Questions from a stock market beginner

[newbie trader]

Re: Real newbie - any advice is appreciated

Hi NT;
Seems to me, you just graduated from newbie to sound advisor

As regards your timing: Please let me remind you that Trading is a business and profession like any other. You wouldn't want to design and build your own house before you've done a few years' apprenticeship and studies. Don't believe for one second that you'll become a successful Trader or Investor by simple Deed Poll or declaring "I'll be a Trader starting Noon next Monday."

Dont know if the top remark was sarcasm or not but I dont claim to know anything about investing and trading (mainly because I don't ). I'm simply giving my opinion and expounding the knowledge that I have gained thus far on my journey.

I agree with you 100%, the market will be there whenever you feel that youre ready!

 

[pixel]

Dont know if the top remark was sarcasm or not

Definitely no sarcasm, NT;

I reckon you've summed it up very aptly - especially the bit about "began investing after about 3yrs of reading and paper/demo trading".

 

[Julia]

Take sometime and plot differing amounts of a trade (say $500 increments) against commissions (e.g. , Etrade $15 each way,

Where are you getting the Etrade $15 each way? With ten or fewer trades per month it's $32.95 each way including GST.

 

[johenmo]

Where are you getting the Etrade $15 each way? With ten or fewer trades per month it's $32.95 each way including GST.

My apologies - tks for correecting me. US etrade is $10. Was thinking Bell direct but typed eTrade. DYOR!!!!

Point being made was look around, think and work out what suits your particular situation.

I find IB suits my needs but not newbie friendly.

 

[opulence]

Beginner questions.

ASF,

Having read Market Wizards, I'm nearly finished reading John Murphy's book on Technical Analysis of the Financial markets. It's a huge and very comprehensive book! However, I do remain sceptical (yet to prove to myself it works) of technical analysis. The Buffet quote of " I knew technical analysis didn't work when I turned the price chart upside down and still got the same answer" scares me a bit as I am drawn to the concise nature of technical analysis but what I found from market wizards was that traders from both sides of the fence had done well by mastering each respective type of analysis. I guess either analysis works so long as you're good at it. Is that a fair comment?

Can anyone recommend a similarly comprehensive fundamental analysis book or is that too broad to be covered in one book?

Secondly, having started to build up my theoretical knowledge I'd was wondering what the best way to gain exposure to a number of software platforms both for the brokerage, scanners/filters and charting tools?
I think that part of my problem when I try and do some technical analysis is that I'm not looking at the right stocks. If I could more effectively scan the markets Id be able to make some decent beginner (so probably wrong) predictions rather than staring at what seemingly looks like a stagnating random price chart.

Which is the best way to paper trade? Just by you're own notes or do software platforms exist to facilitate this?

 

[pixel]

Re: Beginner questions.

Which is the best way to paper trade? Just by you're own notes or do software platforms exist to facilitate this?

There is certainly software that lets you backtest a trading system.
I know of one: Market Analyser from MDS Financial, which I've been using for more than ten years. Mind you, it's not a trivial exercise; nothing for the ten-thumbed "where's-the-off-switch" PC novice. But if you're at home in a program environment, it's definitely worth a try.

Find an example in this essay, describing the early stages of a system that I have been using (and expanding on) for the best part of 10 years. In particular, it includes a profit chart, which is just one element of the Backtesting facility of the MA.

I'm sure other members will know of similar packages.

 

[ozzymk]

Beginner's question

Hello!

I have never been trading on ASX but I am about to start. My plan is to start with big BlueChip companies. Could you please help with those 3 questions:

1) is it ok to buy some shares before the end of this financial year or it is better to wait until July 2010 ? (if I will buy some shares in June, do I need to pay CGT at the end of this 2009/2010 financial year?)

2) when I will be doing tax return should I expect that my tax accountant knows how to deal with taxes in terms of share trading ?

3)what is better: to save money for 2-3-4 months then to spent 3k-5k for shares or better to invest every month, even if I have just 2k to invest ? I know about brokerage fee but except of that ? anything else ?

Sorry I know that my questions are very basic...

Thank you in advance for all your help!

 

[diop]

Re: Beginner's question

Hello!

I have never been trading on ASX but I am about to start. My plan is to start with big BlueChip companies. Could you please help with those 3 questions:

Sorry I know that my questions are very basic...

Thank you in advance for all your help!

Hey man i think im in the same boat as you.. have about 3k to invest, but looking to invest as minimal as possible as I just want to get some experience atm and probably looking at jsut getting some half yearly dividends until i get some more cash.

My question was about the trading tools, im with commonwealth bank so is it best to use commsec or is there something else. IM also very noob lol looking to learn anything and everything

 

[newbie trader]

Re: Beginner's question

Hey man i think im in the same boat as you.. have about 3k to invest, but looking to invest as minimal as possible as I just want to get some experience atm and probably looking at jsut getting some half yearly dividends until i get some more cash.

My question was about the trading tools, im with commonwealth bank so is it best to use commsec or is there something else. IM also very noob lol looking to learn anything and everything

I use Commsec, 19.95 trades so it suits my current needs, but yours may be different. By the sounds of things you want experience but you also want to make some money? I can't help you with the 'making money' part but just make sure you take into account in and out brokerage fees so you know when you'll break even and when you'll pull a profit (i.e. an investment of $1000 with $40 in and out will require 4% profit to break even). Good luck.

 

[sweetclassics]

Hi guys, I'm new here too and got a few questions in mind. I sold my house a few months ago for half a mill, and currently I'm keen to invest back that amount into shares, preferably as short term investment for probably a year or two.

I'm unemployed, so I enjoy lots of free time to browse the market sites, and I try to look at the prices chart atleast once everyday. So I consider myself as a careful investor, although I haven't actually made a portfolio yet.

My questions are, well when I was sieving through a few sites, I noticed that an investor cannot spend more than 25% of his cash on just one company, which I find to be rather a turn off for investing. Can anyone clarify more why is it such?

Secondly, for an investment of 500k, how long do you guys think the process of acquiring and selling my shares would take? Esp when dealing with blue chip shares such as Rio and CBA?

i'm assuming there's a large chance of me not being able to acquire the number of shares I want even though I can afford them, purely because the demand is so high for these type of shares and there's not enough sellers. Is that a reasonable assumption?

Cheers guys, I'm really glad I found this site as I've been struggling to find people I could talk to about shares. Hope you can help, thanks.

 

[burglar]

Hope you can help, thanks.

Sure we can help but, my typing is slow!

 

[ginar]

Hi guys, I'm new here too and got a few questions in mind. I sold my house a few months ago for half a mill, and currently I'm keen to invest back that amount into shares, preferably as short term investment for probably a year or two.

I'm unemployed, so I enjoy lots of free time to browse the market sites, and I try to look at the prices chart atleast once everyday. So I consider myself as a careful investor, although I haven't actually made a portfolio yet.

My questions are, well when I was sieving through a few sites, I noticed that an investor cannot spend more than 25% of his cash on just one company, which I find to be rather a turn off for investing. Can anyone clarify more why is it such?

Secondly, for an investment of 500k, how long do you guys think the process of acquiring and selling my shares would take? Esp when dealing with blue chip shares such as Rio and CBA?

i'm assuming there's a large chance of me not being able to acquire the number of shares I want even though I can afford them, purely because the demand is so high for these type of shares and there's not enough sellers. Is that a reasonable assumption?

Cheers guys, I'm really glad I found this site as I've been struggling to find people I could talk to about shares. Hope you can help, thanks.

500k order for CBA or RIO wouldnt even be blip in market depth as long as you buy/sell in open or close , lunch time they may be a little skinnier . 500k of CBA is just 10,000 shares and RIO 6,000 , considering they generally trade millions of shares a day your concerns are unfounded

 

[burglar]

... I noticed that an investor cannot spend more than 25% of his cash on just one company ...

First time I heard this. Is that verifiable from a good source e.g. ASX or ATO ?

why is it such? So you don't join the queue of victims should you pick a "falling knife".

 

[sweetclassics]

500k order for CBA or RIO wouldnt even be blip in market depth as long as you buy/sell in open or close , lunch time they may be a little skinnier . 500k of CBA is just 10,000 shares and RIO 6,000 , considering they generally trade millions of shares a day your concerns are unfounded

Thanks for that info bud, but how bout the 25% thing? Is that a rule in the ASX trading protocol or does it depend on your broker?

Cause I remember reading somewhere, if you have a portfolio of 500k, you can only spend a quarter of it on one company at a time. So I'd have to settle with spending only 125k on shares I want instead of using the whole lot.

 

[burglar]

If you have not already done so, read lots from the beginners lounge :

Best thread there, by far, is by SIROSISOFLIVER (worth reading twice in my opinion)

https://www.aussiestockforums.com/forums/showthread.php?t=14370

 

[Tysonboss1]

Thanks for that info bud, but how bout the 25% thing? Is that a rule in the ASX trading protocol or does it depend on your broker?

Cause I remember reading somewhere, if you have a portfolio of 500k, you can only spend a quarter of it on one company at a time. So I'd have to settle with spending only 125k on shares I want instead of using the whole lot.

dollar cost average investing in parcels of about $25 K a week into an index fund is you best bet.

You may not have the know how to invest for self yet, if you want to try, put half in the index fund and try and invest the other half yourself

 

[vincent191]

With margin lending, you can invest more than your $500k in the stock market and you can invest it all on the one company if you wish. there is nothing to stop you from investing your entire wealth on the stock market.

The 25% rule is most probably from some article you have read about diversification. i.e. don't put all your eggs in the one basket. ASX don't give a rat's %$#@ how you set up your portfolio.

You are getting mixed up with investing in the sharemarket, risk management and portfolio management.

 

[joea]

Hi guys, I'm new here too and got a few questions in mind. I sold my house a few months ago for half a mill, and currently I'm keen to invest back that amount into shares, preferably as short term investment for probably a year or two.

I'm unemployed, so I enjoy lots of free time to browse the market sites, and I try to look at the prices chart atleast once everyday. So I consider myself as a careful investor, although I haven't actually made a portfolio yet.

My questions are, well when I was sieving through a few sites, I noticed that an investor cannot spend more than 25% of his cash on just one company, which I find to be rather a turn off for investing. Can anyone clarify more why is it such?

Secondly, for an investment of 500k, how long do you guys think the process of acquiring and selling my shares would take? Esp when dealing with blue chip shares such as Rio and CBA?

i'm assuming there's a large chance of me not being able to acquire the number of shares I want even though I can afford them, purely because the demand is so high for these type of shares and there's not enough sellers. Is that a reasonable assumption?

Cheers guys, I'm really glad I found this site as I've been struggling to find people I could talk to about shares. Hope you can help, thanks.

Hi.
You had better develop a trading plan with a big emphasis on risk and money management, or you ain't going to have 500k fo long.
" the maket is made up of two type of people"
1 Those with money attempting to get experience.
2 Those with experience happy to take your money, to give you experience.

Your first "sin" was to skite about how much money you have.

Cheers

 

[sweetclassics]

Hi.
You had better develop a trading plan with a big emphasis on risk and money management, or you ain't going to have 500k fo long.
" the maket is made up of two type of people"
1 Those with money attempting to get experience.
2 Those with experience happy to take your money, to give you experience.

Your first "sin" was to skite about how much money you have.

Cheers

lol first off i didnt mean to skite about my money, I just wanted to make everything clear esp about my investment budget. And yeah I think i have a rough plan about trading, mainly its just observing the fluctuations of the prices, and when I see the prices are low enough, I submit an order for that share.

Then I wait, till it goes back up a bit, not much..in Rio's case maybe a few dollars and then I execute order to sell.

Honestly does that sound like a lame plan? If it does, please tell me cuz I'm here to learn bros.

Peace

 

[tech/a]

Then I wait, till it goes back up a bit, not much..in Rio's case maybe a few dollars and then I execute order to sell.

Honestly does that sound like a lame plan? If it does, please tell me cuz I'm here to learn bros.

Its lame.
How do you determine "low enough"
You need positive expectancy before you do anything.
You then need to understand risk and position sizing.
Start there.
There is much to this business and will take you years and quite possibly a chunk of your funds before you master it.