - and could have a big impact on your PnL. If you're taking ten trades a day then, even at just £1.00 per point, that's £50.00 per week or £200.00 per month etc.

Another thing to keep in mind about the prices displayed on your trading platform is that these are merely the current prices the instrument is trading at. For a whole host of reasons, don't assume the price displayed is the one that your trade will be executed at when you hit buy or sell.

Regarding your feelings about being overwhelmed with information and jargon etc., - don't worry about it. Just take your time, don't be in too much of a hurry, and bit by bit you'll pick it up. Well, most of it anyway. I still read plenty on here that's straight over the top of my little swede!

Tim.

Hi Tim,

Thanks again for coming back to me.

I am excited about learning as much as I can regarding trading. I note many people advise to start off with Forex trading, but I was leaning towards “standard” stock trading to begin with, is there a reason why people push newbies towards FX?

Also, is a “stop/Loss” an automated process? I.e, if I decide on when to get out in terms of a stock that may be falling, does the broker arrange to sell as soon as it hits the limit you have set, or am I totally wrong regarding the whole Stop/Loss side of things?

 

[timsk]

Hi Kenny,

. . . I note many people advise to start off with Forex trading, but I was leaning towards “standard” stock trading to begin with, is there a reason why people push newbies towards FX?

I think you'll find that the people who "advise to start off with Forex trading" tend to have a vested interest of some sort. It's portrayed (wrongly) as being easier than other markets to trade and the profits made can be much bigger and accrued much faster. Obviously, that's what people want to hear and, like moths to a flame, new traders fall for it hook, line and sinker. Needless to say, it's mostly nonsense. I've expanded on this before and, rather than repeating everything here, check out this link: Which Type of trading is suited to me?

I recommend that you keep an open mind about which market to trade and only make a choice when you've done your research and know what the various pros and cons of each one are, and can then decide which is the best one for you. This FAQ will help in this regard: Which Should I trade - Stocks, Futures or Forex etc.?

. . . Also, is a “stop/Loss” an automated process? I.e, if I decide on when to get out in terms of a stock that may be falling, does the broker arrange to sell as soon as it hits the limit you have set, or am I totally wrong regarding the whole Stop/Loss side of things?

It's automated in as much as if price hits the level you place your stop at then the trading platform will automatically close out the trade. It will do that even if you're not at your machine or are asleep in the middle of the night. There are occasions when this doesn't happen, i.e. in a very fast moving market when there's been a shock announcement or a 'black swan' event like 9/11 or the 'flash crash' of 2010. To counteract this, most spread betting brokers offer a guaranteed stop loss - over and above the standard stop loss - which does what it says. However, like any kind of insurance, it doesn't come cheap.

If all this sounds alarming to you - that's no bad thing. Most new traders ignore it, hope for the best and end up regretting that they didn't think about it more carefully. If you don't want to pay for a guaranteed stop loss (or use a broker that offers it - as not all do), there is another solution to the problem. Don't trade using leverage - or only a fraction of the leverage available to you.

For example, take the German Dax. In broad terms, it's floating around the 10,000 level. If you trade it at £1.00 per point and the index goes to zero, you'll lose £10,000 (assuming you're long). Unlike individual equities, indices can't go to zero, so you don't really need £10,000 in your account to trade it at £1.00 per point. If you only have, say, £2,500 in your account, then your leverage is 4:1 and the Dax would have to fall to 7,500 for you to 'blow up'. That's entirely possible, but it won't happen in a single day and probably not in a week - so you'll have time to close your (long) trade or take other evasive action - long before your account is wiped out. But if you trade at £10.00 per point, the Dax only has to fall to 9,750 and you'll wave bye bye to all your money. When you see a trader who has doubled their account in a just a day or two - this is what they're doing - trading with huge leverage. Great when it works but, when the trade goes wrong, disaster strikes. For more on risk and how to manage it, check out this Sticky: 'Essentials Of 'Risk & Money Management'
Tim.

 

[Kenny0936]

Hi Kenny,

I think you'll find that the people who "advise to start off with Forex trading" tend to have a vested interest of some sort. It's portrayed (wrongly) as being easier than other markets to trade and the profits made can be much bigger and accrued much faster. Obviously, that's what people want to hear and, like moths to a flame, new traders fall for it hook, line and sinker. Needless to say, it's mostly nonsense. I've expanded on this before and, rather than repeating everything here, check out this link: Which Type of trading is suited to me?

I recommend that you keep an open mind about which market to trade and only make a choice when you've done your research and know what the various pros and cons of each one are, and can then decide which is the best one for you. This FAQ will help in this regard: Which Should I trade - Stocks, Futures or Forex etc.?


It's automated in as much as if price hits the level you place your stop at then the trading platform will automatically close out the trade. It will do that even if you're not at your machine or are asleep in the middle of the night. There are occasions when this doesn't happen, i.e. in a very fast moving market when there's been a shock announcement or a 'black swan' event like 9/11 or the 'flash crash' of 2010. To counteract this, most spread betting brokers offer a guaranteed stop loss - over and above the standard stop loss - which does what it says. However, like any kind of insurance, it doesn't come cheap.

If all this sounds alarming to you - that's no bad thing. Most new traders ignore it, hope for the best and end up regretting that they didn't think about it more carefully. If you don't want to pay for a guaranteed stop loss (or use a broker that offers it - as not all do), there is another solution to the problem. Don't trade using leverage - or only a fraction of the leverage available to you.

For example, take the German Dax. In broad terms, it's floating around the 10,000 level. If you trade it at £1.00 per point and the index goes to zero, you'll lose £10,000 (assuming you're long). Unlike individual equities, indices can't go to zero, so you don't really need £10,000 in your account to trade it at £1.00 per point. If you only have, say, £2,500 in your account, then your leverage is 4:1 and the Dax would have to fall to 7,500 for you to 'blow up'. That's entirely possible, but it won't happen in a single day and probably not in a week - so you'll have time to close your (long) trade or take other evasive action - long before your account is wiped out. But if you trade at £10.00 per point, the Dax only has to fall to 9,750 and you'll wave bye bye to all your money. When you see a trader who has doubled their account in a just a day or two - this is what they're doing - trading with huge leverage. Great when it works but, when the trade goes wrong, disaster strikes. For more on risk and how to manage it, check out this Sticky: 'Essentials Of 'Risk & Money Management'
Tim.

Hi Tim

I can't thank you enough for sitting and spending the time to send these detailed and informative responses. It really is appreciated.

Although I am at the very, very early stages of learning about Trading, my initial thoughts still steer me towards Stocks, rather than Forex, Futures, etc. I don't think I would feel comfortable in a position in the early stages of trading of using substantial leverage associated with Forex Trading. I want to go into this with a pot of cash that I have saved, that I can afford to lose, should the worst happen. The last thing I want is to be owing more than I have put in, and as an amateur, this could quite well be the case.

I am logging in each day and absorbing as much info as I can, along with various video guides and tutorials on YouTube. I have come across many coaches, who tell me of their success and subsequently try to sell their courses for fairly substantial fees. Whilst pictures of Ferrari's and stacks of cash look tempting, I would like to think I am more savvy than to believe that I will be enjoying these luxuries as a result of this miracle course I have bought into.

What I would invest in though, is a decent book or two, and I'm sure I saw on the Forums a page where popular Trading Literature can be found. I will try and find this and get something ordered. The forums and YouTube are great learning vehicles, and I feel a book I can read and take notes from etc will enhance things further.

Thanks again, and keep up the good work!

 

[timsk]

Hi Kenny,

. . . I have come across many coaches, who tell me of their success and subsequently try to sell their courses for fairly substantial fees. Whilst pictures of Ferrari's and stacks of cash look tempting, I would like to think I am more savvy than to believe that I will be enjoying these luxuries as a result of this miracle course I have bought into.

Very wise. In the event that you are tempted to whip out your wallet, be sure to read these two FAQs first:
Can You Recommend a Mentor, Coach or Trading Course?
How Can I Distinguish Between Scams and Reputable Vendors?

. . .What I would invest in though, is a decent book or two, and I'm sure I saw on the Forums a page where popular Trading Literature can be found. I will try and find this and get something ordered. The forums and YouTube are great learning vehicles, and I feel a book I can read and take notes from etc will enhance things further.

Keep your eyes peeled on the homepage as there's a book aimed at new members wanting to know where to start that will be published right here on T2W in the near future. In the meantime, this FAQ will throw up a few ideas:
Which Books should a Beginner Read?

Enjoy!
Tim.