Your Questions About Paper Trading Stocks

James asks…

How can I buy stock certificates with discount online brokers?

I want to buy stock in several companies and sit on them for awhile. I never bought stock before, so I welcome all suggestions.
David: Thanks, for all the info. Unfortunately, it is has been a daunting task to learn how to invest. I am overwhelmed, yet I don’t want to pay a stockbroker to explain it to me.

John answers:

Start here:
Investopedia and Wikipedia are the best places to begin searching for basic definitions.

Http://www.investopedia.com/university/#axzz1hT16WcZJ

This question is asked dozens of times a day here, so we grow weary of lazy people.

Simply type “how to invest” or “stock market online broker” in the Search Y! Answers box at the top of this screen, and you’ll get lots of answers.

There are many comparison charts for online brokers, plus look in Barron’s or other papers:

http://www.brokerage-review.com/

http://www.forbes.com/bow/b2c/category.jhtml?id=5

http://online-stock-trading-review.toptenreviews.com/

http://www.howthemarketworks.com./

http://stockmarket.makemoneyideas.in/

http://simulator.investopedia.com/#axzz1fc83KRM5 (simulator, and finance terms and definitions)

Develop a trade plan, test your trade plan on a simulator.

Http://www.investopedia.com/university/buildingblocks.asp#axzz1b0PGJiek

http://www.fool.com/school/basics/basics…

Susan asks…

How does commission work on stocks?

How does commission work on stocks? Does the broker charge a % of the money used to buy the securities? Can you give an example? I would also like to ask what is the standard % of commission brokers charge? (full time and discount). Best answer receives best answer. Thank you.

John answers:

It has become more of a flat rate than a percentage, I think, so they can show you how low the rate is, for example. I pay $5.72 per round-trip trade on futures through AmpFutures, including forex futures, index futures and commodities. If you trade forex in the spot market, you’ll pay the pip spread; could be as few as 2 or 3 pips, or maybe 12 pips in the more illiquid currency cross pairs. Two or three pips would be $12.50 or $18.75 on the GBP/USD or double that on the EUR/USD.

You can see from the above that the futures commisions are open and fair and a good deal, while the forex commissions are underhanded, hidden, and double or quad the “good deal.”

Stock trading simulator and Education

http://www.howthemarketworks.com./
http://stockmarket.makemoneyideas.in/
http://simulator.investopedia.com/home.a… (simulator, and finance terms and definitions)
http://www.fool.com/school/basics/basics…
http://beginnersinvest.about.com/library…
http://www.mysharetrading.com

There are many comparison charts for online brokers, plus look in Barron’s or other papers:

http://www.fool.com/how-to-invest/broker…

http://www.stocksandmutualfunds.com/brok…

http://www.investorguide.com/article/onl…

http://www.online-stock-trading-guide.co…

If your broker trades against you, or the platform is so complex you make a mistake, your cheap rates and cut-rate measures will be eaten up, plus some. Don’t quibble over a dollar or two in commissions if you get the better trading platform and fast and flawless executions.

Carol asks…

how do i begin investing in the stock market?

I am interested in investing some money i have recently come into as a kind of ‘retirement planning’ – it isn’t much but i figure if i start now it will mature in the long term; but here is my problem; i know nothing of investments or shares or the stock market. my knowledge of finance is slight at best and I have no idea where to begin researching.

please can someone point me in the right direction and provide some clues as to what kind of specific knowledge i should seek?

many thanks.

Penny.

John answers:

An introductory book like _Stock Markets for Dummies_ is a good place to start. This will give you a basic explanation of most things there are to know about the mechanics of stock investing including useful websites to surf and full-service vs. Self-directed brokerages.

Investors Business Daily (IBD) is a solid daily resource (and its complement, www.investors.com ). It’s a better newspaper than the Wall Street Journal and it is built around a particular approach to trading. You could read _How to Make Money in Stocks_ by William O’Neil too–he’s the founder of IBD.

Search your local library for other books on stock investing. Try to absorb as much knowledge and understanding as you can.

After you have extensively researched and gained a solid foundation/education then look to open a brokerage account and paper trade–this is trading with play money before you put real capital at risk. You should do extensively before you eventually place your first trade live. Your early live trades should be with a very small position size. Only increase position size when you have done well to limit losses when the market has turned against you.

Steven asks…

If you are holding a stock when do you get out?

I am beginning to think that you should buy stocks that pay high dividends. I am taking GE for instance, look at the 10 year chart, basically flat. I am beginning to think about QQQQ and SFINX both holds all of the component securities of the Nasdaq-100 Index (the Index). But even then look how the Nasdaq has hovered on the 2000 mark for how many years now. What is the best way?

John answers:

The only way to “outperform” the market is to hold LESS than the market. If the “market” has 100 stocks, you have to hold LESS than 100 stocks. If you hold 100, you have the market (i.e. Index fund), and if you have MORE than 100, you are taking on ADDITIONAL RISK.

And you’re talking two different things. A stock that pays high dividends usually does NOT fluctuate much at all, like utilities. That’s “income stock”, whereas if you want to “get out” you’re talking normal trading or “growth” stocks, where your gains comes from the prices going up, NOT dividends.

There is no best way. Different investors have different strategies. Right now my bet is on shipping companies and online retailers and discount retailers for Christmas. After New Years I’ll probably switch to something else. And I’m just doing paper trades (on wallstreetsurvivor.com, BTW, a good practice site)


Kasey C, PC guru since Apple II days
Always remember you’re unique, just like everyone else.

Ken asks…

How can a 16 year old get into the stock market?

I’m well informed in finances and want to buy some stocks. How can I do that?

John answers:

You’re only 16–you have much more to learn. An introductory book like _Stock Markets for Dummies_ is a good place to start. This will give you a basic explanation of most things there are to know about the mechanics of stock investing including useful websites to surf.

Investors Business Daily (IBD) is a solid daily resource (and its complement, www.investors.com ). It’s a better newspaper than the Wall Street Journal and it is built around a particular approach to trading. You could read _How to Make Money in Stocks_ by William O’Neil too–he’s the founder of IBD.

Search your local library for other books on stock investing. Try to absorb as much knowledge and understanding as you can.

After you have extensively researched and gained a solid foundation/education then look to open a brokerage account and paper trade–this is trading with play money before you put real capital at risk. You should do extensively before you eventually place your first trade live. Your early live trades should be with a very small position size. Only increase position size when you have done well to limit losses when the market has turned against you.

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