Stock trading, is it that simple?

Question

heres the main jist of what i am understanding, i open an account say scottrade, i have $5k i am wanting to invest, i researched the complany, so is it this simple? open account, buy 1,600 shares for $3.10 a share, IF it goes up in time say it goes up double $6.20 a share, is it correct to assume if i just want out i sell the stock back to the market and double my money just like that??

Answer 1

Kinda.

It all sounds good when you hear of people doubling, tripling their money, what you don't hear is people losing their shirts.

Yes, when you sell back to the market you basically get double, minus the trading fees, but at the end of the year, if you've made a net profit through all of your trading, you'll have to pay taxes.

Answer 2

Its usually that easy to get in and out at near the current market price. However, doubling your money is a totally different matter.

When I first started trading, I was concerned about 'slippage' - the difference between the market price without me selling and the market price with my sell order in the mix. Well after hundreds of trades I've never had a problem really getting out at near the market price. Just keep in mind that a stock could gap down before the next days open price. (This often happens when a company reports earnings that didn't meet expectations.)

Several investment techniques have produced stellar returns over the long-term. Of course, when I say 'stellar' I mean averaged 30% per year - not doubling your money in a few months. However, if you are intimate with the industry or company or see a trend beginning at your local shopping mall and know its going to be a hit, you can score big. Or, you may just get lucky. But remember luck can and does work both ways.

I've spent years studying the best stock investment and trading techniques out there and have found a few with that stellar long-term record. I also have a website and stock picking newsletter that you can try for free. I would read 'How to Make Money in Stocks' by William O'Neill and do your due diligence before investing in a stock - no matter what someone says about it. There's always risk when buying individual stocks. Diversification is one way to reduce that risk.


Brian C Neall
Founder - tradetobefree.com

Answer 3

Well, the mechanics of how it works were described pretty well by you, but life is never that simple - because if it were, nobody would have to work and we'd be back in DotCom Heaven.

By the way, whenever a stock breaks below $5 a share most of the time if it does not recover and go back up above $5 it will eventually go to nothing. You need to concentrate on stocks that are worth at least $35-50 per share - they have a fighting chance to go up. Case in point - CME was trading at about $45 per share in 2001 the Autumn of 2001 when it went public. Now it's trading at $535 - so if you had bought $5,000 of it then you'd have an extra HALF MILLION DOLLARS. This after a recent 8% decline - so if you were a market timer (buying/selling when a longer moving average crossed above/below a slower moving average) you quite possibly could have made TWO MILLION.

Hope this helps. www.cboe.com is a good resource.

Answer 4

In short, you've got to have money to make money.
You've got to have the dough to buy a lot of shares.
The most reliable stocks are expensive (each). If the stocks are cheap, it means that there is no current demand for them.
If you buy a 3.10 share, it's not likely to double unless you have an inside idea on what you're buying (which is illegal).
Also, remember that if a large quantity of shares have been sold, the growth rate will be very slow. For instance, if you bought Sirius stock just before the XM merger, at first, you would think that you'd gain a ton of cash. However, with the volatility of the satellite radio market, everyone and their cousin has purchased shares. Therefore, even if the company hits it big, your increase will be so slight that it probably won't make up for your fees you paid in order to complete the transaction. Hope this helps!

Answer 5

Well to answer your question. Yes! But most stocks as they increase in price take a bit longer usually to make a double.
For example a $30 stock to double in price within a few months, 99% of the time it ain't gonna happen. We specialize in penny stocks (stocks currently trading under $5/share for our members). They can be much more volatile, however for investors who have a cheap discount broker such as Scottrade, can make some great money in this market.
We had a pick this month for our members that went up 133% within a week. As well as a pick in Sept. that recently has hit another new high for a 393% gain.
Timing is very important and you should never just jump into a stock without taking some time to research the company ("due diligence".)

I recommend you look over http://www.investopedia.com/articles/basics/
... for some beginner advice and if your still interested check us out at http://www.bullishinsider.com

Feel free to e-mail me if you have any additional questions. Good luck. Happy trading!

Answer 6

The act is easy, yes. Picking winners is a science, an art, and, some luck.

I use Share Builder. It's quite simple and user friendly. And they have basic ratings and recommendations. Trades cost a flat fee ($8 I think, whether a buy or sell order).

You'll have to decide if you want to be aggressive, or cautious in your strategy.

Answer 7

Well buying stocks is easy, but you do not make money buying stocks. You only make money selling stocks.

So why don't you research a stock and find one that you should sell and then see if goes down.

Answer 8

Correct.

Not exactly rocket science.

Answer 9

no its not that simple