the real basics ... what are stocks ?

[woodyuk]

I am looking into this online trading as something to do as a hobby ... I work in a IT at the moment as a consultant, and track a lot of tech companies and so understand which ones are doing well, have new products etc, which ones I think will fail etc - and so seems to me I should be playing in this space as I "understand" the companies and market.

However I want to understand the basics of trading. All I understand so is that companies float and offer stocks for people to buy and sell. If you stock falls too low you go under and if you sell loads you go into profit . There seems to be different markets e.g. FTSE (I am UK based), nasdaq, NYSE etc. Also have understand you can "trade" in different ways e.g. commodities market, However that’s about it. Must have missed the basics when i was at school!

Is there a good "getting" starting understating the markets book. I am also interested in a one day course, but seems lots of scams out there which will not help at all. I understand once you "get" what the market is the next step seems to be coming up with a formula. My planned formula is just going to be what I understand of the tech market and play that way. Maybe once I understand more that will change.

[been doing some further reading - seems soooo many "getting" start guides all starting at different points!] Has anyone read the dummies guide to online trading ? is it anygood ?

 

[peto]

Hi woodyuk and welcome. Your trading methodology then is to buy shares ( or spreadbets or cfd's or whatever) in those tech companies you feel have a bright future. It could work, so long as your finger is more on-the-pulse than the average investor in that market. To prove your 'understandings' of these companies and profit from them you will probably have to hold onto your shares for a period of say 6 months to 3 or 4 years, while they grow, or prove their potential to the rest of the investment community. This is called ltbh (long term buy and hold), and this forum (and its members) is mainly about much shorter term trading, so ignore everything we say!

With that proviso....

I would say you should buy a "Beginners guide to Sharedealing" type of book to get a basic understanding of markets and investing (purchasing shares is probably your best option over your long time period), and then sign up with a broker who deals with the exchanges on which the companies you are interested in are listed. If they are all uk co's then any uk broker will be fine, if some are u.s. or euro then choose more carefully (the company's' websites will tell you what exchanges they are listed on).
Your 'Beginners Guide' should have some advice on allocating an appropriate amount of risk capital from your deposit account to send to your broker, when to cut your losses, and advice on the advisability of spreading your risk amongst a small portfolio of shares.
pete

 

[woodyuk]

Hi woodyuk and welcome. Your trading methodology then is to buy shares ( or spreadbets or cfd's or whatever) in those tech companies you feel have a bright future. It could work, so long as your finger is more on-the-pulse than the average investor in that market. To prove your 'understandings' of these companies and profit from them you will probably have to hold onto your shares for a period of say 6 months to 3 or 4 years, while they grow, or prove their potential to the rest of the investment community. This is called ltbh (long term buy and hold), and this forum (and its members) is mainly about much shorter term trading, so ignore everything we say!

With that proviso....

I would say you should buy a "Beginners guide to Sharedealing" type of book to get a basic understanding of markets and investing (purchasing shares is probably your best option over your long time period), and then sign up with a broker who deals with the exchanges on which the companies you are interested in are listed. If they are all uk co's then any uk broker will be fine, if some are u.s. or euro then choose more carefully (the company's' websites will tell you what exchanges they are listed on).
Your 'Beginners Guide' should have some advice on allocating an appropriate amount of risk capital from your deposit account to send to your broker, and advice on the advisability of spreading your risk amongst a small portfolio of shares.
pete

Thanks for your comments. I am in odd position to understand the market fully, my job is to follow tech trends, read blogs, tech news etc - making sure as a company we "pick" the best companies / technology. Not sure what the fine line is between knowing too much?. For example buying shares in a company I know is about to do something very interesting. However understand nothing about trading I would trading world-wide on technology, not just UK.

Can you recommend a book ? I feel I want to understand everything to the point it would not matter if I was a online trader or a trader for real. I find it best to get a understanding of "everything" in a subject area and then focus on what interests me. It might be that once I understand more I would be interested in doing quick trades. one reason for wanting to do this is for a) hobby b) making a few extra K to go on holiday, buy a nice car etc. Not wanting to make my millions. How do these kids who leave school and join a trading company learn ?

 

[peto]

I am in odd position to understand the market fully, my job is to follow tech trends, read blogs, tech news etc - making sure as a company we "pick" the best companies / technology. Not sure what the fine line is between knowing too much?

If you have confidential information only available to employees and subcontractors to the companies then you may be 'insider trading' which is illegal (and probably very widespread and largely undetected). It sounds however that you are just ferreting out information which is already in the public domain.

Can you recommend a book ?

http://www.amazon.co.uk/exec/obidos/tg/stores/detail/-/books/1857038479/reviews/026-7479477-5226025
looks good, never read it, can't say.

It might be that once I understand more I would be interested in doing quick trades

.
You have identified a possible 'edge' or rare advantage you possess over the majority of punters out there, and are working out how best to exploit it. "Doing quick trades" sounds like another road to go down entirely, which for most people requires a huge input of time, energy (and capital) before an uncertain outcome is decided. Unless you know something is just about to happen, and then we are back to insider trading.

 

[ukhero]

Some excellent advice above.

In all, you need to sit back and decide the time frame, the period of investment - whether it's intra day, monthly, or even 1-2years.

But whatever you decide, I recommend paper trading for at least a month, not so much as choosing the right shares but more for the mechanics of Spread betting / CFD's ect; It's a whole new world out there.


UK