todd

Recently i've been wanting to get started in the stock market, but on a very very small scale and with very short term investments (something the lines of day trading) in mind. I know very little about the stock market, how it works, or how people go about buying, trading, and selling. Really all I know is stuff i've heard through casual conversation, and what i've read here. I've read a few stock market threads, but they only briefly discuss the activity of day trading, so i'm not entirely sure I have my facts straight. I think what I want to do is even more short term than day trading.

Basically what i'm wanting to do is find a company whose stock is always going up and down, buy about 5 dollars of stock in it, wait untill it goes up like 5 dollars, and sell. I now have 10 dollars. Is dealing on this scale even possible in the stock market? How simple is it to buy and sell? Would it even be worth doing it: would it take too long; do I need a broker, etc.? Does it take weeks for a stock to raise that much, or is that something that happens overnight? Is this type of trading frowned upon, or do a lot of people do it? If I used an online service like e-trade, when I sell stock is the money immediatly deposited into my checking (or maybe something like PayPal) account? I'm not looking for long term investing money, i'm looking for pocket money like you'd have after a day spent at the casino.

I saw somebody complaining about how some people use the stock market as a big casino...well thats pretty much what i'm thinking of it as right now. Is this a bad thing to gamble in for fun? A bad idea?

spindles

I don't think you can really do it on that kinda scale. Most stocks don't move that much in a day (stocks worth a few dollars might move a few cents). Also, the brokerage fees (even from an online brokerage) would be greater than the 5 dollars you are intending to make.

You need to have a reasonable starting amount (like $1000). If you buy $1000 worth of a stock that is $10, and sell it as 10.50, and your brokerage is less than $50 then you made a profit! Problem is choosing the stock that is going to jump (in this case) 5%.

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DDDDave

The stock market 'is' a big casino. The problem is they don't post the rules next to the game like they do in Vegas.

Why do stocks go up and down? Think you know? Really? No, you don't.

Ex: Oh, my stock just announced great earnings. Stock goes down. WTF? The guys that run the casino expected more, maybe. Maybe the casino operators told all their friends to buy earlier and when they announced earnings, they sold. Buy on the rumour, sell on the news. What does that mean?

The casino, just like the stock market, is run by people who want to take your money.

I am certainly not dissing the idea of people joining together and pooling their resources to create an entity to make money and be successful. I just get frustrated when people somehow think the stock market is 'fair'.

And to answer your question. No, you cannot get into the stock market for $5. The example earlier of a $1,000. investment is quite reasonable. If you knew that you could buy the stock for $5 and it would go up $5. it would be easy. But you don't. (Absent some inside information) I can assure you, the guys who put up millions have a much better idea what is going to happen than you do.

Personally, I keep my money and use it myself to make more money. I figure those guys are not any smarter than me they just know their game better. I know my game better.

I have, and still do, play the market. I look at it as a casino. Only bet what you can afford to lose. Set a limit of how much you will lose, and how much you want to win. When either of those happens, walk away.

It is not a bad thing to gamble for fun. In fact that is how Vegas pitches it. They don't say 'come here and lose your money'. They say 'come here and have fun.' How much are you willing to pay for your fun is the question.

Do some more research. They market and Vegas prey on the uninformed.

Good Luck.

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todd

Thanks a lot for the information guys. I understand now I guess that is pretty much what I expected, too. I think I'll do a lot more reading before I consider getting started. In another thread somebody mentioned the name of a good book to buy to learn about how to survive in the stock market; I think i'll pick up a copy of that.

soma

What's Required:

1. Bank Account
2. Money
3. Online Brokerage Account

It is actually that easy to get started. But making money isn't quite as easy. I'd recommend getting familiar with the basics before even considering buying stock in anything. To start out, I'd recommend checking out finance.yahoo.com to watch the major indices move around, to read business headlines, and possibly to follow a few individual companies.

keyshawn

whatever you do, I'd highly recommend NOT TO DAY TRADE WITH REAL MONEY !!! Its risk is enormous and dealing with such big amounts of money with day trading shouldn't be taking lightly.

If you're looking for info, follow the man known as warren buffet and check out the motley fool - www.fool.com


or if you want to pseudo-day trade, try one of those simulated stock market trading sites [using fake money]
Sorry I forgot the name of it.

good luck and most importantly, read up !
will.

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TrevDigital

I have been doing a lot of reading about investing lately and I have come away with the following information

The way to win the game is not day trading or pseudo day trading. Not only does it carry huge risk, but you accrue brokerage fees that can easily negate your profits.

<a href="http://en.wikipedia.org/wiki/Efficient_market_hypothesis">The Efficient Market Hypothesis</a> is the underpinning of a strategy similar to what Warren Buffet has used (Buffett was already mentioned in here)... Find a good company, put in some money, then just relax. The value of your money is going to fall, from time to time but on the average you're going to make money.

Timing will cause you to pull your hair out. Buffett put a ton of money into Coke back in the 80s when the stock price was rather high, but he never felt any regret. Why? Sure, he could have made a bit more money if he'd have chased it up and down and picked a low point to invest, but the company still grew substantially and took the value of his investment with it.

Buffett is also strongly in support of a non-diverse portfolio. From his standpoint, if you pick great companies you can afford to put a huge amount of money (In his case, billions) into 3 or 4 companies. You might want to consider this when you think about chasing tiny fluctuations in dozens of companies.

Hope this was useful - I'd love to chat with you about the stock market more! I have no money in the market yet but I'm trying to gather as much information as I can now.

eribrav

I don't mean to sound disparaging, but you indeed sound like someone who has read a lot about the market but has no actual experience trading it.

How do you suppose you will find "great companies"? If you had bought $10,000 worth of Coke stock 5 years ago how much would you have now? How about the same amount of stock in GM or Merck? Are those not great companies? Will you simply decide that they are great companies and keep them forever or will you listen to quarterly conference calls, read annual reports and re-evaluate? How many individual investors actually do this?

I don't think that the individual investor has a real chance to outperform buying large cap stocks like those named above unless you have an effective money management plan. At some point you can't ignore catastrophic losses and just tell yourself "it's a great company." Otherwise you end up with Enron stock certificate wall paper.

TrevDigital

Is it possible to make money through day trading and market timing then? I found stacks of evidence stating that making profits through day trading was simply not possible enough to warrant consideration. If this is incorrect I'm going to be very excited.

It seems like Eribrav most of what you're saying is that buy-and-hold-forever is not always the best strategy. Is it better to set up stops to make sure you sell at a certain amount of profit?

eribrav

Since there are people out there earning a living by trading, I must conclude that it IS possible. Whether it's easy, and whether you or I can do it is another story.

I manage to earn a steady amount of money each year by swing trading. My positions are generally open from several days to several months. The reason most folks fail at trading is because they lack effective money management skills. The most common manifestation of this is failing to stop out of losing positions.

I would suggest looking over TheStreet.com website and maybe subscribing to RealMoney.com. I also read a lot from Bill Fleckenstein on his website.