Short Term traders - advice please

[Jackie284]

Hi everyone,

I'm new here and need some advice. I have a real interest in this short term trading business although I am very very new to it and am still reading and learing, so i'll apologise if my questions are annoying. I wanted to ask, when you buy a share you have to pay arounf £10 -£12 for the transaction, and then the same when selling ? have I got that right ? 'cos I was just thinking how that would really eat into any profits.

Also, do you guys open accounts with an interactive investing site, or do you use something called a trading platform ?? Any advice and info would be greatly appreciated,

many many thanks
Jackie

 

[Jack o'Clubs]

The commission will be charged on both sides of the transaction, buying and selling. You should be able to get comms down to £6-7 per side if you look around (Interactive Brokers, Hoodless Brennan, etc). If you're trading UK stocks you'll also need to add the 0.5% stamp duty as an additional cost. And the spread, which can be anything from insignificant for FTSE100 stocks to quite large when trading AIM or other small caps.

 

[hornblower]

you can open a spread bet account for a few hundred pounds and spread bet a £1 per point

 

[Jackie284]

Hi there,

thanks for your replies. I was thinking of trading on shares, something along the lines of examining the markets, buying low and then hopefully sell when the price increases. I work full time and was hoping to do this in the evening. With charges and everything, is this viable option ?

thanks again
Jackie

 

[Jack o'Clubs]

You can work it out. If trading stocks directly what's, say, £14 as a percentage of the amount you'll be investing each trade? Then add 0.5% for stamp duty and the typical % spread. What is the average return you'd hope to make? If the second is a fair bit larger than the former, then yes it's viable.

If spreadbetting, what is the percentage spread on the instruments you want to trade? Add the financing costs, then same answer as above.

 

[hornblower]

cfd may be the answer

I should paper trade for a while , untill you make profit

making money trading shares is harder then you think
put say £5000 into a pretend account and then buy and sell and add your costs ,
and see how much you have lost over the 3 months

 

[chump]

Jackie,
"can it be done" ,yes . By you ,the odds are against you. If by short terms you are talking a couple of days to a couple of weeks and if you can only monitor that period at the end of each day AND given the size of transaction costs you will be incurring in relation to what your capital size might be (I am making some assumptions here) then it appears to me you are not putting the odds on your side. There are better ways to go.

 

[Jackie284]

Hi guys,

what do you think would be a better route for someone in my position ? I'm not expecting mega bucks quickly, but it is something I would love to learn and do in my spare time. Why do some training courses / tutorials claim that you can make money by starting small and doing it in your spare time? Again, I apologise for being so naive, but we have to start somewhere eh ?

thanks again
Jackie

 

[shadowninja]

Play with a free £20k account on Tradindex. It's how I cut my teeth with strategies.

 

[Tawe Trader]

Yes I would open up a demo spreadbetting account or open up a s/bet account with real money say £500 (be prepared to lose it - put it down to education) with a spreadbetting company that will allow beginners to place very low value bets. I think Finspreads allow 10p bets for new customers.

Read up on everything you can to do with trading, there are thousands of books available most are pretty much worthless, but some will change your life. Also you can find nearly all info for free via google on the net, if you're prepared to sit for hundreds or thousands of hours in front of the screen. There is a huge amount of excellent, free info on this site as well.

IMHO due to human nature and our mental make-up, this is the hardest occupation in the world. In the end success in this business comes down to having a winning trading plan (which only you can find), being patient, sticking to your plan and not being greedy /fearful and being not afraid of hard work.

Be prepare to laugh and cry and have more bad days than good days, but if you are determined and strong-willed and prepared to work very hard then anybody can succeed, thankfully high intelligence is not needed !

Please be very careful - this industry is full of snake oil salesmen. There is no HOLY GRAIL or magic formula/indicator, be very wary of anybody/website or seminar that is trying to tell you there is - if there was, why are they offering it to the public ?

I hope I haven't put you off, you already have an advantage though, it is a known fact that women make better traders than men, why ? they don't let their ego get in the way of their trading decisions........

Best regards
Darren

 

[Jackie284]

Hi Darren,

thanks for your encouraging reply ! I am reading as much as I can, and I notice you mention some books are better than others, could you recommend any that would be worth getting ? Also, what are your views on Forex trading ?

thanks again
Jackie

 

[shadowninja]

As a newbie trader (ignore the bit under my name that says Senior Member; probably given that cos of the amount of crap posts I have submitted ), my biggest problem is the psychological aspect of trading. My system can work. When I am ultra disciplined, I make money and very little loss. I will be treating myself to this book which people on here have said is good:
Trading in the Zone

Oh, IG Index have a Tradesense tutorial programme you can join (for free, plus a balance in your account of £10).

 

[Tawe Trader]

Hello Jackie, even though I'm down as a Rookie (I haven't posted much - too busy reading, learning and trying to trade) I have been 'hooked' on this game for over 7 yrs. I feel I have just turned a corner since the start of this year.

I am a hopeless share trader, I am a losing-to-breakeven Forex Trader but I have recently had some consistent success, when I only concentrate on the FTSE and S&P Indices. It really does pay just to focus on one market. I may return to one of the currency pairs though in the near future.

I have got to go out and walk my dog, I will post a list of books I feel are worthwhile, later. There is no need to pay for brand new books, there are some excellent 'used' trading books on the amazon sites (UK+US) Save all your money for your trading account.

To get you started have a look at www.babypips.com and click on school.

Darren

 

[Tawe Trader]

Hello Jackie,

Here's a list of my favorite books, everyone has their own favorites, mine are mostly to do with traders stories more than actual trading methods or systems.

There are hundreds of ways of obtaining a buy/sell signal but it's the psychological side of things that makes the difference between a winning and losing trader. All of my reading these days is based on the 'mental' side of things.

How I trade for a living – G. Smith
Trading Day by Day – C. Goslin
Trading for a living – A. Elder
Trade your way to Financial Freedom – Van Tharp
Trader Vic – V. Sperando
How I Made $2,000,000 In The Stock Market – N. Darvas
Stock Trading Wizard – Tony Oz
The Logical Trader – M. Fisher

Zen in the markets – Toppel
Reminiscences of a Stock Operator
Market Wizards – J.Schwager
New Market Wizards – J.Schwager
Stock Market Wizards – J.Schwager
Fooled by Randomness – N. Taleb
The Way of the Warrior Trader - R. McCall

Bets and the City – Sally Nicoll
Liar's Poker – Michael Lewis
Dumb Money - Joey Anuff


Regards
Darren

 

[Slorm]

For technical analysis go for Technical Analysis of the Financial Markets by John Murphy, it can be a bit heavy going in parts but covers just about everything. I always keep it to hand for reference.

Other I've found pretty good:

Come Into My Trading Room - Dr Alexander Elder
The Market Makers Edge - Josh Lukeman

Good luck with your trading

Oops nearly forgot, there's an excellent trading plan template you can find on T2W at http://www.trade2win.com/knowledge/articles/general_articles/trading-plan-template/

 

[Jackie284]

Hi guys,

thanks so much for all your input, it's much appreciated. I went to one of those cheesy seminars last night, I know what they're all about, but just to be nosey I went along. They make it sound sooo easy, which is, how I imagine, they reel alot of people in. Anyway, can I just ask which website you guys prefer to trade through, least fees etc ? Also, you know the stop loss that you put in, if a share does continue to rise, and you move your stop loss up to lock in your profit, do you have to pay again (fee or percentage) to move it ?

thanks again
Jackie

 

[Jack o'Clubs]

Anyway, can I just ask which website you guys prefer to trade through, least fees etc ?

I assume you're still talking about equities and haven't been lured by forex, futures, etc.? If you look on here you'll find many threads discussing who the best spreadbet firm and brokers are. The short answer is that nearly every s'bet firm will have at least a few punters they've managed to upset, although some seem worse than others. FWIW, I've never had a problem with IGIndex or CMC, and in my experience Finspreads are a disgrace. If you're after a 'proper' broker, you won't go far wrong with Interactive Brokers, although Hoodless Brennan are okay if you're looking for simple and cheap execution only. In my experience Barclays Stockbrokers are an embarassment to their profession, so avoid.

Also, you know the stop loss that you put in, if a share does continue to rise, and you move your stop loss up to lock in your profit, do you have to pay again (fee or percentage) to move it ?

No, you only pay on execution of the order.

 

[Slorm]

You need to decide on *what* you want to trade and *how* you want to trade it. For example if you want to trade equities are you looking to day trade, swing trade (holding for a few days or weeks) or investments (holding long term).

If you are mixing approaches you will need accounts with different brokers. For example, for investments I use Halifax Sharebuilder the costs are tiny but it takes a week or two to execute as they bulk buy (same for selling) but if you plan on holding for a few years the time isn't an issue. Otherwise find the cheapest execution only broker you can find (e-trade were pretty cheap the last time I looked)

For swing trading I use T D Waterhouse, they are expensive (compared to other execution brokers) but offer T+20 (twenty days to settlement) and some good leverage so you can trade in and out of the settlement dates without tying up too much capital, though do make sure you can cover the margin if using this approach.

For day trading I use a Spreadbet firm, though this can be a minefield for both the experienced and beginner alike. Have a look at the spreadbet forum on this board to get a flavour of the pitfalls.

 

[chump]

Be aware that the two factors that will increase the cost of your education are :
1.Using leaverage without fully understanding it.
2.Not understanding the instrument you are going to trade and how to recognise the technical setups that create momentum/volatility.

From what you have posted so far you are not yet equipped to trade. Starting with the above is as good as anywhere to start learning.
I draw your attention to leaverage because of your comments about short term trading and the potential for you to charge ahead and SB where margin will be given.

 

[Jackie284]

Hi everyone,

I still have a very long way to go before I'd even attamept to trade. I'm looking for equities I could perhpas hold onto for a few days / weeks, even months before selling. I work full time, so I can only devote so much time to it, but i'm ok with that. I realise it's going to be a very long process and I have alot to learn. If the objectives i've outlined don't really fit in to any viable trading catergory, maybe i've got this whole thing wrong. Does anybody do this in their spare time ?
(apols if my questions sound frustratingly naive)

thanks
Jackie