Investing

Starting in Stocks

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  • Jul 10th, 2012 10:44 am
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[OP]
Newbie
Jun 20, 2012
29 posts
4 upvotes

Starting in Stocks

Hi all.

Ive been doing some research for a while and I’ve decided I want to try some trading!

To give you some background, Im 24, a student with a physics degree, about to finish my mech eng degree (8 months to go), and am so far debt free by sacrificing my summers to the reserves (im out now) and doing coops, all said around 50K in tuition so far with another 8K to go…plus rent. Gah. But the fantasy world of school is about to end and I feel I should get some experience in investing.

Since Im young-ish and stupid the way I want to try this is with stocks. Around the structure of how I want to do this the best choice seems to be with Questrade (Ive read the threads here so I know some of the conflict), but the 50$ free trade commissions, the 5$ trades after that, and the TFSA system (I have no money in any of them yet) has drawn me in. Ill worry about inactivity fees if I get that far and don’t lose all my money.

So Ive decided to throw $1000 in with questrade and see what happens. While I would prefer not to lose my money, I can survive the hit since Im so close to the end of school anyway. Im currently at a COOP job I have a lot of extra time to spend at so a more active style of trading is feasible and appealing to my foolishness.

But I’m not a complete idiot, so I thought I would ask here first if actively trading (swing/day) is even possible on such a small start without getting killed on commissions?

I think doing is the best way to learn something and that is really what this is about, but making a bunch of useless trades won’t teach me anything either.

Any input is much appreciated!

Thanks, Matt.

EDIT: I should add in no way am I asking for "stock tips"
70 replies
Sr. Member
User avatar
Sep 12, 2004
516 posts
4 upvotes
North York, Toronto
Have you read any books on the subject? Beware that most books are written by people that are in the business of selling trading education, not actual traders. However you do come across few books that offer truth and realistic expectations of trading the markets.

The stats from veteran brokers are consistent. 85% of small account traders fail to succeed. They just don't have the staying power to see their strategy see it work. I suggest you build your capital and find a broker that charges much less commission.

Here are some books I recommend to get started:


Trade Like a Casino: Find Your Edge, Manage Risk, and Win Like the House
http://ca.wiley.com/WileyCDA/WileyTitle ... 33097.html


Trading in the Zone: Master the Market with Confidence, Discipline, and a Winning Attitude
http://www.amazon.ca/Trading-Zone-Confi ... 0735201447
Personal Investment Blog - Goal is 10% return on capital (ROC) per month
Deal Fanatic
User avatar
Jun 19, 2009
5662 posts
1542 upvotes
Scarborough
Are you investing to try to make money in the short term like day traders? Or are you investing for long-term capital growth?

If you're aiming for the first type, just forget it. You need leverage (i.e money) to make big plays in the market, and with $1,000 invested, the commissions will erase your capital pretty quickly.

If you're investing for long term growth, Broad index ETFs are your best friends.
[OP]
Newbie
Jun 20, 2012
29 posts
4 upvotes
Thanks for your answers so far everyone, its very good to know. Using jr high math I basically said if i pick a stock and put all 1000 into it, and it goes up 2%, i spent half of what I made on commissions. Clearly not at all what I would actually do, but just the most basic example of how it seemed possible.

As for indexs I really like this idea for two.5 reasons. One is that theyre probably a safer investment, the second reason is that looking at their histories, at least recently, theyre almost as volatile as everything else, but within a range. Almost seems like a perfect playground to get my feet wet in really. Unless of course the TSX crashes...

The half reason is since there are so many indexs that get more and more specialised, if i get involved in those, it gives me a chance to play close attention to smaller groups of companies and individual companies until I feel I have better grasp on whats going on.

Or Im making no sense, in which case please tell me.
Deal Fanatic
User avatar
Jun 19, 2009
5662 posts
1542 upvotes
Scarborough
NakorOranges wrote:
Jun 21st, 2012 1:41 pm
Thanks for your answers so far everyone, its very good to know. Using jr high math I basically said if i pick a stock and put all 1000 into it, and it goes up 2%, i spent half of what I made on commissions. Clearly not at all what I would actually do, but just the most basic example of how it seemed possible.

As for indexs I really like this idea for two.5 reasons. One is that theyre probably a safer investment, the second reason is that looking at their histories, at least recently, theyre almost as volatile as everything else, but within a range. Almost seems like a perfect playground to get my feet wet in really. Unless of course the TSX crashes...

The half reason is since there are so many indexs that get more and more specialised, if i get involved in those, it gives me a chance to play close attention to smaller groups of companies and individual companies until I feel I have better grasp on whats going on.

Or Im making no sense, in which case please tell me.
The point of index ETFs is that they're meant to mirror an index. Sure, you can gamble and try to pick out which sector/industry ETFs will outperform the market but at that point it's essentially timing the market. You can play with sector ETFs but they're mostly used by investors with extensive knowledge of the industry. For just regular investors like you and me I highly recommend index ETFs unless you're willing to put the time and effort into researching individual industries.
Deal Addict
Jul 23, 2007
3808 posts
1602 upvotes
Back in the 90's I noticed that the professional managers were saying that it was very difficult to beat the market due to the fact that it's a bull market for equities. Wait til there's a trader's market they said. Well, we've had a trader's market for well over a decade now and when I compare their active fund returns for the last ten years to a live index like TD e-Series funds, the majority of active are still getting whipped. Too bad there's no way of telling by looking in the rear view mirror as to which are the minority of active funds that are going to do better, but every few years that list of winners keeps changing.

Then of course the amateur comes in and he/she is going to beat the market. Good luck with that one against the pros.
Member
User avatar
Dec 6, 2010
424 posts
105 upvotes
SkimGuy wrote:
Jun 21st, 2012 2:29 pm
The point of index ETFs is that they're meant to mirror an index. Sure, you can gamble and try to pick out which sector/industry ETFs will outperform the market but at that point it's essentially timing the market. You can play with sector ETFs but they're mostly used by investors with extensive knowledge of the industry. For just regular investors like you and me I highly recommend index ETFs unless you're willing to put the time and effort into researching individual industries.
What ETFs do you recommend?
Deal Fanatic
User avatar
Jun 26, 2005
9513 posts
1550 upvotes
Toronto
There was another thread askign the same thing, so I'll type the same thing here:

1) get a REAL stock trading education (not a get rich software, a real education, like the one I did, search it here)

2) don't put any money into QT and see how it goes, do it ON PAPER ! You don't need to risk money yet. I can almost guarantee you will lose if you trade more than a few times. Like do you know how many shares to buy? It is not BCE costs $10/share, I have $1000, so I can buy 100 shares.

3) always plan your trade BEFORE you trade. Entry price, exit price and stop price. Again, refer to (1) and learn carefully before you go in.



NakorOranges wrote:
Jun 21st, 2012 9:54 am
Hi all.

Ive been doing some research for a while and I’ve decided I want to try some trading!

To give you some background, Im 24, a student with a physics degree, about to finish my mech eng degree (8 months to go), and am so far debt free by sacrificing my summers to the reserves (im out now) and doing coops, all said around 50K in tuition so far with another 8K to go…plus rent. Gah. But the fantasy world of school is about to end and I feel I should get some experience in investing.

Since Im young-ish and stupid the way I want to try this is with stocks. Around the structure of how I want to do this the best choice seems to be with Questrade (Ive read the threads here so I know some of the conflict), but the 50$ free trade commissions, the 5$ trades after that, and the TFSA system (I have no money in any of them yet) has drawn me in. Ill worry about inactivity fees if I get that far and don’t lose all my money.

So Ive decided to throw $1000 in with questrade and see what happens. While I would prefer not to lose my money, I can survive the hit since Im so close to the end of school anyway. Im currently at a COOP job I have a lot of extra time to spend at so a more active style of trading is feasible and appealing to my foolishness.

But I’m not a complete idiot, so I thought I would ask here first if actively trading (swing/day) is even possible on such a small start without getting killed on commissions?

I think doing is the best way to learn something and that is really what this is about, but making a bunch of useless trades won’t teach me anything either.

Any input is much appreciated!

Thanks, Matt.

EDIT: I should add in no way am I asking for "stock tips"
Deal Fanatic
User avatar
Jun 26, 2005
9513 posts
1550 upvotes
Toronto
gta_guy wrote:
Jun 22nd, 2012 12:30 pm
What ETFs do you recommend?
If you want Index ETFs, go to iShare's website and look
Newbie
Jul 17, 2003
31 posts
Burnaby
With $1,000 I will say you better take a mid to long term position.
In my experience, day trade with small fund will end up with nothing left in your pocket. (commission, emotion, gamble behaviour...etc, will just destroy you completely)
Sr. Member
Mar 19, 2010
918 posts
99 upvotes
Markham
NakorOranges wrote:
Jun 21st, 2012 9:54 am
Hi all.

I think doing is the best way to learn something and that is really what this is about, but making a bunch of useless trades won’t teach me anything either.
Forget about trading. it's a zero sum game.

Buy companies that pay and grow their dividends, add to your portfolio on a regular basis and always re-invest your dividends. Think long term.
[OP]
Newbie
Jun 20, 2012
29 posts
4 upvotes
Thank you again everybody. I believe I now have an idea about where i want to put my money! I think I will put half in an index fund, and the other half in a single stock or two. Thans everyone! Im sure I will have many more questions to come as things progress.
Sr. Member
User avatar
Feb 1, 2011
726 posts
20 upvotes
Hamilton
if you try to time the market and buy and sell you will probably loose unless you're warren buffet
so far, what i've gotten from reading a ton of info, researches is to just buy and buy and ignore it and just let it grow

read on - 8 part series on stocks
http://jlcollinsnh.wordpress.com/2012/0 ... -save-you/
Deal Addict
Nov 26, 2005
3085 posts
249 upvotes
Vancouver
always try to time the market, thats the only way to beat market. too many lazy or less intelligent people who fail to do so say impossible. at least give yourself a try. do it with paper trading first if you are too scared. dont do fully equal weighting at minimal even if you are semi-lazy. adjust the weighting when you feel market is too high or too low. an average person who put some effort can do better than blindly equal weighting.

A better approach is to study ETF and kick out those obvious losers and buy the rest stocks to beat etf.

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