Newbie Lessons - All your questions answered

[Sir Osisofliver]

As an investor looking to start out in investing and trading is it necessary to plan and create, for example a company to trade under when starting with a limited capital base? I know this isn't a blanket answer for everyone but in your opinion is it worthwhile creating the correct entity from the beginning?

No is the short answer. It takes time to learn how to trade consistently and during this learning stage you want to have as few fixed costs as possible. The set up costs and ongoing audit requirements for trust and company entities mean that without sufficient starting capital it will be a major hindrance to compound growth in the portfolio. On e you hit the 100k mark then move to structures. YRMV if your trading is successful early.

Is the method that you use for picking long term shares similar for your short term trading shares. As my capital is limited at the moment I would like to start by learning a good trading foundation that can feed my investments as you described. Is there anything you could suggest to be mindful of when starting or some good techniques?

Thanks,
Wilkens

No the methodology of the core and non-core portfolios have significant differences. I'm looking for different characteristics in the target space. The difference between this more passive style of investing and the activity trading is even more extreme.

Number one tip... Learn as much as you can and develop a plan.

Cheers
Sir O

 

[WilkensOne]

Thanks Sir O, I really appreciate your help.

I will keep reading some more technical analysis books and practice with some paper trading.

Look forward to more of your posts.

Wilkens

 

[YMI]

Hi, I read most (still reading) of the thread here and I just wanted to say that people who spend so much time putting all the knowledge together and share it with others for no other reason but to help improving someone else's life deserve the highest respect Some of it I knew already but some of it is new and helpful to me, overall it’s just marvelous. Thank you very much!

The following is not supposed to be criticism, just my humble opinion.

...by the age of 65

38 will be deceased
38 will be living in poverty
16 will still be working
7 will be retired on a livable income
and 1 will be wealthy.

Scary numbers although I think we can be grateful to live in OZ, just a guess but the number for living in poverty over in the US for example is probably more like 45. And changing that would be really difficult.

...ANYONE can retire very comfortable.

Really, can they??
Wealth is not defined by the amount of money, it’s more defined by the amount of poverty. In other words, to get another one super rich you probably need 20 more exploited. If we all manage to raise our self-discipline, work harder and save more, it will most likely result in higher inflation and not increased wealth That may sound depressing but it’s the way our system works after all.

Probably not the right place to say that but perhaps something to think about: If I find a 100 dollar bill on the ground and keep it, I am a thief. If a mine extracts tonnes of Gold out of the ground, they’re rich.

 

[Julia]

Wealth is not defined by the amount of money, it’s more defined by the amount of poverty. In other words, to get another one super rich you probably need 20 more exploited. If we all manage to raise our self-discipline, work harder and save more, it will most likely result in higher inflation and not increased wealth That may sound depressing but it’s the way our system works after all.

Probably not the right place to say that but perhaps something to think about: If I find a 100 dollar bill on the ground and keep it, I am a thief. If a mine extracts tonnes of Gold out of the ground, they’re rich.

As you say, this is probably not the place for this discussion, but it's an interesting topic and I'd like to read your expanded version of what you outline above.

We are in need of some new opinions.
Hope you'll start a new thread on wealth and its acquisition.

 

[Sir Osisofliver]

Hi, I read most (still reading) of the thread here and I just wanted to say that people who spend so much time putting all the knowledge together and share it with others for no other reason but to help improving someone else's life deserve the highest respect Some of it I knew already but some of it is new and helpful to me, overall it’s just marvelous. Thank you very much!

You are welcome. Although I have neglected this thread at times I do enjoy helping others and passing on what I have learned.

The following is not supposed to be criticism, just my humble opinion.


Really, can they??
Wealth is not defined by the amount of money, it’s more defined by the amount of poverty. In other words, to get another one super rich you probably need 20 more exploited. If we all manage to raise our self-discipline, work harder and save more, it will most likely result in higher inflation and not increased wealth That may sound depressing but it’s the way our system works after all.

Probably not the right place to say that but perhaps something to think about: If I find a 100 dollar bill on the ground and keep it, I am a thief. If a mine extracts tonnes of Gold out of the ground, they’re rich.

I truly do believe that.... But you'll note I didn't say super meage rich...I said comfortable. What the ATO defines as wealthy in retirement and just wealthy are different. Financial literacy is woefully inadequate for the vast majority of people I meet. I get far more people in their late 30's and early 40's who start to get apprehensions about their future than I do 20 something's. That loss of time is highly significant and it's only by educating the next generation that those numbers will be improved.

Cheers
Sir O

 

[bos1234]

Great thread! I went through your budgeting thread. Though I always remained 'positive' in my bank accountant, I can't believe how much I've spent on food alone in the year! I've just started to go through my yearly budget. These are two facts that I could NOT believe

Subway: $404.88
Mcdonalds: $282.20
total: $687.08

These two amounts excludes the times I paid by cash, so it could easily be $100 or so more!

Thanks again!

p.s. does anyone have an example budget sheet they have?

 

[nev25]

Sorry for the Hijack
But I have a Newbie Lessons I need questions answered

Ive read on here and else where about a minimum amount you need to trade
Some say $10,000 Some say more
I read with interest the thread A newbie with a grand
Now I know the ASX insisted the first trade is $500 in value
I have also read to open an account with some brokers you have to deposits a minimum amount (some like IB is$10000)

So I Pose the Scenario

If I bought shares say to the Value of $500 @ .027 = 18519 shares + $15 Brokerage (assuming) =$515 cost
Now I am going to assume the shares increases to 0.30
Therefore If I sell them all 18519 x .03 = $555.57 - $15 Brokerage = $540.57

$540.57-$515=$25.57

Sounds like a good deal to me

So whats wrong with that

I hear you saying this guys an idiot not worth the hassles
Explain to me why

Only one catch I can see (apart from the price not going up) is selling the shares
Ive has sell orders sitting there for weeks unfilled
I can only assume no one wanted them as its not an automatic process as some would think

 

[boofis]

No I going to assume the shares increases to 0.30

The 'catch' seems to be rather essential in the whole scheme really.

 

[nev25]

The 'catch' seems to be rather essential in the whole scheme really.

Lost me

 

[boofis]

Well, you'll make $25 if the share price goes up, do the maths on what you stand to lose if the sp goes down.

 

[tech/a]

Lost me

Learn basic maths first.

Hint----decimal point!

 

[nev25]

Learn basic maths first.

Hint----decimal point!

Oh sorry typo
EXCUSE ME

should read .030

 

[nev25]

Well, you'll make $25 if the share price goes up, do the maths on what you stand to lose if the sp goes down.

But thats the same with any share

If its a $500 parcel or a $500,000 parcel you still stand to lose if it goes down

 

[CanOz]

Sorry for the Hijack
But I have a Newbie Lessons I need questions answered

Ive read on here and else where about a minimum amount you need to trade
Some say $10,000 Some say more
I read with interest the thread A newbie with a grand
Now I know the ASX insisted the first trade is $500 in value
I have also read to open an account with some brokers you have to deposits a minimum amount (some like IB is$10000)

So I Pose the Scenario

If I bought shares say to the Value of $500 @ .027 = 18519 shares + $15 Brokerage (assuming) =$515 cost
Now I am going to assume the shares increases to 0.30
Therefore If I sell them all 18519 x .03 = $555.57 - $15 Brokerage = $540.57

$540.57-$515=$25.57

Sounds like a good deal to me

So whats wrong with that

I hear you saying this guys an idiot not worth the hassles
Explain to me why

Only one catch I can see (apart from the price not going up) is selling the shares
Ive has sell orders sitting there for weeks unfilled
I can only assume no one wanted them as its not an automatic process as some would think

The simplest way to think of this is that you should only ever risk 2% of your account on any one trade. If you only have a $1000.00 account then its only $20 to risk on each trade. That means that when you get stopped out your loss is no more than $20. That is going to either limit the amount of shares you can purchase or it will put you too close to the price action and you'll be stopped out with the normal 'noise' of the market. that's why you need a bigger account.

You can go with risking a higher percentage than 2%, but your risk of ruin (risk of losing all the money) is higher.

You see, no matter how good you are at picking winners, you'll be lucky to be better than a coin toss. If however, your winners are three times bigger than your losers on average, then you can withstand a losing streak and you will survive to trade another day. 2% of your capital means you can lose 50 times in a row, that's ample room for survival.

The bigger the account the better and it totally depends on your system how big the account should be. This will determine frequency of trades which also in turn determines brokerage...

CanOz

 

[burglar]

...
$15 Brokerage
$15 Brokerage
...
$25.57

The broker is gonna love you, the tax man too.
If you borrow, you can add interest.

As you say it's good for you!

 

[Julia]

If I bought shares say to the Value of $500 @ .027 = 18519 shares + $15 Brokerage (assuming) =$515 cost
Now I am going to assume the shares increases to 0.30
Therefore If I sell them all 18519 x .03 = $555.57 - $15 Brokerage = $540.57

$540.57-$515=$25.57

Sounds like a good deal to me

You would seriously go to all the trouble of buying and selling, doing the necessary paperwork, including it in your tax return, for $25???

And, as has been pointed out, where will you be if the price falls?

Only one catch I can see (apart from the price not going up) is selling the shares
Ive has sell orders sitting there for weeks unfilled
I can only assume no one wanted them as its not an automatic process as some would think

It's not automatic if you choose something with low liquidity. How are you going to feel if your sell order sits there day after day while the price falls and falls and falls and for pretty obvious reasons no one wants to buy them?

 

[nev25]

You would seriously go to all the trouble of buying and selling, doing the necessary paperwork, including it in your tax return, for $25???

Yes I would
A hobby that makes money Fantastic

Wow its only an example

And, as has been pointed out, where will you be if the price falls?

. How are you going to feel if your sell order sits there day after day while the price falls and falls and falls and for pretty obvious reasons no one wants to buy them?

That could be asked with any stock
Could it not

 

[nev25]

The broker is gonna love you, the tax man too.
If you borrow, you can add interest.
!

Sorry
Care to explain???

 

[burglar]

Sorry
Care to explain???

If you borrow money from a bank, you can add bank interest to your costs.
And the bank manager will love you too!

 

[nev25]

If you borrow money from a bank, you can add bank interest to your costs.
And the bank manager will love you too!

Borrow $515 from the bank I dont think so