Brokerage and trading, beginner advice

Alrighty... Well I'm taking my investing to the next level. I'm going to be speaking with a guy in October who is an investment broker and a Dave Ramsey ELP. Hopefully he will help my wife and I on investments for retirement.

I also want to begin something like Scottrade or E-Trade on the side to start screwing around trading. I've been putting it off forever, and I feel like the key to real wealth is through stocks / investing. I had a very good conversation with a small business owner and he made almost all his money through investing on the side in the market.

Unlike him though, I don't have the starting capital. I'd be lucky to start my Scottrade account with $1,000.

You have to start somewhere. My "side" investing is $800 that I use as play money for learning and making picks. If they don't work out, that amount won't hurt me to lose. Learning is a lot easier once there is real money in the game. Good luck!

The rest of my investments are professionally managed, so my side money is peanuts.

Do you use Scottrade for your picks?

Originally Posted by BimmerFerret

Alrighty... Well I'm taking my investing to the next level. I'm going to be speaking with a guy in October who is an investment broker and a Dave Ramsey ELP. Hopefully he will help my wife and I on investments for retirement.

I also want to begin something like Scottrade or E-Trade on the side to start screwing around trading. I've been putting it off forever, and I feel like the key to real wealth is through stocks / investing. I had a very good conversation with a small business owner and he made almost all his money through investing on the side in the market.

Unlike him though, I don't have the starting capital. I'd be lucky to start my Scottrade account with $1,000.

Originally Posted by SLVR JDM

You have to start somewhere. My "side" investing is $800 that I use as play money for learning and making picks. If they don't work out, that amount won't hurt me to lose. Learning is a lot easier once there is real money in the game. Good luck!

The rest of my investments are professionally managed, so my side money is peanuts.

I might sound a bit stuck up on this issue or possibly condescending, but this is my personal belief..

Trading stocks =/= investing. It is a job. As a job, there are some who are qualified to do so, either through formal education and training or personal education and training, but most people are not qualified to do that job. I spent 2 years studying the markets and trading, including about 1 full year trading in a practice account, prior to putting a dollar of my money in the market. I still spend 15-20 hours per week, minimum, researching trades and evaluating my trading methods etc though I've been doing it for years. It is a job.

The shorter time-frame you are looking at trading, the harder it is to be successful. The overwhelming majority of people who decide to be day-traders fail. The majority of those who try to be swing traders also fail, though not the same rate (studies suggest up to 95% failure rate for new day-traders).

I'm not saying don't manage your own money or trade stocks. I am saying that if you wish to do so, study and practice first or it is likely you will join the ranks of people who have tried and failed.

Wraisil, is there a website that allows for trading with "play money?" I'd love to do something like that to start out and learn.

I definitely plan to keep trading to non-investment only. I know that trading stock is a lot like gambling (to quote Jim Cramer). I also know that it isn't as rigged as gambling in a casino is.

Originally Posted by BimmerFerret

Wraisil, is there a website that allows for trading with "play money?" I'd love to do something like that to start out and learn.

I definitely plan to keep trading to non-investment only. I know that trading stock is a lot like gambling (to quote Jim Cramer). I also know that it isn't as rigged as gambling in a casino is.

http://www.google.com/#hl=en&cp=13&g...w=1680&bih=865

Originally Posted by BimmerFerret

Wraisil, is there a website that allows for trading with "play money?" I'd love to do something like that to start out and learn.

I definitely plan to keep trading to non-investment only. I know that trading stock is a lot like gambling (to quote Jim Cramer). I also know that it isn't as rigged as gambling in a casino is.

This is what I used and still use for refining my trading strategy and testing out new methods https://papermoney.thinkorswim.com/t...paperMoney.jsp

It's a fairly imposing platform at first but as you refine your trading strategy and rules, the benefits of having such a powerful platform become very clear. If you can no longer sign up through there (thinkorswim was bought by tdameritrade) then you should be able to access it with a TDAmeritrade account. Opening an account shouldn't cost anything or require a deposit to use the papermoney feature, but some features may not be available to those who don't have a funded account.

A note: generally stock quotes in "free" accounts or available for free are required to be delayed 15 minutes, on the paper account you may notice they are delayed, however the charts are generally updated real time unless they have changed anything about them recently.

Well Wraisil I got the Paper Money software. Gonna give a shot tomorrow.

Okay so I got it running. Holy crap there is a lot going on.

Originally Posted by BimmerFerret

Okay so I got it running. Holy crap there is a lot going on.

Yep, there sure is. Once you figure out how to customize how you want it set up you can clean it up some. It's pretty customizable to show exactly what you want and ignore the stuff you don't care about. Here's my set-up when doing chart research:



I keep level 2, news, time and sales, and active trader up on one screen with the chart when trading during the day. Prophet charts are also really nice for researching pattern trades as it can search for specific chart patterns based on your criteria.

Do you use the same software for real world trades too?

Yes, I trade with TDAmeritrade using the thinkorswim platform. The login screen for the thinkorswim platform allows me to choose my real account or my paper account at login. In the real account I can choose to be in my normal brokerage account or an IRA account. Currently the futures account is separate but is getting integrated back in to the standard account (was together before the merger with TDAmeritrade and they have some clearing house things they are working out before reintegration of the accounts. It is also an excellent platform for analyzing options trades as well, though I really wouldn't recommend options to a beginner outside of potentially some covered calls etc. I also don't recommend trading on margin until a trader is more experienced and has been consistently successful though I do recommend using a margin account to trade in so that the T+3 day rule is less inhibiting. Keep in mind that day-trading in general requires a 25k+ account to satisfy the pattern day-trader rule from the SEC.

Futures execution is better on some other platforms but I'm not primarily a futures trader so that doesn't really bother me.

I know it sounds like a weird question, but how long do you have to hold a stock before you fall out of the "day trading" window? Honestly, I work a typical job and can't execute trades like this day-by-day, but I could do monthly or weekly activity. Like I said, I'm not out to be a millionaire overnight, but if I can make a grand or two over the course of a year in stocks I'd be pretty happy.

Maybe I need to redirect this to another thread, as we are getting off track. Sorry all.

Day-trading rules apply to positions that are open and closed on the same calendar day. I'll PM a mod and ask them to pull the posts since 111 into their own thread as we are a bit off topic.

Thanks for answering all these questions. Very insightful. I'm going to crack open my Jim Cramer book again and take it a lot more serious this time around. I have this book:

http://www.amazon.com/Jim-Cramers-Re.../dp/0743224892

Well I took the leap last night with my wife. Met with an investment professional and began two Roth IRAs (one for each of us). We dropped quite a bit of coin on it. Pretty excited honestly, because I know I'm doing the right thing. I also have a Roth 401k I can rollover into the IRA and it won't count towards my 5k/year according to my guy.

We decided on funds that didn't have an up front cost. Some of the funds required a 5% up front fee on every dollar, but the long term ownership was cheaper.

We chose the funds with about 75 bps higher ownership fees, but no up front cost. I prefer to have the guy watching my money have a bigger reason for watching it, as the longer he keeps me around, the more he can make, and with proper supervision... The more I can make.