Learn2Trade in the Evening With a Small Bank

[mackayhmfc]

I am new to the forum and I am relatively new to the trading the markets. After a small amount of time (<1year) investing some savings in UK Stocks I am looking to start trading more regularly.

With a full time job the best time for me to invest some time in the markets is after 6pm.

What would you recommend to be the best way to learn and trade in the evenings with a small bank (<£1000). I want to start small and look to be making profit before I invest more of my savings however the commission charges and general confusion of which platform to use are making it difficult to decide which route to follow.

So far I have researched trading US Stocks via Spreadbetting but been put off by a number of threads on here which make sense regarding the spread size.

I then looked at trading via CFD's with DMA and Level 2 which seems to be the preferred method for US Stocks however the commission charges of £20 per trade would have a pretty big effect on my <£1000 bank?

Am I wasting my time with US Stocks and a small bank, if so how else can I learn in the evening UK Time when the markets are shut?

Any advice would be appreciated.

 

[roy12]

Why dont you try forex? Markets are open longer and you only pay spreads (normally reasonable)?

 

[roy12]

Trading stocks with a small bank by the time you pay commission - you would need a massive increase in your shares to just breakeven.. you could look at trading CFD as you dont need to put the full amount of the price up just a margin. But you might have a problem with your trading times.

 

[timsk]

Any advice would be appreciated.

Hi mackayhmfc,
Welcome to T2W.

Your summary highlights the problems of trading a small account - but there are options. If you go down the spread betting route, then most members would advise against day trading. If you're swing trading over a few days and aiming for a proportionally larger profit on winning trades (than you would if you were day trading), then the impact of the spread is minimised. Also, you can filter stocks according to their spreads and only consider the largest and most liquid ones which have the narrowest spreads. Alternatively, if possible, open an account with a broker that lets you trade £0.10p per point so that a ten point spread only equates to 0.1% of your total equity. (I've not researched SB brokers - so this may not be possible.) You probably won't make much but, by the same token, you won't lose much either. You'll gain valuable experience and, if you can keep the account at break even or better, this will give you some idea of how you might perform if you 'upgraded' to a DMA account with much tighter spreads.

Alternatively, you could focus on trading one of the U.S. equity indices which will have narrow spreads. True, you don't have the variety you have with stocks and, if you trade momentum based strategies, then you'll have days when you'll be sitting on your hands. My personal view is that this is the route I'd go down if I were in your shoes, as most equities traders spend a good deal of their time looking at the major indices anyway. If you get a good feel for the S&P500 say - it will stand you in good stead if and when you switch to trading equities. Also, when you come home from work, you'll fire up your computer and you're good to go. If you trade equities, time will be against you and endlessly trawling through lots of stocks trying to find 'the one' may frustrate you and lead to discipline issues. Yes, I speak from experience!

Besides equities and their indices there are other markets. You could look at commodity futures perhaps or, as roy12 suggests, try FX?


Tim.

 

[mackayhmfc]

Hi mackayhmfc,
Welcome to T2W.

Your summary highlights the problems of trading a small account - but there are options. If you go down the spread betting route, then most members would advise against day trading. If you're swing trading over a few days and aiming for a proportionally larger profit on winning trades (than you would if you were day trading), then the impact of the spread is minimised. Also, you can filter stocks according to their spreads and only consider the largest and most liquid ones which have the narrowest spreads. Alternatively, if possible, open an account with a broker that lets you trade £0.10p per point so that a ten point spread only equates to 0.1% of your total equity. (I've not researched SB brokers - so this may not be possible.) You probably won't make much but, by the same token, you won't lose much either. You'll gain valuable experience and, if you can keep the account at break even or better, this will give you some idea of how you might perform if you 'upgraded' to a DMA account with much tighter spreads.

Alternatively, you could focus on trading one of the U.S. equity indices which will have narrow spreads. True, you don't have the variety you have with stocks and, if you trade momentum based strategies, then you'll have days when you'll be sitting on your hands. My personal view is that this is the route I'd go down if I were in your shoes, as most equities traders spend a good deal of their time looking at the major indices anyway. If you get a good feel for the S&P500 say - it will stand you in good stead if and when you switch to trading equities. Also, when you come home from work, you'll fire up your computer and you're good to go. If you trade equities, time will be against you and endlessly trawling through lots of stocks trying to find 'the one' may frustrate you and lead to discipline issues. Yes, I speak from experience!

Besides equities and their indices there are other markets. You could look at commodity futures perhaps or, as roy12 suggests, try FX?


Tim.

Thanks for the feedback both of you. I think as you suggest I will look into spread betting indices and FX as it would suit my balance and time restrictions better! I'm not looking to make fortunes just to learn with small amounts of risk and time!