Anyone dabble with online stock trading?

[WSUCougar]

I was considering maybe dipping my toe in the online stock waters but am a total newb when it comes to such things. My only stock involvement up to this point has been selling some shares my wife got through her job, observing my 401k and IRA funds, and winning the stock market game in 5th grade because I put all my money in IBM. :D

Anyway...anyone do this much? Any tips or other advice? If I do this, it won't involve much money for now.

Thanks in advance.

[cartman]

The only advice I'd have right now is to do a lot of research before jumping in. In the beginning, to limit your exposure, it's probably best to stick to the index listings. These are ones that are not shares in a particular stock, rather they are composites of many companies. An example of this is the NASDAQ Spider (QQQQ). This keeps you from getting hammered by any individual stock.

[Ksyrup]

If by "dabble" you mean invested a lot of money about 6 years ago and lost my shirt, then yes, I've "dabbled."

[rkmsuf]

If by "dabble" you mean invested a lot of money about 6 years ago and lost my shirt, then yes, I've "dabbled."


perhaps you should have dibbled.

[BrianD]

I did this a few years ago. I followed lots of advice from any financial website I could find and ended up doing ok. If you plan on trading individual stocks, understand that it will be like gambling on a coin flip. You'll probably get some right and others wrong. Assuming you don't totally devote your life to company research, you probably won't have a great understanding of why a stock did well or did poorly.

[Ksyrup]

perhaps you should have dibbled.
I dabbled on the advice that it would be a no-brainer double of my investment. I got drubb...led.

[rkmsuf]

You try to corner the frozen orange juice market?

[Ksyrup]

I live in Florida. Frozen OJ doesn't go over too well here.

[WSUCougar]

Oh, Winthorp.

[rkmsuf]

That's Louie to you.

[Eaglesfan27]

I was considering maybe dipping my toe in the online stock waters but am a total newb when it comes to such things. My only stock involvement up to this point has been selling some shares my wife got through her job, observing my 401k and IRA funds, and winning the stock market game in 5th grade because I put all my money in IBM. :D

Anyway...anyone do this much? Any tips or other advice? If I do this, it won't involve much money for now.

Thanks in advance.
I'm looking for advice as well. I plan on doing this in the next year after we get our house.

[Cotton]

Filing your tax return will get about 300 times more complicated. Which always adds insult to injury after a bad year... like... um... six years ago... ;)

[BrianD]

Filing your tax return will get about 300 times more complicated. Which always adds insult to injury after a bad year... like... um... six years ago... ;)

The tax returns aren't all that complicated, you just have to keep track of stocks you hold for more than 1 year and stocks you hold for less than 1 year. They get reported differently.

You do have to pay capital gains tax for any money you make in the trading, but you also get to take income deductions if your capital gains are negative.

[WSUCougar]

but you also get to take income deductions if your capital gains are negative.
Mighty big of the IRS to allow that...

[BrianD]

Mighty big of the IRS to allow that...

Yes, I took advantage of that a few times in my trading days. The goverment always says that they want to inspire investing, and this seems to be a small step toward that idea.

[panerd]

Yeah it maybe adds an additional 2 minutes to your taxes. You just have to report money made from sales and dividends and the company you use will give you a tax form reporting the dividends.

As far as online trading goes. If you can figure out a text sim, online trading is about as simple as it can get. I kind of look at it like gambling with a little better chance. I bought some XM stock on Tuesday afternoon when the stock looked pretty low and now that Oprah is coming I have made about 10% in two days. Compare that with my college basketball bets this year and you would wonder why I bother with the sports.

[Ksyrup]

Yeah, I forgot about some 5 year old stock that I decided to dump at the beginning of 2005 when I did my taxes this year. So I already filed and got back $2600, then get the 1099-B and thought, "Shit, the IRS is going to think I'm trying to dodge paying more taxes on the stocks I sold." Then I started to complete the Form 1040X for amending my return, and it dawned on me that I don't owe them shit - I lost money on that stock, so they owe me an additional $760. Sweet!

[astrosfan64]

This is very similiar to what I do. Day Trading is just another form of gambling.

[moriarty]

Yeah it maybe adds an additional 2 minutes to your taxes. You just have to report money made from sales and dividends and the company you use will give you a tax form reporting the dividends.


2 minutes! I'm assuming you weren't day trading.

If you're planning on making lots of trades, just be sure you have good record keeping.

[AgustusM]

If you are interested in online investing and are a rookie - you should really try this first. lets you get your feet wet, learn a little bit and there is absolutley zero risk. Sure if you hit it big you won't be seeing any cash - but it is far more likely you will make mistakes first and lose money, so why not let it be virtual money as opposed to real money.

http://simulator.investopedia.com/

[st.cronin]

The best advice I can give to anybody thinking about doing this is DON'T SELL UNLESS YOU HAVE TO. Run it as though it's an IRA - take a certain amount of money out of each paycheck, or out of your savings every month or so, and buy whatever company you want to own.

Trading stocks is a sucker's game, unless you have inside information, which is normally illegal. I haven't sold a stock since before 9/11 and I've beat the market every year.

[moriarty]

The best advice I can give to anybody thinking about doing this is DON'T SELL UNLESS YOU HAVE TO. Run it as though it's an IRA - take a certain amount of money out of each paycheck, or out of your savings every month or so, and buy whatever company you want to own.

Trading stocks is a sucker's game, unless you have inside information, which is normally illegal. I haven't sold a stock since before 9/11 and I've beat the market every year.

I don't necessarily agree with that. You should look at selling some of your Dog stocks IMO every December to take advantage of the tax break and offset taxes against any income you might have earned from profits on selling your good stocks.

[Cotton]

2 minutes! I'm assuming you weren't day trading.

If you're planning on making lots of trades, just be sure you have good record keeping.

Bingo. Even my tax guy rolled his eyes when he saw my spread sheet.

[st.cronin]

I don't necessarily agree with that. You should look at selling some of your Dog stocks IMO every December to take advantage of the tax break and offset taxes against any income you might have earned from profits on selling your good stocks.

I don't say there's never a reason to sell - but if you thought it was a good product when you first invested, and you still think it's a good product, you should hold the stock. A good product nearly always makes money in the long run.

[st.cronin]

dola

I have known quite a few people who got MURDERED trying to trade stocks. Unless you've got a bankroll of at least 6 figures, you're better off with a careful buy and hold approach. Carefully pick what product you want to invest in, and hold it until you absolutely have to sell it.

I worked on wall street for several years, even managing a hedge fund for a while, so I think I know what I'm talking about.

[BrianD]

If you aren't planning on buying and selling regularly, why would you do the trading yourself? If this is a long-term investment plan, you might as well roll this in with your retirement and other savings plans with your financial planner. Then you can at least get some additional professional advice. The only reason I see to try to trade yourself is if you want to try your hand at beating the market.

[st.cronin]

If you aren't planning on buying and selling regularly, why would you do the trading yourself? If this is a long-term investment plan, you might as well roll this in with your retirement and other savings plans with your financial planner. Then you can at least get some additional professional advice. The only reason I see to try to trade yourself is if you want to try your hand at beating the market.

Most people can do as good a job as a financial planner for much less of a price. Picking stocks takes a little bit of work, but it's not at all difficult.

[BrianD]

Most people can do as good a job as a financial planner for much less of a price. Picking stocks takes a little bit of work, but it's not at all difficult.

I agree that it isn't terribly difficult, but if the purpose of the trading is a long-term investment vehicle, it would seem wise to wrap it up with all of the other investment vehicles in a coherent plan. If stock purchases are going to be jumping from company to company, then it seems smarter to do the trading yourself...assuming you can find a place with low commissions.

[rkmsuf]

I dare someone to create the

"Anyone dabble with online flesh trading"

thread.

[Godzilla Blitz]

A couple of thoughts...

If your goal is to invest money and build retirement wealth using money you can't afford to lose, then I would steer you away from individual stock trading unless you have lots of time to do it right. Better to go the fund route, where you can get decent/good results on your own with -much- less of a time investment.

If your goal is more game-like and if you're playing with money you can afford to lose, then I'd say go for it. However, I think it takes considerable time to do it well: lots of reading, research, and consistent effort. The two non-professional people that I know that are extremely and consistently successful at individual stock trading have spent a good 5-10 hours/week for the past ten years working at it.

[BishopMVP]

I did an internship at a Raymond James branch, so while I'm no expert, I think I learned a few useful things. Unless you are going to quit you job, you should be buying stocks that you think will do well long term (no day-trading), but buying and holding can be a suckers game. Take a look at Apple and Google, 2 great companies that have shot up the past couple years. If you held for the last month, you would have lost 25% of your investments. Contrary to what some people say, that is your money even when unrealized. (If you play poker at a casino, walk in with $1,000, do real well and get up to $10,000 before falling to $2,000 and leaving, it's a lot easier to sleep saying you won $1,000, but the fact is that $8,000 was yours.) With a little bit of research you can pick good stocks, but what will seperate you from doing alright to doing amazing is learning timing. Finally, as someone who is good with text-sims, I suggest trying a program called VectorVest. You can get a 5-week trial for $10, and it will do most of the research for you and consolidate it into a fairly easy to read format. There is a simulator that goes along with it I was running down at Raymond James (it costs $2000-3000), and I was getting compound rates of return between 120%-185% with some formulas from mid-1995 - Jan 2006. Even assuming this to be wildly overoptimistic, a 30% RoR will double your money every 3 years.

http://www.marketocracy.com (http://www.marketocracy.com/) is another site for "fantasy" trading - probably best to do something like that for a little first if you are unsure of things. Especially because it looks like the market is about to turn over, and unless you want to start by shorting stocks, now isn't the best time to enter it.

[BuffaloHuskey]

I often follow the "what do I like/do" method when investing in stocks. For example, I invested in Chipotle shortly after the initial IPO because I am obsessed with the food (and many of my friends are as well). I invested in Apple shortly after I purchased my IPOD because I considered my IPOD the greatest purchase <$500 I have ever made. Also, whenever there is a company out there whose product name is synonymous with the product regardless of the brand (i.e. Jello, Kleenex) I like to take a look at that stock as well. Obviously, this strategy is not fool proof, but it gives me a starting point. I examine financial statements all day long for my day job, so I make sure to analyze historical financials and stock valuation models before I invest, but I am more likely to take chances with a stock if I have a postive feeling about the product.