I am talking about newbies in the business. I have a friend who wants to start trading stocks and getting into the whole investment thing. She is a stay at home mom and there is really very few jobs that work for her, she asked me if I think it is a good idea, I told her to go to one of those courses on "how to trade" the local community college offers but I am not sure my advice was correct... is it possible for her to live from trading stocks and investing her money?
2007-01-02 06:57:26 · 19 answers · asked by L M 3 in Business & Finance ➔ Investing
If she is very lucky. Day trading isn't that different than gambling. When you buy a stock your betting that the stock will increase in value. Sometimes they don't and you lose value. Although you keep your shares of the stocks. I would recommend investing in solid companies with an established track record that pay dividends. This isn't a buy one day and sell the next gamble. It's an investment in the long term. Further if you sell a stock too quickly you end up paying a higher capital gains tax. Another words it's not that easy to make quick and easy money this way. Let me explain it this way.
Let's say you buy a stock xyz at $100.00 dollars a share. you have $5000.00 dollars to invest. that means that you can buy 50 shares. in a week the xyz stock is worth $101.00 dollars. that means that after you pay for your trading fees normally around 20 dollars you made 30 dollars.
Now if you buy a riskier stock at a lower value lets say zyx at $5.00 a share. You still have $5000.00 to invest. Now you can buy 1000 shares. If the stock changes value to $5.50 you will make $500.00 dollars minus the transaction fees upon sale. bingo you just made around $470.00. Now on the flip side, if the stock goes down below $5.00, let's say to $4.50. You will have the option of selling at a loss and you will l lose around $530.00. Or you can just hold onto it and hope that it will go up again. Sometimes they don't and just go bankrupt, then you just lose all your investment.
For more info check out www.scotttrade.com or www.sharebuilders.com.
2007-01-02 07:16:04 · answer #1 · answered by krzylove 3 · 0⤊ 0⤋
Anything that involves frequent trading, I think is a bad idea. I think brokerages try to make day trading seem cool, but they really are just trying to get the typical small investor to spend more on commissions.
I think if your friend invests some time to learn about investing, it will be time well spent. I would start by reading "The Little Book that Beats the Market." Jim Cramer's books are worth reading too. You might want to look at http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.
Here are this month's best traders:
http://www.top10traders.com/Top10Standings.aspx
Good luck.
2007-01-02 14:17:05 · answer #2 · answered by Anonymous · 0⤊ 0⤋
It is very difficult to do better than the market average, even for the professionals. The easiest way to make a living on the stock market is to start with a million dollars, invest it in a stock index fund, and live off the 7 to 10% average gain per year, recognizing that there will be better years and years with a loss. But starting with very little and trying to make enough to live on will probably require margin accounts (borrowing money to invest with) which make it much more likely that you'll lose everything: not something to just play around with.
2007-01-02 07:09:55 · answer #3 · answered by Faeldaz M 4 · 0⤊ 0⤋
Yes you can live off your investments. But you need lots of cash to start and it takes a long time. If you start trading stocks you will loose money. the commissions alone will kill you. You have to start a long term investment program like I have.You star with mutual funds that pay dividend income every 3 months such as Vanguard Equity Income Fund. Get a money market fund which pays every month. It Will take a long time to live off the income. I have houses that I collect rent from and stocks and mutual funds and it still get tight some months. Do not go into trading stocks.
2007-01-02 07:06:15 · answer #4 · answered by ? 6 · 1⤊ 1⤋
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2016-02-16 17:41:52 · answer #5 · answered by Anonymous · 0⤊ 0⤋
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2014-10-03 21:15:16 · answer #6 · answered by ? 1 · 0⤊ 0⤋
It helps if you have a good working crystal ball and can tell the future. The only way to make money, big money, in the stock market is if you are very, very, lucky. The higher the risk, the higher the return. Nothing will change that. If you can afford some large losses, you may get some large gains. It takes a large amount of money to make large amounts of money. Are you willing to take the risks?
2007-01-02 07:03:19 · answer #7 · answered by L P 1 · 0⤊ 0⤋
Investing your money? Sure, if you have a substantial amount to start with. Trading stocks? Not bloody likely, unless you have a crystal ball or amazingly good luck.
2007-01-02 07:55:46 · answer #8 · answered by Dave 4 · 1⤊ 0⤋
Yes but it's very difficult. She should begin by paper trading (make believe trading) and see how she does. If she is consistently successful then maybe she has a shot. It takes a lot of hard work and studying though. It is more likely that without any experience she will just lose her shirt
2007-01-02 07:04:22 · answer #9 · answered by Chris S 2 · 1⤊ 0⤋
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2015-01-25 00:54:48 · answer #10 · answered by Anonymous · 0⤊ 0⤋