How Can I Buy Stocks And Trade Online?
I just finished watching Oprah and they were discussing stocks. I’m absolutely fascinated with learning how to profit from the stock market. However, I really have no clue what to do or where to start.
Can alot of money be made within a day or so or does it take months to make a profit? Say a stock rises $20 in one day and I have 20 shares. After seeing that could I just sell my stock? Who do I sell to?
I’d like to do this online and I have watched that money show with that crazy guy screaming and he gave the name of 4 stocks that are a good idea to invest in. I’d like to start with a safe company and then see how I do.
I know there’s a million questions and sites about this out there but I was hoping to get an answer from someone who actually trades stocks online.
Important: ONLY answer this question if you trade stocks online. Other answers will just be given thumbs down or reported for spamming.
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To answer your questions:
1) You can make a lot of money on the stock market–the Dow Jones Industrial Average, the most commonly used listing of stocks, went from 66 in 1900 to 13,207 as of today’s close–but don’t expect to make a huge fortune overnight. Stocks are volatile–you may see a stock you buy double in a few weeks, (though this is pretty rare) lose half its value in the same period of time, (also, fortunately, rare) or go nowhere for months or even years. Over the long term though you can make a huge amount of money if you play your cards right.
2) If you purchase stock then that stock is your property and you can buy it or sell it whenever you please. Note however that most brokers will charge you a fee for doing it, and you also have to pay taxes on profits made in the stock market (unless you trade in a tax sheltered retirement account) so its a good idea to make an investment and stick with it.
3) You’re probably thinking of Jim Cramer. Cramer’s a smart guy, but don’t ever just run out and buy a stock because someone on TV recommended it.
4) To get started you’ll want to open an account with a low cost brokerage (a middleman who buys and sells stock for you). Try http://www.tradeking.com or http://www.zecco.com. I have an account with Tradeking I use for options and generally like them, as they have low commissions and don’t require a minimum initial investment which is good if you want to stick in a few hundred dollars to get your feet wet. IMPORTANT if you use a different broker make sure they don’t charge you an account maintenance fee or another fee for simply having an account open.
If you want to be conservative you can buy SPY or IVV–these are two mutual funds that trade on the stock market like stocks, and each holds stock in the 500 biggest companies in the US. If you buy either one you’ll effectively own 500 companies, which is an extremely safe long term investment. If you want to own individual companies I recommend you go with well known companies that have strong brands: for example I doubt that Harley Davidson (HOG) or Apple Computer (AAPL) are likely to go out of business anytime soon.
Two other things: decide how much money you want to invest in a company (say $300) and then buy that much stock. Don’t worry about how many shares you can buy– a thousand dollar investment is a thousand dollar investment regardless of wether you’re buying two shares of a five hundred dollar stock, or a thousand shares of a dollar stock.
And finally if you should lose a bit of money when you get started don’t worry about it too much. Everyone loses money occasionally.
Good luck!
My first thought is that you’re still caught up in the hoopla of the show. Don’t jump into the market right away. Educate yourself about the market. I’d strongly suggest reading the intelligent investor by Ben Graham.
You’re gambling with your money, so invest with your head, not your heart.
finally for $700 you might be better off investing in a index mutual fund. They have lower management ratios, and you participate in the performance of the market. Its a good startign point while you learn more about investing.
Determine your investment goals, and how
You can make a lot of money in 1 day. That’s just luck buying hours before another company announces a takeover and so on. However its more likely to make the money over an amount of time, hence a lot of people say “stay invested”
If you have $700 to invest in the stock market you can expect to make approximately $150 in one year. As stocks go up and down it’s only the cumulative growth that makes any difference. Therefore, you should be able to get 10-20% growth if you pick the right stock or stocks. Basically, $700 is hardly worth it. You’d be better off buying the latest iPod and just enjoying it. If you really want to make some money, put your whole $7000 in. That way, maybe you could squeeze $100/month out of it. Now, if you really want to make that kind of return, read Jim Cramer’s book (the crazy guy on TV). This is where I got started, and it’s an entertaining, straightforward beginners approach to getting started in stocks. Without knowing what’s in the book, you will really get nowhere. The book is called Real Money: Sane Investing in an Insane World. It covers what to look for in a stock and how to tell if it is overpriced, if it is growing, and if it has good potential. Say you bought Google. It very well may be nearing its peak, or even Apple. Microsoft is referred to as Microsoftie because it hardly moves at all.
Best of luck! Remember that stocks have outperformed all other asset classes over time — including real estate.
Your first step is to open an account at an online broker.
1. Review the online brokerages – ScottTrade, TDAmeritrade, etc. Then, go to a local office and visit a couple of “brokers” – one will be assigned to you when you walk in the door. Tell them “the money is not here yet” – otherwise they will pressure you to open the account now. The objective is to find a broker you are comfortable with.
2. Give the selected broker a check to open the account. It should be active as soon as the check clears.
3. Then, go online and start learning … try http://www.betterinvesting.org, Yahoo Finance, http://www.stockcentral.com, http://www.manifestinvesting.com … they all have educational material and tools to enable you to find the stocks to invest into.
4. “Spread it around” – don’t invest your entire nest egg into one stock … find 3-5 … maybe even 7 … different industries, different profiles, etc. You don’t want to be “wiped out” if your one selection becomes another Enron next week.
5. Keep reading & learning. If there is an AAII chapter or a BetterInvesting chapter close – JOIN! Learn about how to pick good stocks, when to sell, etc.
GOOD LUCK!
Let me try to answer your original question..
In order to trade stocks online you need to open an account with an online broker ie, schwab, etrade, ameritrade, scottrade. You will need an initial investment of $1000, so you wont be able to do much with $700.
You CANNOT make a lot of money in one day, unless you have literally HUNDREDS of thousands of dollars in the account, or you are very very very lucky.
You can only buy with cash or on margin (very risky). If you buy on margin, you are borrowing from the broker BETTING on the stocks rising faster than the costs of borrowing. If your stocks go down, you will get a margin call, and they can,depending on how much debt you have, take EVERYTHING you own, not just the stocks. People have lost cars, homes, and entire life’s fortunes.
You need education FIRST! Even Jim Cramer (the guy yelling on CNBC) advises to do one our of homework per week per company you own shares in (or mutual funds).
So play it safe.. Spend a few Saturdays in the library reading Barrons, The Wall St Journal, Financial Times, Business Week, etc. Read books on this subject, BEFORE you invest $1.
Otherwise, you’re better off buying lottery tickets!
Good Luck
ED