Online trading

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773 doc

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Who do you use and who do you recommend?

I got a recommendation for Scottrade at $7 transactions.

Beyond the comission fees, does it matter much?

I'm new to online trading (previously all mutual funds), read morningstar courses (I highly recommend for other newbies) among other resources. Not that I plan too, but I'm ready to lose some money in learning. I may wait until the current volatility slows and just follow stocks or try to simulate trades.

Thanks
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773 doc said:
Who do you use and who do you recommend?

I got a recommendation for Scottrade at $7 transactions.

Beyond the comission fees, does it matter much?

I'm new to online trading (previously all mutual funds), read morningstar courses (I highly recommend for other newbies) among other resources. Not that I plan too, but I'm ready to lose some money in learning. I may wait until the current volatility slows and just follow stocks or try to simulate trades.

Thanks
Click to expand...

If what you mean by online trading is buying and selling individual securities in an attempt to outsmart the market I think you're making a mistake. What makes you think you're better at this than those who do it for a living (and still can't do it successfully?) Do yourself a favor and read one good investing book such as one of the following:

The CoffeeHouse Investor
The Boglehead's Guide to Investing
The Dummies Guide to Investing
 
depends on how much money you're "investing". for what it's worth, fidelity has the best trading platform i've used, but then again, i'm partial since i think they are the best at everything. but activeduty is right - you probably should stick with mutual funds (low cost, index funds)...if you want to experience the thrills of trading, just do a fantasy stock account.
 
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ActiveDutyMD said:
If what you mean by online trading is buying and selling individual securities in an attempt to outsmart the market I think you're making a mistake. What makes you think you're better at this than those who do it for a living (and still can't do it successfully?) Do yourself a favor and read one good investing book such as one of the following:

The CoffeeHouse Investor
The Boglehead's Guide to Investing
The Dummies Guide to Investing
Click to expand...

I believe that no one has the answers. I do not believe one can legally "outsmart" the market. I understand that I will (nearly) invariably lose money. I am in a position where I can afford this gamble. I plan to start slow.

I already have (virtually) a year's salary worth in mutual funds. I have my 4-5% savings account and I plan to gamble with some of that money, to have fun and to learn.

If I see it's not working I'll stick to the mutual funds.

I need to figure out what is the best book to read. I've already read and am familiar with quite a bit. I'm long on reading and short on experience.
 
etf said:
depends on how much money you're "investing". for what it's worth, fidelity has the best trading platform i've used, but then again, i'm partial since i think they are the best at everything. but activeduty is right - you probably should stick with mutual funds (low cost, index funds)...if you want to experience the thrills of trading, just do a fantasy stock account.
Click to expand...

I've had funds with vangaurd, trowe, and american funds (started with american funds, didn't know any better at the time). Now all of my funds are with Fidelity, I love their setup too... and of course they have a number of solid funds. I have a ****load of funds too, and they have done very well for me where I am able to tolerate the current state of the market.

Going to step into individual stocks. I haven't traded virtual stocks, but I have been following individual stocks for some time now. Play money is no fun for me and I've saved enough where I can afford to gamble a little bit.

I'm sure to step in as I've done a lot of reading, research, etc. Now I need experience and I expect to lose money. We'll see in x amount of quarters what I have to say...
 
Sol Rosenberg said:
Scottrade is great. I have used them for the past 7 years with no problems.
Click to expand...

I plan to start slow of course. Scottrade was recommended because of the price as I likely won't be trading enough to get lower prices elsewhere.

Thanks
 
I'm probably one of the few actual traders on here. I rarely hold anything longer than a few weeks and I trade almost purely on technicals.

I've been following the markets for over 10 years now and absolutely love how unpredictable they are.

Before you actually start trading, I would take the time to read, paper trade, and define your rules. You need to figure out what type of trader you are, if that's even for you. If not that's perfectly ok too.

The reason I say that is because each broker has a different personality as well. I would be extremely cautious trying but the top few brokers if you actually do intend to trade.

There are plenty of main stream brokers for investors: TD Ameritrade, Charles Schwab, Scottrade, Fidelity, etc etc. Those are all great brokers for investors. Their focus is on research reports and holding stocks for a longer period of time. One of the reasons traders shy away from these brokers is because they don't exactly provide you with the best execution price, or the best fees.

Luckily, there are also a handful of good trading brokers. Some of the top rated ones are: Tradestation, Thinkorswim, and Interactive Brokers. I'm personally with ThinkOrSwim. I don't think they provide any research reports or anything like that... but nor do I ever care to look at one. The common themes between these brokers is that they all have their own independent platforms (ie not web based). They also generally have cheaper trades and better execution prices.

I do recommend reading and learning as much as you can before diving into the markets. The most important thing to understand as a trader is risk management. Trading is very different from investing, in that you don't just buy something and check the stock price 5 years later.

I whole heartedly recommend reading books #1-11. They are essential to every trader (I couldn't have come up with a better list myself).

http://blog.stocktickr.com/2007/07/09/what-books-do-successful-traders-recommend/

You can feel free to PM me if you have any more questions, or post here.
 
mgdsh said:
Before you actually start trading, I would take the time to read, paper trade, and define your rules. You need to figure out what type of trader you are, if that's even for you. If not that's perfectly ok too.
Click to expand...

Also, before you start trading, learn how to accurately calculate your overall return using Excel's XIRR function. After a few years you may decide it isn't fun enough to justify the underperformance (or you may realize you're the next Warren Buffett.)
 
mgdsh said:
I'm probably one of the few actual traders on here. I rarely hold anything longer than a few weeks and I trade almost purely on technicals.

I've been following the markets for over 10 years now and absolutely love how unpredictable they are.

Before you actually start trading, I would take the time to read, paper trade, and define your rules. You need to figure out what type of trader you are, if that's even for you. If not that's perfectly ok too.

The reason I say that is because each broker has a different personality as well. I would be extremely cautious trying but the top few brokers if you actually do intend to trade.

There are plenty of main stream brokers for investors: TD Ameritrade, Charles Schwab, Scottrade, Fidelity, etc etc. Those are all great brokers for investors. Their focus is on research reports and holding stocks for a longer period of time. One of the reasons traders shy away from these brokers is because they don't exactly provide you with the best execution price, or the best fees.

Luckily, there are also a handful of good trading brokers. Some of the top rated ones are: Tradestation, Thinkorswim, and Interactive Brokers. I'm personally with ThinkOrSwim. I don't think they provide any research reports or anything like that... but nor do I ever care to look at one. The common themes between these brokers is that they all have their own independent platforms (ie not web based). They also generally have cheaper trades and better execution prices.

I do recommend reading and learning as much as you can before diving into the markets. The most important thing to understand as a trader is risk management. Trading is very different from investing, in that you don't just buy something and check the stock price 5 years later.

I whole heartedly recommend reading books #1-11. They are essential to every trader (I couldn't have come up with a better list myself).

http://blog.stocktickr.com/2007/07/09/what-books-do-successful-traders-recommend/

You can feel free to PM me if you have any more questions, or post here.
Click to expand...

i used to have an account at interactive brokers, but was getting better execution at fidelity; specifically since you can route your orders to ibkr as the market maker using fidelity.
 
UPDATE on how I've been doing... not at all on the sidelines


I've been !!A LOT!! more active than I thought I would have been with trading! I've had money in mutual funds for a few years. I recently started trading stocks and to date regarding my stock buys/sells I'm up, in the black.

I basically buy dips and sell rips on companies I like. Actually I didn't start out like this so I initially was in the red and ready to give up on stocks altogether, but since I started buying dips and selling rips I've gotten a "refund" on all the money I lost and am now in the black.

Aside from the reality of it (people losing jobs, TERRIBLE), from a trading standpoint I like the current market...

I've never experience trading/investing in stocks in a bull market, I wonder would I do even better in that environment... I'm guessing I'd be doing more investing as opposed to trading.

I'm paying very little in comission (10 free trades a month)...

We'll see where I'm at in a few months
 
I look into Excel's XIRR function, seems maybe a little complicated for me or perhaps I'm being lazy.

I feel like I make too many trades to use excel, unless excel somehow can upload my stocks' performance on a daily basis. Right now I use fidelity's watch list to follow my performance and when I sell I enter it (type it out) into a microsoft document.

Is there a website where you can track your stocks and when when u sell shares, it is still reflected?
 
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773 doc said:
I look into Excel's XIRR function, seems maybe a little complicated for me or perhaps I'm being lazy.

I feel like I make too many trades to use excel, unless excel somehow can upload my stocks' performance on a daily basis. Right now I use fidelity's watch list to follow my performance and when I sell I enter it (type it out) into a microsoft document.

Is there a website where you can track your stocks and when when u sell shares, it is still reflected?
Click to expand...

have you tried using the portfolios at finance.yahoo.com?

you can enter your buys and sells and it will keep an active tab of your current value of your portfolio - you dont even need to refresh the screen

who do you use for 10 free trades per month? does that require a minimum balance?
 
xanthomondo said:
have you tried using the portfolios at finance.yahoo.com?

you can enter your buys and sells and it will keep an active tab of your current value of your portfolio - you dont even need to refresh the screen

who do you use for 10 free trades per month? does that require a minimum balance?
Click to expand...

I have used Zogo Trade, and they are pretty bare bones. But I think its as cheap as it gets. I like them. Does anyone on here day trade?
 
773 doc said:
UPDATE on how I've been doing... not at all on the sidelines


I've been !!A LOT!! more active than I thought I would have been with trading! I've had money in mutual funds for a few years. I recently started trading stocks and to date regarding my stock buys/sells I'm up, in the black.

I basically buy dips and sell rips on companies I like. Actually I didn't start out like this so I initially was in the red and ready to give up on stocks altogether, but since I started buying dips and selling rips I've gotten a "refund" on all the money I lost and am now in the black.

Aside from the reality of it (people losing jobs, TERRIBLE), from a trading standpoint I like the current market...

I've never experience trading/investing in stocks in a bull market, I wonder would I do even better in that environment... I'm guessing I'd be doing more investing as opposed to trading.

I'm paying very little in comission (10 free trades a month)...

We'll see where I'm at in a few months
Click to expand...

Sounds like you've caught the thrill of the trade, if by "active" you mean day-trading. You get great highs, and unfortunately very low lows.

If you are ready to move on from marijuana to crack, try options!
 
Your chances of beating the market in active trading are pretty low. I'm referring to trying to time the market. When you factor in commisions and short-term capital gains taxes you have a TINY chance of coming out ahead if you keep on doing it. Now, buying individual stocks and holding for 10+ years is something else. I was reading Million Dollar Portfolio by the Motley Fool and they were highlighting the fact that if you traded your shares twice a year, incurring the aforementioned fees, you would need a return of like 25% to beat the 10% of the index fund. If you did that, you would be the greatest investor ever.

Warren Buffet is great, especially his quotes. (paraphrased here)

"I would be richer if I had never traded any of my stocks"
"For the vast majority of the populace, low-expense ratio index funds are the best option."


http://www.amazon.com/Motley-Fool-Million-Dollar-Portfolio/dp/006156754X

I don't have much money right now, but will start picking individual stocks after residency. Right now its just very low cost index funds plus a bit of bonds.

773 doc said:
Who do you use and who do you recommend?

I got a recommendation for Scottrade at $7 transactions.

Beyond the comission fees, does it matter much?

I'm new to online trading (previously all mutual funds), read morningstar courses (I highly recommend for other newbies) among other resources. Not that I plan too, but I'm ready to lose some money in learning. I may wait until the current volatility slows and just follow stocks or try to simulate trades.

Thanks
Click to expand...
 
odieoh said:
Sounds like you've caught the thrill of the trade, if by "active" you mean day-trading. You get great highs, and unfortunately very low lows.

If you are ready to move on from marijuana to crack, try options!
Click to expand...

lol, exactly. Options takes way too much time for me. Probably won't do it until later on in life. As of now, just options practice accounts. Too much time and TA involved.
 
chinocochino said:
Your chances of beating the market in active trading are pretty low. I'm referring to trying to time the market. When you factor in commisions and short-term capital gains taxes you have a TINY chance of coming out ahead if you keep on doing it. Now, buying individual stocks and holding for 10+ years is something else. I was reading Million Dollar Portfolio by the Motley Fool and they were highlighting the fact that if you traded your shares twice a year, incurring the aforementioned fees, you would need a return of like 25% to beat the 10% of the index fund. If you did that, you would be the greatest investor ever.

Warren Buffet is great, especially his quotes. (paraphrased here)

"I would be richer if I had never traded any of my stocks"
"For the vast majority of the populace, low-expense ratio index funds are the best option."


http://www.amazon.com/Motley-Fool-Million-Dollar-Portfolio/dp/006156754X

I don't have much money right now, but will start picking individual stocks after residency. Right now its just very low cost index funds plus a bit of bonds.
Click to expand...

This is highly variable. Mutual funds and/or ETFs still require research. Personally, I don't like mutual funds and don't like others managing my money. As for ETFs, this still requires a lot of research because the ETFs have to be good at following whatever indices/companies they have under their umbrella.

You can get great returns by flipping stocks here and there. It just depends on what type of person you are. If you're an adrenaline junkie, you might like the TA side of trading, or if you don't want to constantly have headaches, fundamentals and 'investing' might be the more appropriate route.
 
I was referring to index mutual funds; in this case the manager does not matter.

Its very difficult to reliably overcome the costs of capital gains and commissions. I remember reading in the Motley Fool that to beat an investor that has an index fund with only a 10% yield, the very aggressive investor that trades stocks twice a year with the concurrent capital gains taxes and commissions costs would have to yield 25% (I don't remember the exact number) or so to match the other person. If you did so, consistently, you would be the greatest investor in the history of the world. Are you saying that you are better than Buffet or Peter Lynch, etc?

I'm not saying that handpicking individual stocks and holding long-term is bad--its probably the absolute best way to make money in the market. However, lost cost index funds are great for the average investor with little time or expertise.

Heck, I should spend less time in these forums. Its not my money that I'm losing.

21CentSouldier said:
This is highly variable. Mutual funds and/or ETFs still require research. Personally, I don't like mutual funds and don't like others managing my money. As for ETFs, this still requires a lot of research because the ETFs have to be good at following whatever indices/companies they have under their umbrella.

You can get great returns by flipping stocks here and there. It just depends on what type of person you are. If you're an adrenaline junkie, you might like the TA side of trading, or if you don't want to constantly have headaches, fundamentals and 'investing' might be the more appropriate route.
Click to expand...
 
Scottrade is great. I have used them for the past 7 years with no problems.
Click to expand...

Agree. Some airlines have periodic miles rewards for new Scottrade membership :thumbup::thumbup:

odieoh said:
Sounds like you've caught the thrill of the trade, if by "active" you mean day-trading. You get great highs, and unfortunately very low lows.

If you are ready to move on from marijuana to crack, try options!
Click to expand...

:laugh: Love this quote. So true.
 
michaelrack said:
There are a wide variety of ways to use options; for me they are like benzo's. I used covered calls to hedge/smooth out the returns of my portfolio.
Click to expand...

Also very true, they can be used to minimize risk or create spreads. On the other hand writing naked calls or puts is a great way to maximize risk.
 
depends what "trading" you're doing. if you're just buying and selling once in a while (by that i mean no more than once or twice a week turnover) then yeah a scottrade type discount broker is ok.

its not like you need level2 nasdaq data or anything. if you outgrow scottrade try interactive brokers for a more professional broker.
 
Great chat here. Read Fooled by Randomness by Taleb. Don't trade money you can't afford to lose. Plan to spend a lot of time on it. Do what you love with your spare time, but its a hobby and the snakes are poisonous, so only offer up a toe or finger you won't need. Warren Buffet is a businessman; he buys entire businesses. They put him on the Board of Directors. You won't be there. You won't get tours of the plant or get to make major decisions about what goes on--slightly different approach. He is not an "investor." He is not a trader. Traders are a special breed, takes a special mind and discipline so suited to few, very few doctors. Pick the brain of Sleep Doctor, he will tell you the truth, but some will not admit losses here. Covered calls work well in up markets, buying down and taking losses in taxable accounts helps when things tumble Gains have to be net of fees and net of losses and net of taxes. There are other ways to win the investing game. Conservative for 90% of your portfolio, very very very safe, and I don't mean stocks and bonds ( Madoff, Enron, T-bills today!). Consider alternative investments ( equipment leasing funds, non-traded REITS, Clean Tech, and look at private equity as an asset class for some stunning returns. Again a very small amount of gambling money. Professional traders take call. Seriously. As in overnight currency call. Another alternative is managed futures if you don't want to be active alone, but want a lot of exposure to the trading of rice in China, sugar in Brazil, futures, metals, etc. All of them can do amazingly well, but not all at the same time. Some made returns in the 30% to 40% range when the market tanked. I recently asked a distinguished professor and former fed reserve member what was in his portfolio. He smiled and said "I diversify."
 
STAY AWAY from mutual funds because of the expense ratio fee, which is usually very high, it is their commission, usually 1% a year! Unless it is for a fixed income instrument.

Stocks : Pick high yielders that pay a dividend such as Altria Group (MO) with a 6.5% yield! STAY DIVERSIFIED!large cap -40-50% , small cap, 10-20% and intl 10-20% and fixed income 10%

don't hold more than 6 positions, you aren't a mutual fund....and NEVER....EVER NEVER...invest in anything that CANNOT be found w/ a ticker!

Don't buy all positions all at once, buy on down days, I only buy a 1/4 position at once. Reinvest those dividends and take the yield divide by 72 and that's how many yrs that will double!

HOT STOCK OF THE YR? ALL SCRIPTS...MDRX! No yield but is a healthcare EMR that beat this quarter's estimate/s and just got a new contract added
 
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I'm a trader and yes it is possible to outsmart the market, and it's not that hard. Who decided that the market was so smart anyways? Look at the internet bubble in the late 90s. These *****s had no idea what they were investing in. Simply put, the market is more emotional than your girlfriend during her time of the month.

I started about 6 months ago, and am now up 100-110%. I got my brother in law into it and with my methods he's up about 70% in about 4 months.

I invest purely in small cap pharmaceuticals. These are risky plays, but if you take some time and learn how it works it's not too hard. And when you're right with these stocks, you're up big. Really big. Last winner I had was last week with AMRN. Held it for a grand total of 2 weeks. Bought some stock at $8.50 and a few options. Sold the stock at $17. Options were up 300%.

Bottom line: if you're going to get into stocks and want to make money, you have to get serious. Read books, learn technical analysis, pick a sector you're comfortable with(biotech is actually pretty fun and you learn a little bit about new drugs on the side), find websites specific to that sector and stick with it.

PM me if you have any questions.
 
touchadream said:
Warren Buffet is a businessman; he buys entire businesses. They put him on the Board of Directors. You won't be there. You won't get tours of the plant or get to make major decisions about what goes on--slightly different approach. He is not an "investor."
Click to expand...

I agree with your post that no one should trade if they can not afford to loose it. I feel investment is totally different than trading.

I quoted the lines which I do not agree at all. What you wrote is true to some extent but he does buys businesses from open market by analyzing the information available to public.

Buffet started buying whole business more and more as his capital grew but majority of his initial out-performance came from buying securities from open market and at that time he did not have any extra information as compared to you and me. If you read the Essays by Warren Buffet , he has clearly taken majority of decision to buy publicly listed companies without visiting their factories.

I have seen many people using this statement without realizing that bulk of his initial out performance came from buying without having any additional non-public information. You can read his letter to partnership before Berkshire Hathway come into existence as his investment vehicle to gain further insight.

Do not take it personally but we are Buffet fanatic and could not resist posting a reply to correct the mis-information.
 
baj6974 said:
STAY AWAY from mutual funds because of the expense ratio fee, which is usually very high, it is their commission, usually 1% a year! Unless it is for a fixed income instrument.
Click to expand...

Not only expense ratio but sometime they have front end and back end load as well. I find it even more funny that some the mutual funds may charge you “12b-1 fee”, which represents expenses used for advertising and promotion of the fund. Yes you may be paying for that.

Another problem with mutual funds is -- they have very rigid investment structure where they invest in only in large cap or only small cap .

How would you feel paying 2 million dollars for a one bedroom condo, if two bedroom condos in same complex, having double the square footage, and with similar features, are available at 1 million dollars? Is it good idea to established a company with a restricted charter to invest only in one bedroom condos?

I feel that you should buy something if it is less than it's true value no matter where you find them. Having a rigid structure forces you to buy something even if it might be costly just because you made rule to buy them no matter what.

Then not to mention , other investors hurting your returns and sometime paying taxes even if you lose money, huh... sounds stupid but its structure.

Since structure has problem most of mutual fund manager do not invest their own money in the fund they manage. So it is good for you but not good for them :)
 
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