Share trading - how do (and should) I begin?

[Ari]

Ok so long story short, I think I can best describe myself as "middle aged", had a fairly good job, got squashed by the recession, unemployed for 5 months, now got a reasonable job with a reasonable salary and potential to earn more, but never loads.

When I was earning good money (last three or four years of my previous job) I pushed everything I could into paying down my mortgage, and cleared it just before I was made redundant (I'd had a feeling things were going to go bad for a little while).

So, I'm now financially solvent, got a reasonable house that I have no mortgage on, got a few quid in savings, bought a little second-hand MX5, all good.

But having played it safe for so long, and having got myself into a position of reasonable security (my monthly outgoings are very low), I really feel the urge to take a bit of a financial risk.

Now it had always been my intention to get into property (buy to let) having done it with some success back in the early nineties, but once everyone jumped onto that bandwagon prices shot up so high that to my mind it's a complete non starter, and remains to be so for the foreseeable future so that's out. (That's a whole different argument I know, I'm just explaining why I don't want to invest in this for the forseeable).

So I'm thinking about putting a chunk of money that I'm prepared to lose into an account and, well let's be honest, gambling with it by buying and selling (or just buying and keeping) shares.

So my questions are:

First of all, quite simply how does one go about this? Where does one open an account, how does it work, what do I need? Where/how do I buy and sell?

How much money is likely to be needed to be worthwhile? If (say) £1,000 is never going to realise any sensible potential then how much would? I appreciate that's a complete "piece of string" question, but there wouldn't be any point investing only £50, and you wouldn't suggest someone start off with £100,000 (not that I've got £100,000 anyway), so where's a sensible minimum level?

Is it worth even trying to speculate (given I really don't have much of a clue, although I'm not completely thick and am a reasonably fast learner) or for someone like me is it best to simply track (say) the FTSE100? That smacks a bit too much like playing it safe again, although I appreciate there's still potential to lose cash that way too.

Where's the best place to look for advice on what to buy and sell?

And basically what else have I not considered, should consider, or whatever?

All thoughts and advice very gratefully received.

[Emsman]

Buy low sell high is I think the most important part

[zac510]

I would read some books on the psychology of trading first. You suggested you can put some money in an account to gamble with but gambling is completely the wrong attitude.
Start with Reminiscences of a Stock Operator.

There are other more experienced traders here so I'll leave the rest to them.

[13th]

It's really easy to make a small fortune trading shares!

First start with a large fortune; within weeks, days, even hours! BINGO you now have a small fortune.

HTH

[B0LLIKS]

easiest place to start is go to your bank, they can give you a rundown on the pitfalls. have a chat with their finance adviser and see how you feel. if you want to buy and sell you realy need to be at your PC 24 hours, as prices change quick. investments realy need to be long term...5 years or more. if you decide to go to your bank they will ask you questions and depending on the answers you give they will build a risk profile and advise you from there. there are web sites that lend you pretend money to play with so you can see how you would have done, and also lead you through the process of dealing.

[Rocksteadyeddie]

13th said:

It's really easy to make a small fortune trading shares!

First start with a large fortune; within weeks, days, even hours! BINGO you now have a small fortune.

HTH

^^ this ^^

You are likely to lose a lot of money unless you are a) lucky, or b) very skilled.

Do not invest money you cannot afford to lose.

[DangerousMike]

you could always put the money in some kind of index-linked fund or managed fund or one of those things where they do the investing for you.

zopa is an interesting prospect too (google zopa)

[deeen]

You could try a fund which gives small income from dividends, with a chance of capital gains in the long term?

And unless you can afford to lose it all, don't put it all in 1 place

[Ari]

Emsman said:

Buy low sell high is I think the most important part

Thank you, good advice!

[Ari]

zac510 said:

I would read some books on the psychology of trading first. You suggested you can put some money in an account to gamble with but gambling is completely the wrong attitude.

Ok so gambling is probably the wrong word, but if we're really honest, that's what it is isn't it? After all, for a share to have a value you need (in very simple terms) the same number of people/money thinking it will go down (selling) as there are people/money who think it'll go up (buying). After all, if everyone is a seller, the price will fall till those numbers equalise, and the same if all were buyers. So every share sits at a level where you've got about the same amount of money in the system expecting it to drop as expecting it to rise. So really it's something of a gamble as to which it will do. I guess the trick is to try and make a more informed gamble...


[quote]
Start with Reminiscences of a Stock Operator.

There are other more experienced traders here so I'll leave the rest to them.

I'll have a look out for that one, thank you.

Edited by Ari on Saturday 5th June 13:14

[ZOLLAR]

Does Gulzar do share trading? if so may be worth asking him for advise?, from the looks of his car profile it certaintly looks like he know's what he's doing!

[Ari]

13th said:

It's really easy to make a small fortune trading shares!

First start with a large fortune; within weeks, days, even hours! BINGO you now have a small fortune.

HTH

Well you may well be right, and I might be barking completely up the wrong tree with this one, hence asking for thoughts and advice.

But it must be possible to make money at it or no one would be doing it surely..?

[Ari]

B0LLIKS said:

easiest place to start is go to your bank, they can give you a rundown on the pitfalls. have a chat with their finance adviser and see how you feel. if you want to buy and sell you realy need to be at your PC 24 hours, as prices change quick. investments realy need to be long term...5 years or more. if you decide to go to your bank they will ask you questions and depending on the answers you give they will build a risk profile and advise you from there. there are web sites that lend you pretend money to play with so you can see how you would have done, and also lead you through the process of dealing.

The problem I have with banks is that they're really only interested in their own ends. So they'll advise from that perspective. That might sound cynical, but there it is.

[Ari]

Rocksteadyeddie said:

13th said:

It's really easy to make a small fortune trading shares!

First start with a large fortune; within weeks, days, even hours! BINGO you now have a small fortune.

HTH

^^ this ^^

You are likely to lose a lot of money unless you are a) lucky, or b) very skilled.

Do not invest money you cannot afford to lose.

Agree with that last sentiment 100%. Hence the idea of putting a figure on it that I can afford to lose if it all goes wrong.

Nothing ventured, nothing gained and all that.

Equally, if I'm in dreamland with this idea then clearly I'd rather not throw the money away just for fun and won't bother. Hence canvassing opinions.

[Ari]

DangerousMike said:

you could always put the money in some kind of index-linked fund or managed fund or one of those things where they do the investing for you.

zopa is an interesting prospect too (google zopa)

I'll have a look at that, thank you.

[Ari]

deeen said:

You could try a fund which gives small income from dividends, with a chance of capital gains in the long term?

And unless you can afford to lose it all, don't put it all in 1 place

That might be a more sensible approach.

But again, how does one know? Someone once told me to avoid investing in funds boasting big rises in value as they tend to do that once they've just had a good run and therefore are more vulnerable to a drop.

What I don't want to do is make the mistake a lot of people made with property, which is to look backwards at what it's just done and invest based on that. Always better to look forwards I think. Harder too though unfortunately.

[devonshiredave]

Accurate research and knowledge of what you are investing in is probably the largest stumbling block. That aside trading strategies, technical analysis etc will also take some time to become proficient enough at.

Why not have a look at IG Index (something we all play with during the quiet times on the desk) and try financial spread betting, you can effectively take a position on the FTSE, oil, currency, metals etc. And in this way gain some exposure to financial markets in an easier fashion.

Dave

[B0LLIKS]

Ari said:

B0LLIKS said:

easiest place to start is go to your bank, they can give you a rundown on the pitfalls. have a chat with their finance adviser and see how you feel. if you want to buy and sell you realy need to be at your PC 24 hours, as prices change quick. investments realy need to be long term...5 years or more. if you decide to go to your bank they will ask you questions and depending on the answers you give they will build a risk profile and advise you from there. there are web sites that lend you pretend money to play with so you can see how you would have done, and also lead you through the process of dealing.

The problem I have with banks is that they're really only interested in their own ends. So they'll advise from that perspective. That might sound cynical, but there it is.

totaly agree, it was just so you could get the feel of things by talking to someone who should know what they are hopefuly are doing. if it sounds like your thing go to an indipendant adviser. i just say bank as they can see your finances there and then.

[zac510]

Do you actually have experience in trading bolliks?

[ZOLLAR]

zac510 said:

Do you actually have experience in trading bolliks?

i read that wrong 1st time