Dabbling in stocks and shares trading

[cptwhite_uk]

I'm just curious as to whether anyone has actually had a go at this. I'm tempted to give myself a £250 starting fund and see what happened, with the clear knowledge it might just evapourate.

What is the process for small scale trading, how is it done etc. I assume there are websites out there which will assist this process for a small commission.

Does anyone doe this, or have experience - any tips? I'm not looking to build a fortune, more like I'm invested to see if I can make any profit at all. What with the pathetic interest rates on offer at the moment I'm interested to just give this a go for a bit of fun.

Post your experiences of online stock trading!

[b0redom]

Yes. I bought a whole pile of Northern Rock stocks just before they tanked. My advice is:

1) It's gambling, nothing more, only spend what you can afford to lose. You never know when the bottom might fall out of the market, or the government might pass an emergency unprecedented law and rob the shares from you. (Bitter? Me?)

2) You'll pay a fairly hefty fee on buying and selling, from memory it was ~ £10 / trade when I did it, so unless you're investing a bit more, your gains will be outweighed quickly by the cost of actually trading.

3) ONLY INVEST WHAT YOU CAN AFFORD TO LOSE! Look at BP, Northern Rock, Bradford and Bingley, RBS etc etc. Interest rates in a bank might be poor/zero, but at least your money is (pretty much) guarenteed.

[mikerr]

I'd recommend iii.co.uk for some casual trading, but small gains tend to be killed by the minimum £10 fee for every trade.

Better, get an account on betfair.com .. and do your gambling there

[TheAnimus]

3) ONLY INVEST WHAT YOU CAN AFFORD TO LOSE! Look at BP, Northern Rock, Bradford and Bingley, RBS etc etc. Interest rates in a bank might be poor/zero, but at least your money is (pretty much) guarenteed.

BINGO!

So I spread bet. I started with £750. My best week I made £9,500. My Worst day, which conincidentally was just after that week, I lost £9,433.....

I prefer spread betting because the likes of igindex give you a great interface, real time, you can use pence, and oh, its CGT free because its taxed as gambling, which is more honest of what it is.

Yes, and last night took me by surprise, so I had a couple of £2 per point exposures, so lost the better part of £500, made back £750 this morning, lost £850 before lunch, made £180 since...... A lot of effort on a day like today.

I take it you've seen the news? If the markets have over-reacted, then its bargin FTSE as it was down at about 5018 when I went long....

I also have a host of other non-traditionally correlated things, I quite like sugar. I don't have much of a pension, because lets be honest, they will just take it off me to give to those who don't bother......

[usxhe190]

Spreadbetting has leverage rather than just going long shares and so please consider this and not just the tax advantages.

[TheAnimus]

Spreadbetting has leverage rather than just going long shares and so please consider this and not just the tax advantages.

Depends how you do it.

Say you've got £5k for FTSE.

You can just put £5k in the account and go £1 a point.

It gives the option for leverage, but in the above example not so, with £1 commision, and no CGT.

[usxhe190]

Depends how you do it.

Say you've got £5k for FTSE.

You can just put £5k in the account and go £1 a point.

It gives the option for leverage, but in the above example not so, with £1 commision, and no CGT.

True, but they work differently to shares and so just letting the OP know. It's the leverage that entices the investor to spreadbetting more than the tax I believe. Also spreadbetting has no voting or dividend rights. It's a pure play on the market price of the share.

[TheAnimus]

True, but they work differently to shares and so just letting the OP know. It's the leverage that entices the investor to spreadbetting more than the tax I believe. Also spreadbetting has no voting or dividend rights. It's a pure play on the market price of the share.

Absolutely, but if your doing just indecies, which I think most people recommend for the new, this isn't an issue.

[badass]

Most online brokers have regular times each month where the commission is just £1.50. You arrange to buy x value or amount on one of those dates in advance and you buy at the price that morning. Feed in at least £150 each time you do that and it works out as a 2% up front cost.

If you're looking for less risk with the potential of decent returns, look into investment trusts. They are traded as shares on stock exchanges like any other company. They buy up investments, take out their costs and the profits are distributed as a combination of a dividend and the increase in tehir share price.
Another lower risk way of doing things is to buy into ETF's. Their aim is to mirror an index tracker e.g. the FTSE 100. Once again, regular investments using the £1.50 per dealing regular trading is the lowest risk way to go.

As you are well aware, the prices can go down as well as up but if you buy into a few ETF's and index trackers and they all lose 100% of their value, you'll have bigger concerns than no money TBH.
That said, if you can't watch the value of your investment halve without panicing, you're looking into the wrong place for your money.

All of this talk about spread betting is promoting a very high risk way of investing money.
The leverage employed increases losses just as much as gains and is only for the very experienced or those that are just looking for a gamble.

[mikerr]

I've looked at spread betting, but I 've never been brave enough since I'm not clear on how to limit your loss.

But apparently capitalspreads have just launched a limited risk account where the risk is limited to your deposit:

http://www.spreadbetting.com/news/20...-risk-account/

May give that a whirl...safer, but still gambling.

[TheAnimus]

All of this talk about spread betting is promoting a very high risk way of investing money.
The leverage employed increases losses just as much as gains and is only for the very experienced or those that are just looking for a gamble.

You don't have to be leveraged. If you simply put your £500 that you were going to spend on a FTSE future, then go long 10p a point.....

The deal will have cost you erm 10p......

[usxhe190]

TheAnimus is right that you can utilise spreadbetting so that you don't have leverage.

The problem is the attraction of leverage in spreadbetting - it's simple to get leverage and when you win a little, you think you are a god and leverage up. I don't think I know anyone that doesn't use the leverage in spreadbetting...

To be honest, buying shares is already a high risk investment although people don't realise that.

I agree that the OP should try buying an ETF linked to a liquid index (e.g. FTSE100, S&P500, EUROStoxx) rather than going for individual stocks. My 2p though.

But be prepared to lose your full £250. It's not just interest you are losing, it's your principal as well.

[b0redom]

Right, I get the idea of spreadbetting, but who are you betting against? Lets say the US invade Bahrain, and in protest the Saudis turn off the taps. It's almost certain in this case that the price of oil would rocket. Who would bet against that?

[usxhe190]

Right, I get the idea of spreadbetting, but who are you betting against? Lets say the US invade Bahrain, and in protest the Saudis turn off the taps. It's almost certain in this case that the price of oil would rocket. Who would bet against that?

b0redom, you would be betting on the "spread" rather than the event - e.g. how much oil would rocket.

[b0redom]

Have I missed something then? The intro video on the Animus' website said you basically decide to long or short stocks, and the profit/loss is the number of points * the bet per point.

So lets say Brent Crude is at 100/101 in my scenario I bet £10 / point long. At the end of the day it's at 125/126. I sell, and have made a profit of £10*24=£240?

Someone has to pay for this, so somewhere there's a loser. Who do you bet against?

[TheAnimus]

They hedge with the 'real' product...