Starting stocks/trading tips

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Harry Wellins
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Hi, I would like to start trading/buying stocks and investing and learning about this all, so can you guys give me tips on where to start, like any books or websites or videos which are good for learning for beginners to this topic.
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ReadingMum
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Start with a virtual portfolio not real money. There are lots of ways to do this - morning star, trustnet, etc.
There are plenty of online resources to do some reading. Trying to pick a winner with individual stock selections is a good way to lose money but the safer ways of investing- diversified multi asset funds and the like - are not that fun as you don't need to do anything once you have bought in.
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ch0c0h01ic
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(Original post by Harry Wellins)
Hi, I would like to start trading/buying stocks and investing and learning about this all, so can you guys give me tips on where to start, like any books or websites or videos which are good for learning for beginners to this topic.
Why? What is your motivation?

If it's about making money or generating an income then you're going to be sorely disappointed. Over 98% of "traders" lose money, anybody who says otherwise is either dishonest (ie; "instatraders") or deluded (ie; generated a short term profit purely by chance).

Investing in equities is more about long term (ie: 10+ year timescale) wealth preservation/generation.

---

Monevator Blog (free impartial advice) - https://monevator.com/category/investing/

Reddit UK Personal Finance (more free, impartial advice) - https://www.reddit.com/r/UKPersonalFinance/

Investing Demystified by Lars Kroijer (good, down to earth investment book) - https://www.amazon.co.uk/Investing-D...dp_ob_title_bk

Smarter Investing by Tim Hale - https://www.amazon.co.uk/Smarter-Inv...s%2C376&sr=1-1

That's pretty much all you need.

(Original post by ReadingMum)
Start with a virtual portfolio not real money. There are lots of ways to do this - morning star, trustnet, etc.
There are plenty of online resources to do some reading. Trying to pick a winner with individual stock selections is a good way to lose money but the safer ways of investing- diversified multi asset funds and the like - are not that fun as you don't need to do anything once you have bought in.
I would never recommend virtual portfolios and simulators as a means of learning how to invest.

There's no risk or accountability to your actions which fuels risky / dangerous investment strategies and gives investors a false sense of confidence.

For example, using a simulator you could easily dismiss investing in Vanguard's FTSE Global All Cap for the next 20 years for an average annual return of 5-10% in favour of shorting 'x' with 'y' amount of leverage on 'z' date to make a substantially greater return. However it completely glosses over the fact that the latter strategy could just as easily go against you leaving you in £10,000s if not £100,000s of debt.

It's no coincidence that virtual portfolios and simulators are utilised by scam artists to convert and exploit investing muggles
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alex282
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Short-term/day trading to make money:
You don't have a chance and will lose thousands. This is a highly specialised skill which takes thousands of hours to master and even then you are up against maths and programming geniuses, people with faster information than you, manipulation and instituitions which have been doing this for decades. Don't fall for the fake Instagram traders that make money from your referral commission or selling you a trading course.

Investing in the long term:
Do you have a lot of spare money that couldn't otherwise be used as turnover in any sort of business?
Will you need the money in the near future or can you live without it for years?
Only risk what you can afford to lose, for most people this may only be 1-2% of their total equity/net worth.e.g. if you have accumulated £45k mortgage equity and £5k in savings you probably don't want to risk more than £500-1000 on the stock market. if you only have £1000 then just forget it altogether.
Many companies just go sideways or even lose money, so it is never guaranteed that you will make a profit.
If you are going to do it then it would be worth learning some basic technical analysis to get a favourable entry position from the charts e.g. buying at a long-term low, not at the top of a bubble like bitcoin before it crashed the first time.
You should also have a good reason to invest in a company e.g. I will invest in Shell because they are going to make the world green or I am going to invest in Tesla because I predict all the car companies will go to them for batteries in the future.
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ch0c0h01ic
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(Original post by alex282)
Only risk what you can afford to lose, for most people this may only be 1-2% of their total equity/net worth.e.g. if you have accumulated £45k mortgage equity and £5k in savings you probably don't want to risk more than £500-1000 on the stock market. if you only have £1000 then just forget it altogether.
Yes and no.

Where does this 1-2% of total net worth come from? Why not 5%, 10%, 30%...?

Investing in a broadly diversified, low cost, tax efficient manner can make a massive difference to net worth and retirement income, more so than home ownership. So why limit that to such a paltry amount if you can afford more?

If you have good job security and already have 3-6 months of emergency savings you can probably afford to invest more than 1-2%

Also it depends on your concept of risk. Investing in individual stocks, commodities or currencies, is far higher risk that investing in a broadly diversified, low cost, index tracker. Hence you could probably afford to "risk" more in a low cost global equity trackers, than in individual stocks.

If you are going to do it then it would be worth learning some basic technical analysis to get a favourable entry position from the charts e.g. buying at a long-term low, not at the top of a bubble like bitcoin before it crashed the first time.
Basic technical analysis will give you little or no advantage, said information is freely available and 99.99% of the time will be already reflected in the price of said stock.


Without the type/level of information available to institutional/"professional" investors (or inside information) you have little or no edge, and you would be better off (on average) investing in a low cost index tracker.

You should also have a good reason to invest in a company e.g. I will invest in Shell because they are going to make the world green or I am going to invest in Tesla because I predict all the car companies will go to them for batteries in the future.
Why? Is making money not a good enough reason?
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alex282
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(Original post by ch0c0h01ic)
Yes and no.

Where does this 1-2% of total net worth come from? Why not 5%, 10%, 30%...?

Investing in a broadly diversified, low cost, tax efficient manner can make a massive difference to net worth and retirement income, more so than home ownership. So why limit that to such a paltry amount if you can afford more?

If you have good job security and already have 3-6 months of emergency savings you can probably afford to invest more than 1-2%

Also it depends on your concept of risk. Investing in individual stocks, commodities or currencies, is far higher risk that investing in a broadly diversified, low cost, index tracker. Hence you could probably afford to "risk" more in a low cost global equity trackers, than in individual stocks.



Basic technical analysis will give you little or no advantage, said information is freely available and 99.99% of the time will be already reflected in the price of said stock.


Without the type/level of information available to institutional/"professional" investors (or inside information) you have little or no edge, and you would be better off (on average) investing in a low cost index tracker.



Why? Is making money not a good enough reason?
So you are advising a total newbie to go and risk 30% of his equity on stocks? Great idea!

Technical analysis is irrelevant? So you are advising that he goes and buys Tesla after the top of the massive spike? Great idea you should have applied it to Bitcoin before it came crashing down!

"Making money is a good reason to buy a stock", wow so just buy any old stock like one that's going bust
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ch0c0h01ic
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(Original post by alex282)
So you are advising a total newbie to go and risk 30% of his equity on stocks? Great idea!
It could be depending on your timescale, type of investments, level of emergency savings, job security, etc.

Sure investing irresponsibly can destroy wealth, but done responsibly it can be a massive builder of wealth, more so than home ownership. Investing has had a far greater impact on my net worth than building home equity over the last several years. If I had stuck to 1-2% I would be worth a lot less than I am now.

You haven't given a cogent argument as to why someone should limit their investments to 1-2% of their net worth, but then again you have advocated far riskier investment ideas (eg; active investing, individual stock picking) so maybe therein lies the answer.

We are adults, I'm sure we can have a rational argument. Please go into a bit more detail, maybe you or I, or someone else will learn something.

Technical analysis is irrelevant? So you are advising that he goes and buys Tesla after the top of the massive spike? Great idea you should have applied it to Bitcoin before it came crashing down!
That's a strawman. I would never advocate investing in individual stocks or cryptocurrencies.

As I said earlier, the vast majority of retail investors lack the information to be able to undertake any real quantitative analysis so as to have an "edge" over random stock picking or pure speculation. Many convince themselves that they do, and because of that they underperform the average market return instead of investing passively.

To play devil's advocate, if Tesla is trading at a high P/E ratio how is someone like yourself able to tell with any sort of certainty whether Tesla stock is overpriced and due a correction with such basic information? .... You can't, the inverse could be just as likely, or it could be weeks/months/years down the line (in which case there could still be an opportunity to make money).

"Making money is a good reason to buy a stock", wow so just buy any old stock like one that's going bust
Another strawman.

Like I said earlier, you don't have to have a strong ideological reason for investing in a certain stock or sector. Simply wanting to diversify or make a decent return is a good enough reason. For example, I may not agree with everything that goes on with the US and dominant US equities, but I have made a lot of money from doing so. There's nothing wrong with that per se.

Most people's "good reason to invest" as you put it, are based on little more than ill informed speculation (eg; "I think that x might one day perform better in the future so I'm going to do invest in that").
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candydiva
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I disagree with all this orthodoxy about market complexity, difficulty to make profits for the average Jane/Joe investor etc. It's reasonable and possible to invest in individual companies and make money. Learn your sectors and know your companies and understand their specific value and strengths and weaknesses as well as the technicals. For me it's not about "competing" with professional traders or challenging arbitrage algorithms but in identifying a good value proposition with temporary weakness, buying, and holding it to maturity whether that's a year or five years.

I was lucky enough to be provided with a small sum to invest and choose my investments before I went to college. Dad ran through some basics and then left it to me. I made some investments two years ago. The pandemic damaged some of the values but not all of them. My energy sector investment is lower than when I bought but not by that much, about 20 percent.

FR is the best investment in the travel industry with low CASM strong RASM and a superefficient operation. The company maintains strong liquidity reserves with low overheads, and therefore possesses an unrivalled ability to weather a cashflow storm like now, then bounce back when travel resumes. Short haul EU destinations perfect for the city breaks everyone will be able to take... you're all going to using more FR whether you prefer it or not and that means I make money too

Yes yes I know... lol! I've used their product myself and Mr. King Leprechaun doesn't believe in luxury or customer service he tells it like it is. But since FR is Europe's largest airline measured by enplanements he's prob right.

They're worth 20 percent more than when I bought in, pandemic included... when travel takes off again, other airlines with higher overhead and worse RASMCASM differential will bk, retrench and be placed in administration or cease operations entirely.

Then there's BABA. A 50 percent gain in five months. I've done well from this stock but I'm not selling now and taking profit coz that one's headed very far up... look at AMZN and you'll see the comparator. If I can hang on for another couple years I'll be doing well.

Alcoholic beverage and brewing stocks likewise. I invest in what I drink.. SAM...look at that. Yes there's decent beer in America and that's one of the biggest brewers of good stuff.

I agree with one point from posts above... never gamble with money you can't afford to lose. Lesson #1... set those stop orders as soon as there's appreciable gain lol!

So instead of them, listen to me, a young woman who makes her own decisions and puts her money where her mouth is....and not the stuffed suits who take commission for playing the casino with your chips, betting on companies whose products they don't use, care about or understand and deflect your loss with meaningless mumbojumbo that they don't believe themselves......
Last edited by candydiva; 5 days ago
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