Stock Trading on a Daily/weekly Basis

[phlemboy]

Hey guys. I wanted to get your thoghts on a NEWBIE with no investing/trading experience to start trading with "disposable money". I'd like to start doing this. I have no experience whatsoever but I want to learn. I'd like to start with about $500 that I can afford to lose if it happened. For example,

1. I open an online trade account with Scottrade.
2. I invest in a stock. Possibly selling that stock if the price rises to make a small profit later in the day. Granted, the profit may be very small with such a small amount. But the point is to try to get my feet wet and learn by doing.

     Please understand that I'm not suggesting that anyone can just jump in and do what RookieNYC and FDJake do. I want to learn how to invest/trade on my own. I want to do the research and make decsions with my own money. Perhaps this can grow from a "hobby" to something where I'm really increasing my net worth. I consider any costs that I pay will be the cost of education. I'm hoping to rely on the experienced members to point me in the right direction. With all that said, do you guys think this is a good idea? Can you give some advice on how I should proceed?  I appreciate any help. Thanx.

[propertymanager]

Phlemboy,

If you want to start trading, I would STRONGLY suggest that you treat it exactly like you did real estate.  Do your homework first, before you spend a penny trading.  At a minimum, I would suggest buying several books on stock trading, including books on fundamental analysis, technical analysis (candlestick charting, chart patterns, trend lines, channels, etc).  Stock trading is MUCH less forgiving than real estate.  That $500 could be gone in a week (or a day).  You could also learn a lot by subscribing to Telechart 2007 and reading the daily posts of the Worden brothers.  It's about $30 per month.

Good Luck,

Mike 

[j1dias]

phlemboy - I believe morningstar.com still has some onlline courses that will help you understand the fundamentals of stock trading. They are very basic but will help you understand the base. The good thing is that they are free.

In addition, if you have never traded I suggest you start with a "fake" portfolio. Similar to fantasy football... You can trade and learn some of the basics without loosing money. Or making money... :O)

Another point to consider - I believe you mentioned a number of times that you were glad to have found this board and that people here helped you "not" lose a lot of money in real estate. Have you considered finding a good stock trading board? It may help save you some money... :O)

Good luck!

[propertymanager]

Have you considered finding a good stock trading board? It may help save you some money... :O)

If you find one, let me know.  I have looked, but have never seen one where the vast majority of posters weren't newbies and the rest of the posters weren't  pumping their penny stocks with the purpose of taking money from the newbies.

Mike

[phlemboy]

Thanx guys. Education is absolutley my first step before I commit to any money. I'm interested in stocks as well as RE. I've got a couple of books aleady. I'm currently reading
'Contrarian Investing techiques" by Dave Dreman. There is so much I have to learn. I like the idea of going through "mock" trades to see how it feels. I'll definitley look into those suggestions. I have the confidence that I can learn how. It's the sifting through all the BS and "experts" that are out there. The difference between stocks & RE is that my interest in stocks at this point is a bit of a hobby. But I realize that if done the right way, it can add significantly to my net worth. I know this is a RE site, but from the posts I've read, there is some valuable information. I'll be sure to keep "non RE" issues to the Random Ramblings forum. 

[fdjake]

Your doing this the right way.  LEARN, LEARN, LEARN!!!

I will say this though.....

Paper trading (using a make believe account with NO REAL MONEY) is NOTHING like trading real money.

What you learn over the years doing this is..... The psychology of investing is more important than anything you'll ever learn about stocks.  Your ability to completely dis-regard other peoples opinions is extremely important to your success.  This runs counter to every human instinct we have.  In most situations, our instincts will tell you to RUN when everyone else is running.  There have been extensive studies done on this.  It's known as the "Herd Mentality."   This is the reason shows like CNBC see their rating blow through the roof when the stock markets TANKS.....EVERYONE wants to know what EVERYONE ELSE is doing.   

In my experience doing the exact opposite is usually the right thing to do.  Experience plays a huge role in this.  As an example, I am now convinced that this market is headed LOWER, possibly MUCH lower.
The talking heads are all saying we've hit bottom and the next step is a big UP move......I COMPLETELY DISAGREE.  Here's what you need to know about the next year for this stock market.......

JOBS

JOBS

JOBS

THAT IS ALL THAT MATTERS.   

Job losses CREATE more job losses.  I've heard all the BS about the stock market being a LEADING INDICATOR.......If that indicator is telling the talking heads we're headed higher??????

It's a crappy indicator.

The other part of being a successful investor is having the ability to look at VERY BIG PICTURES....Case in point...

CHINA and INDIA

China WAS basically a country of SUBSISTANCE FARMERS....They grew their own food, if the crops failed, they went HUNGRY, if the crops ALL died, SO DID THEY.   What you now have is a country that is being INDUSTRIALIZED.......Those village farms are being paved over and Factories are being built.  The farmers are taking JOBS IN those factories.   Here's what you need to think about......   

WHAT happens when you pull an entire Countries population OFF those farms and put them in FACTORIES for 10 hours or more a day?????

THE ANSWER IS...................YOU HAVE TO FEED THEM!!!!!!!!  Think about this.......WE all have JOBS......How many AMERICANS grow their own FOOD?????  We DON'T because we don't have TIME.   The Chinese are quickly learning to eat at McDonalds, buy food at Walmart, and LIFE is easier!!

FOOD Production will be the next OIL BOOM!!!  India is going through the exact same industrial BOOM. India's population is expected to PASS China's in the near future (China has strict popuation controlls in place)

Fertilizer companies, chemical companies, shipping companies that now BRING PRODUCTS to the U.S. will SOON being SHIPPING FOOD to China and India FROM the U.S.  China's geography does NOT lend itsself to BIGTIME industrial farming.....The U.S. on the other hand PAYS it's farmers NOT to grow FOOD!!!!!

THAT will change......VERY SOON!!!!!

[d_sbrown]

Phlemboy-

Just want to second FD on a few things.  Paper trading means nothing.  It is similar to the free poker sites.  They let you play with free money, because when you start to win, eventually you figure, "hey, I could be making real money here " and so you try it with the real stuff only to figure out that it is a completely different animal.  Why?  because emotions are involved.  When you make 50 % profit for a couple days trade, its exciting.  When you lose on 10 trades in a row, it affects your whole day and your confidence in the next trade.  Trading is 90% pshycology.

I have taken three runs at trading.  Mostly commodities, short and long postitions, options and naked futures.  I paper traded before my first run and then put my system to work.  at 10 months in I had tripled my money.  I was on top of the world and my confidence was high.  I couldn't lose.  Dreams of sugar plums were dancing in my  head.  I took one trade that went against me big, over a holiday where I wasn't paying good enough attention, then stubornly refused to take the oversized loss, and when I finally cut loose, had cut deeply into my gains.  Then my system went through a period of losses. Long story short, just two months from the high, I was where I started, only with a very large loosing streak bothering me instead of the confidence of paper trading.  I pulled the plug with my start up money mostly in tact and took a little time to evaluate what I had learned.

My point is that you tell yourself that you won't get caught up in it and you will make cold decisions, but very, very few people can do that without hard experiences.  If you decide to do this, there will be a point when you are 10 months in and have tripled your money easily, when you will want to throw in you whole life savings and triple that too.  I mean if you can take $5000 to $15000, just think if you had done it with $50,000, or $200,000, Now you are talking life changing money here.  Just remember that there will be times that for no good reason that you can see the markets will move against you and sometimes hard.  Commodity trading has some different aspects to it than stocks,  but many of the principles are the same.

In my opinion, though, you will only really learn if you can of can't do this if you have real money on the line.  Never trust a paper trading record.

FD-

I like your prediction on the food production boom.  I have two farms that I am a partner in and we have been waiting for the population expansion in the world to start to drive such a boom.  The interesting thing about your comment that we are paid not to produce food is accurate, but I wonder if the hungry of the world will have more pull than the green politics that drive the conservation policies that are in place which is where the money comes from that causes land to be taken from production of food and put into the conservation reserve program.

My 2 cents as a farmer and habitual trader 

DB

[fdjake]

I think the reason farmers like yourself will be in extremely good positions in the near future is the fact that FOOD production will become a MAJOR export for the U.S.  Our country got OUT of the production of GOODS, we turned intoa SERVICE economy.  I think the next 100 years are CHINAS.  We had our 100....Every major country has had 100 or more years of boom.  The interesting thing about food production is it is tightly tied to Geographics.  WHERE you are is VITAL to WHAT YOU CAN GROW!!!   China will be an economic force, even the Tree huggers don;t want to be POOR TREE HUGGERS.  They'll see the light as the MONEY takes over.  It's awful hard to run a "green" anything without CASH.

This FOOD BOOM will be HUGE.   The U.S. has a LOT of untapped land still left. 

I also believe that we will see the U.S. lead the world in new medical treatments that will move our economy forward for years.

Think about this.........

When China and India's economies DEPEND on those workers SHOWING UP and WORKING productively the GOVERMENT will need to KEEP them healthy.   These people will also start EATING like Americans.  Increases in Heart disease, cancer, diabetis, and other problems that face ALL people as they LIVE LONGER.

Pfizer pays an almost 8% annual dividend and the stock sells at under $17.   How do you lose buying a company that has paid their dividend WITHOUT FAIL for over 50 years with the WORLD becoming indusrialized????

The answer is...........YOU DON'T LOSE......You make a LOT of money over a very long period of time. 

That's called WEALTH CREATION!!!!!

[phlemboy]

Thanx for the input guys. I think that practicing will give me a "feel" for how the procedure works. The true learning is when my money is on the the line. I'm looking at any money invested as "gambling" money. If I lose it, it won't hurt me. But its in the losses that you learn the most. My goal is to hopefully avoid too many mistakes and use stocks as another investment tool to increase my net worth. I'm currently in the "learning to get started" phase, but I hope to be ready in the next month or so. Thanx again guys.

[tolbelt]

FDJAKE.. where did u buy your chrystal ball and how much was it?
I love reading your posts.  How do you know these things? 
I'm on this site at least 3 times a week (if not everyday) and it just amazes me the amount of knowlege that gets posted here. 

I love real estate too (hubby and I are landlords) but I think I'm going to investigate the stocks as well. 

If your prediction about the Health industry is correct... I should be sitting pretty.. I work for a major Pharmaceutical Company in Lake County IL.

Keep the predictions coming.. I love it!

-LT

[phlemboy]

I was just thinking about the India/China issue. It would appear that these countries would end up having similar problems other industrialized companies have when they get "modernized". Aside from the increase in food and healthcare issues, we could just look around and see things in our own country and look to capitalize on similar issues there. At this point, I want to concentrate on learning how to identify undervalued, well run, financially solid companies. I really like the idea of going against the herd. It makes sense to me. I see it the same way RE cycles up and down. It seems to me the herd is usually late in positioning themslves to get in or out of an investment. Perhaps they blindly listen to the media like CNBC and base their decision on what they are told by "experts." This all boils down to a lazy way of learning/investing. Either people don't want to/ or believe they can learn how to do due diligence on their own and form their own opinions.

[fdjake]

We just had the FED say they DON'T CARE WHAT MONEY COSTS

The DOPES on CNBC are running around jumping up and down.  They think this is GREAT!!!

It isn't..............

The FED just told us THEY HAVE NO CONTROL!!!!   They have thrown EVERYTHING they have at this market and NOTHING has worked.

Watch.....Watch......Watch....

This is a SUCKERS BET.......The HERD willl charge into this BS and get their @sses handed to them.  The market will do what it HAS TO DO...
RE-ADJUST DOWN to a NEW REALITY!!
The Real Estate Market is doing this RIGHT NOW......Why on EARTH would anyone think that the stock market is going to defy GRAVITY.

It's about....

JOBS

JOBS

JOBS

If you don't have one....Does it really matter that mortgage rates are at 2%????

This should have been done 2 years ago.   They missed the boat.  THAT is EXACTLY what todays announcement confirms.  The FED is CHASING this market, not LEADING IT!!!

[phlemboy]

Perhaps they're trying to stimulate the stock market by fooling people into thinking that low rates are sign of an economy on the rise.

[Bluemoon06]

The first thing you need to do is look at your hands.  http://hosted.ap.org/dynamic/stories/S/SCI_FINANCIAL_FINGER?SITE=CACRU&SECTION=HOME&TEMPLATE=DEFAULT