The stock market - how does a noob get started in that then?

TheBigCheese · 18 Jul 2011 at 09:14

I've always been interested in the stock market and would be interested in 'having a go' but I know absolutely nothing about it.

I know there is a stockmarket thread already - it's here, but it seems more geared to people who are already wheeling and dealing and I don't want to hijack the thread.

So for those in the know...can you give us total noobs any idea what's involved and perhaps links for things we should read up on to learn how it works and how to trade? Everyone has to start somewhere!

I should note I would like to have a good long practice on a virtual stock exchange if they exist still, AOL on it's portal (back in the AOL 7 days) used to have a virtual stock market where you could buy/sell etc., and see how much you could have made/lost. That would be useful if they are still available.

Thanks in advance for any info!

I hope this thread will be of use to lots of fellow trading noobs!

MeEsH BaKkA · 18 Jul 2011 at 09:20

Google iii set up an account then just add stocks to your portfolio (you don't need to buy any) and see how you get on. You can make quite a bit of money very quickly for example I brought range resources shares at 9p and sold about a month and a half later at 22p... But you can loose your money very quickly as well, so be careful and practice using portfolios for free

ntg · 18 Jul 2011 at 09:49

Ok, here are some pro-tips

a) buy a book about how to invest in the stock market, that should give you a bit of background
b) virtual trading is ok, but nothing compares to putting down your own money. Perhaps open an account, put in a few hundred quids and trade with them only? Look at it as an education fee.
c) do not, I repeat, do not buy penny shares as countless people will try to tell you. It's a mugs game. Yes, you can make wild profits but the opposite can (and will) happen. Read up on it and you'll understand why.
d) never-ever-ever invest money you cannot afford to lose. Whatever money you invest, make sure that you don't need them for anything - with a horizon of 1 year.
e) remember that you are entering a very volatile market, a lot of things won't make sense why they are happening.

enjoy

Noni Juice · 18 Jul 2011 at 10:05

One of my distant relatives is a trader, I'm interested too after watching countless films on traders (bad, I know). I had a long chat with him and 2 things he said stuck in my mind.

-The market and how much something is worth is decided by people, if there is a rumor that say Company X's owner has aids and likes to have sex with sheep in Africa then people will get scared and sell, which means everyone else will start selling too and etc.

-You WILL lose money, the trick is to gain more money than you lose (duh).

jp_bl_68 · 18 Jul 2011 at 10:08

I saw this on BBC's Click - How the Market Works

Might be worth a look.

Hatter The Mad · 18 Jul 2011 at 10:21

This will be right up your street: http://www.amazon.co.uk/Naked-Trader-Anyone-Trading-Shares/dp/1897597452

Souleh · 18 Jul 2011 at 10:35

Thanks for posting this OP - Also interested. Also thanks for the info guys

uniQ · 18 Jul 2011 at 10:42

Read and research. Learn about Business and profits. EBITDA. DigitalLook is great for previous results. Use a live results service not a 15 minute delayed.

Consider seasonal factors, state of economy. How risk averse you are. Short/Medium/Long Term trading etc.

I have a spreadsheet I created that I enter the current stock price and it will include share dealing commissions and charges and then shows how much is needed to invest at various % levels and what the returns will be for various investment amounts. I find this extremely valuable as it helps balance risk/reward in advance.

Spread betting with IGIndex (there are alternatives) is also worth looking into. Excellent for quick shorts and speculative bids with smaller investments but noobs have to be careful with spread betting as unlike stocks you can lose more than you invest.

Take any specific stock tips you read on forums with a pinch of salt.

Spit · 18 Jul 2011 at 10:43

Read, read and read some more. Trading is one of the hardest things you can do. That's why 90% of traders lose money.

mcast · 18 Jul 2011 at 10:52

Do it the hard way and invest your own money or the easy way as a fund manager.

In my experience 95% of home traders lose money over time. Invest someone elses pension money for an average £100k/year salary and if you do well collect a bonus.

ntg · 18 Jul 2011 at 10:58

uniQ said:
Read and research. Learn about Business and profits. EBITDA. DigitalLook is great for previous results. Use a live results service not a 15 minute delayed.

I think the OP needs to clarify whether he is interested in daytrading or investing. Daytrading needs live prices. Investing does not. I would suggest the OP starts with short-term investments until s/he understands how the market works, before venturing in trading.

I have a spreadsheet I created that I enter the current stock price and it will include share dealing commissions and charges and then shows how much is needed to invest at various % levels and what the returns will be for various investment amounts. I find this extremely valuable as it helps balance risk/reward in advance.

That is excellent practice.

Spread betting with IGIndex (there are alternatives) is also worth looking into. Excellent for quick shorts and speculative bids with smaller investments but noobs have to be careful with spread betting as unlike stocks you can lose more than you invest.

My opinion on this is no, just no. Spread-betting is just that, betting. SBetting is not for beginners, not by any stretch of imagination. People who are starting are not ready psychologically for the fast losses/wins that Sbetting offers, therefore I would discourage anyone getting involved in that.

Take any specific stock tips you read on forums with a pinch of salt.

Make that handfuls of salt. Actually, forget stock tips, do your own research and read reputable and verifiable public sources of information only and combine that with the actual company SEC filings. Otherwise, whenever you see a 'tip', look at it in a contrarian way as it might be hiding exactly the opposite catalysts.

UK-AL05 · 18 Jul 2011 at 11:01

mcast said:
Do it the hard way and invest your own money or the easy way as a fund manager.

In my experience 95% of home traders lose money over time. Invest someone elses pension money for an average £100k/year salary and if you do well collect a bonus.

Easy way without performance bonus costs, ftse index tracker. Or if you have enough money to spread around, you can do it yourself. Long term, fund managers find it hard to beat ftse index trackers, especially with fees taken out.