New To Trading Uk Shares

Guys & Girls -

I've only ever traded bonds / currencies however i want to move into the uk shares market. The big mistake i made while learning the ropes on the bonds was i started off traing the bund.

I want to maybe invest £500 and see what happens. Is trading shares like bonds - i.e. you constantly keep an eye on your positions? What sort of industries sectors should i be looking at / researching? Also i guess you can sell shares and buy them back at a cheaper price - like with bonds? right?

cheers

Sion

judging by what you trade,id say you like to be active in the market,so look for hot sectors,outperforming shares on a pullback,and take profits 10% above last high,its done me no harm.

Arrrh thanx for the reply. I've started to do a few paper trades!

I was just wondering if anyone could clear sumthing up for me. In the bond market you are able to sell the bonds and then buy them back at a lower price - hence making money. Can you do this with the stock market? i.e. sell shares in a company then buy them back at a later date (hopefully) at a lower rate?

cheers

welsh_guy said:

Arrrh thanx for the reply. I've started to do a few paper trades!

I was just wondering if anyone could clear sumthing up for me. In the bond market you are able to sell the bonds and then buy them back at a lower price - hence making money. Can you do this with the stock market? i.e. sell shares in a company then buy them back at a later date (hopefully) at a lower rate?

cheers

Click to expand...

You can go short on shares and indicies with CFDs and spread bets. If you are short you will usually earn interest on positions held over night too.

PeterPG - i think i get you, however i havent get opening up a trading account and was just wondering do most companies offer CFD trading or is it a specific thing?

many thanx again

Lots of companies do, I would not call them specialist. IGMarkets, GNITouch, Citywire, H-L are a few. I have only traded CFDs on demo, so unfortunately I cannot recommend a good broker, perhaps some of the others can.

welsh_guy said:

Guys & Girls -

I've only ever traded bonds / currencies however i want to move into the uk shares market. The big mistake i made while learning the ropes on the bonds was i started off traing the bund.

I want to maybe invest £500 and see what happens. Is trading shares like bonds - i.e. you constantly keep an eye on your positions? What sort of industries sectors should i be looking at / researching? Also i guess you can sell shares and buy them back at a cheaper price - like with bonds? right?

cheers

Sion

Click to expand...

This one always gets me...... since it always seems to be a choice between "activity" and "profitability" - in my not very humble....

I'll concede it is quite possible to have both ...........and many people have managed to walk that line but ... I would consider the choice very carefully.... cos many get the mix wrong .....I was one of them

I like things which have a simple/solid business models which ensures the price bias is to the upside ... ideally I wait for a hiccup to get in then ride the "inevitable (?)" wave skywards... Strong yields are a big bonus too........

I liked BT, Vodafone ........ but they have matured and the uptrend is now established.

Tesco - is going to become the stock that everyone wished they got into ....maybe.
Great company and price is coming down nicely (in hiccup phase).... future plans for world domination are still intact!

Mining Sector is something you might want to consider as an active trader - the vol is amazing ..........

That's all for now folks!

High frequency trading only benefits one market participant - stock brokers. Identifying a handful of profitable listed businesses and holding for the medium term will produce better results. This is what I teach my students.

welsh_guy said:

Guys & Girls -

I've only ever traded bonds / currencies however i want to move into the uk shares market. The big mistake i made while learning the ropes on the bonds was i started off traing the bund.

I want to maybe invest £500 and see what happens. Is trading shares like bonds - i.e. you constantly keep an eye on your positions? What sort of industries sectors should i be looking at / researching? Also i guess you can sell shares and buy them back at a cheaper price - like with bonds? right?

cheers

Sion

Click to expand...

Just my 2cents worth:

1) What type of strategy do you intend to use?? Mechanical / Discretionary / Simple Buy & Hold (which in my view is Investing not Trading) ??

Without knowing this first I wouldn't do anything else IMO

2) You mentioned that you like the idea of Selling shares and then buying them back which fits nicely into Spreadbetting. However, with limited / no experience with this and coupled with your starting capital of only approx £500, I personally wouldn't go near this type of instrument!!!

3) Do you believe that £500 is enough to start trading?? What about risk management and diversification? With such a relatively small amout of money you will probably only be able to take 1 position. With brokerage costs this is going to be extremely difficult to succesfully turn a profit.

4) My advice is spend the £500 on some software with decent backtesting capabilities and develop some trading ideas of your own. At least this way you will learn what the real important points are to be successful in the markets plus you will end up with some software for your money.

5) If you do decide to go down the route of Spreadbetting (due to the fact that you can leverage) then please REMEMBER that learning how to spreadbet is not the same as having a Trading Strategy!!!!!! As I mentioned earlier though, I really wouldn't go down this route though.......not until you have a proven strategy.............

Chorlton

Speculation said:

High frequency trading only benefits one market participant - stock brokers. Identifying a handful of profitable listed businesses and holding for the medium term will produce better results. This is what I teach my students at www.intelligentspeculation.com.

Click to expand...

Regardless of what you teach your students, blanket generalisations such as this are to be avoided like the plague. Especially so when you provide no definition of what "high frequency" is.

High Frequency Trading

Unless you enjoy institutional transaction costs, then by definition your transaction costs will be in the same order of magnitude as the gains you hope to make. Given that the probability of a successful trade is low [not including transaction costs], then when you take into account these costs, the odds are even more stacked against you.

Let me give you an example:

Lets suppose you trade Tesco stock to make 1%. Retail transaction costs range from 0.1% to 0.3% for each side. That means that you need to make at least 1.2% to 1.6% to earn your 1% net. Assuming a good trader makes 3/10 successful trades, then on 7/10 occasions you will lose money in addition to your transaction costs. Let's assume you set a stop loss of 0.1%. This means that you will be stopped out a hell of a lot of times. If you set a stop loss of 1%. Then you need to earn 15.4% on your three successful trades to break even. But if you are selling out at 1% profit, then you can never actually earn this level of profit. So you say that you need change the level at which you take profit - ok so you adjust you profit taking level to 5%. Now by definition you have to wait around longer to exit your positions. In addition your probability of a successful trade drops to a lower level and your losses are in aggregate bigger (assuming you adjust your stop level). Can you see what I am saying? It is a never ending spiral -> the only way to make money is to take a very small number of high profit trades. On my website I show the performance of my LIVE trading account with broker Commonwealth Securities [Commsec] that has generated $12,670 in profit from a starting investment of $3,018 speculating in Australian small to mid caps. You will notice that only a handful of companies have been selected over 24 months.

You need another broker.

Suppose you are trading a US stock at $50.00 per share. At $0.005 per share commission that is 0.01%.

Suppose you are trading DAX futures. At a nominal value of in excess of 200,000 euro per contract, and a round trip of say 3.2 euro, that is around 0.0016%.

There may or may not be good reasons for choosing a particular trading style and timeframe, but commission is not necessarily the only or even principal factor.

And besides, your posts look like spam.

Spam Or No Spam

dcraig1 said:

You need another broker.

Suppose you are trading a US stock at $50.00 per share. At $0.005 per share commission that is 0.01%.

Suppose you are trading DAX futures. At a nominal value of in excess of 200,000 euro per contract, and a round trip of say 3.2 euro, that is around 0.0016%.

There may or may not be good reasons for choosing a particular trading style and timeframe, but commission is not necessarily the only or even principal factor.

And besides, your posts look like spam.

Click to expand...

The average retail equity investor does not have the discipline to scalp the DAX or daytrade US stocks. Furthermore most retail equity investors don't want to sit in front of their trader like you do. My post is intended for the middle ground of equity investor not your 2nd or 3rd standard deviation trading junkie.

Speculation said:

Unless you enjoy institutional transaction costs, then by definition your transaction costs will be in the same order of magnitude as the gains you hope to make. Given that the probability of a successful trade is low [not including transaction costs], then when you take into account these costs, the odds are even more stacked against you.

Click to expand...

Hi Speculation,
While many members are interested in investing, the focus of this site and its discussion forums is mainly about trading. You appear to be in the investing camp - which is all well and fine - but to infer in your opening few posts that (short term) traders can't make a profit is quite wrong and misleading to less experienced members. If, as dcraig1 suggests, you're merely trying to direct traffic to your own website, then you'll soon have the moderators on your back and your time here will be short lived. If, on the other hand, you are interested in having an informed discussion of the pro's and con's of trading vs investing then that would be interesting and worthwhile, although that's not the topic of this thread. By all means start a new one, although you'll have to support your case with a much stronger argument than the comment quoted here which rather suggests you don't understand the modus operandi of most traders.
Welcome to T2W btw!
Tim.

Speculation said:

The average retail equity investor does not have the discipline to scalp the DAX or daytrade US stocks. Furthermore most retail equity investors don't want to sit in front of their trader like you do. My post is intended for the middle ground of equity investor not your 2nd or 3rd standard deviation trading junkie.

Click to expand...

Unlike you, I am not recommending any particular trading style or investment strategy to anybody. Neither am I selling a trading/investment course.

I was pointing out that 0.3% commission is not what retail traders need to pay and it is disingenuous and misleading to promote your stuff on that basis.

timsk said:

Hi Speculation,
While many members are interested in investing, the focus of this site and its discussion forums is mainly about trading. You appear to be in the investing camp - which is all well and fine - but to infer in your opening few posts that (short term) traders can't make a profit is quite wrong and misleading to less experienced members. If, as dcraig1 suggests, you're merely trying to direct traffic to your own website, then you'll soon have the moderators on your back and your time here will be short lived. If, on the other hand, you are interested in having an informed discussion of the pro's and con's of trading vs investing then that would be interesting and worthwhile, although that's not the topic of this thread. By all means start a new one, although you'll have to support your case with a much stronger argument than the comment quoted here which rather suggests you don't understand the modus operandi of most traders.
Welcome to T2W btw!
Tim.

Click to expand...

I am not in the investing camp - I am merely suggesting that newbie traders put excessive pressure on themselves by shortening their timeframe. Having worked previously on an equities prop trading desk [merger arbitrage & algorithmic high frequency statistical arbitrage] in a Hong Kong based investment bank, I have seen time and time again how the little guy gets screwed trading equities because he doesn't have enough capital to hold his position. I have many friends in Wall St hedge funds who trade with the sole intention of triggering retail stop levels [easy to pick because they're all using fibonacci or simple technical stops and the volumes are tiny] - its like how the big fish on a poker table with 10 times as many chips as anybody else will put a man to his money even when he is holding a less than optimal hand. My argument is that the only way you can beat 1000 lb gorilla insto traders is to mimic their behavior and trade ahead of their flow over a longer time frame.