Some basic questions

[shadeed]

Complete beginner with background in sports spread betting and fixed odds trading (via betfair etc). Looking to get into stock/share price trading and would like some very basic feedback on the following (please include explanations for any technical jargon!) :-

1. How/where do I trade? (I don't mean how do I trade successfully - I see lots of advice on here - what I mean is what are the mechanics of it - in basic simple terms)

2. Where do i go for charting software? (free or cheap please)

3. Where can I access historical share price detail (daily highs/lows, open, close etc)?

4. How do i know in advance when Companies are announcing figures which may affect the price?

Cheers in advance

 

[rossored]

Hi

1. Not sure what you mean by your first question? Do you mean how do you interpret price action?

2. Lycos.com do pretty cheap charts. Otherwise someone like www.sierrachart.com , but you also need a price feed - from about $20 a month, depending on what market/data you want.

3. Historical data - something like www.bigcharts.com, www.inverline.com or again lycos.com

4. Depends which market you are after as to where you go for this : GNI do some free daily reports sent out pre-market on Europe and the US, so try thier website. Maybe something like advfn.com? Or www.reuters.co.uk (or .com) Others members may have other suggestions.

Here's some other useful links:

http://stockcharts.com/index.html

http://www.decisionpoint.com

http://www.incrediblecharts.com/technical/easy_guide.htm



RR

 

[oatman]

No.1 is probably where you want to hold an account. IB is popular here http://www.interactivebrokers.com/index.html which ties in nicely with Sierra at £24 for 6months in T2Win store.

 

[shadeed]

Ok - so I get myself some charting software + feed, develop a trading strategy, open an account with someone like IB.

Next basic question -
Say I am trading shares in a ftse company. Presumably if I think it is going to rise I simply buy then sell when/if the price goes up.
Say I take a view, based on my analysis of the charts, that the price is going to fall. How do I profit from that?

Also I have read about stops and targets. How do they work and how do you put these into place when making the transactions? Am I right in thinking that a stop is a price at which you make an arrangement with the broker that the share will automatically be sold when the share hits that price and is designed to protect you from extreme losses. Does a target work the same - i.e. do you pre-determine with the broker that you offload the share when/if it hits that level? Also can you adjust stops once the trade is underway or are you stuck with the original position?

I know these questions are probably hopelessly naive but if you don't ask you don't learn!

 

[rossored]

You can short some stocks and benefit from falls in prices as well as rises in price.

I'm not sure I'd actually recommend IB to start with unless you have some industry knowledge : It might be better to start trading CFD's or Spreadbetting (or at least paper trade direct access) whilst you increase your knowledge, with a view to moving to Direct Access in the near future. Having said that, I moved from SB to DA quite quickly, so...

Stops are generally initiated at the start of a trade, and as you correctly state, limit your loss to a pre-determined level in the event that the trade goes against you (as they have a habit of doing sometimes). They can normally be moved to lock in profits once a trade goes in your favour, but if you're spreadbetting you need to check with the individual broker.

Targets are not, as far as I'm aware, available with SB or CFD - correct me if I'm wrong, someone : You choose when to exit the trade yourself. However, with someone like IB, for example, you can set up a "limit sell", for example, that would be triggered once your buy order had reached a certain level (reverse for sells), and this will automatically close the position.

 

[shadeed]

Great Rossored - just the sort of stuff I need!

Some more basics -

CFD's ?? What does CFD mean. And Direct Access?

Spread firms - recommendations, if you have any. What are the pluses/minuses of spreads over share dealing and where do the mysterious CFDs fit in?

Thanks for this help btw - it is appreciated. Tried Inverline for Historical data and it is fine - just what I need to play about with at this stage.

 

[rossored]

I really should be out Xmas shopping, but...

Try this for some basic CFD info :

http://www.dow-jones-stock.com/cfd1.html

At the bottom of that page there are also details on spreads, etc.

Direct Access means going through a broker (like IB). Basically, you deal directly with the exchange via the broker, rather than dealing with a SB firm who then deals with a broker, who then deals with the exchange. Hence, you only pay a small commission to the broker (in my case, for futures, I pay $4.80 per "round trip" - thats an opening and closing of a contract btw), rather than paying a spread to a SB company of between 5-11 points. Brokers do not have "spreads" as such : For example, using Direct Access I can take a position on March Dow at, say, 10250 : at 10251, if I change my mind I can be out for no loss. Should you try that with a SB broker offering a 5-point spread, you would have to be at 10255 before you are at breakeven, 10256 before you would be in profit. Horses for courses, really. Some people still prefer SB though I cannot fathom why.

Spread firms? Hmm. Check the reviews in the "reviews" section of this website. Finspreads or Deal4Free probably : However, I am heavily biased against SB but you will have to decide for yourself I'm afraid! Might be a good idea to go on the various websites, and request info packs from a few to get a feel for things.

 

[shadeed]

Sorry to disrupt your Xmas shopping!

So.... dealing direct with the broker the cost of the trade is the commission, dealing with spreads the 'cost' is inherent in the spread itself. From the sound of it the broker option sounds best.
I now need to do a couple of weeks paper testing to find out what else I need to know (probably quite a lot).

I had a quick look at a couple of threads dealing with charts and am beginning to see wood from trees - any useful websites discussing chart analysis in more detail?

Many thanks

 

[oatman]

I put a search in Google. Try this http://www.chartpatterns.com/

 

[rossored]

In addition to Oatmans recommendation, I have listed a number of other TA sites on my first reply to you.

RR

 

[shadeed]

Yep Rossored - got those - all very useful. Thanks both for a really helpful response. As a little fish about to swim with the sharks I feel a little bit better protected now... unless you are a couple of sharks luring me in that is!!!