Before you start stock trading: first think if it is worth the time and money
That was the better news. The bad news is simply that those firms are selling you the tools and service only. They don't sell you any warranties of success. It is of no significance if you profit or lose money, the trading company will get its fee for each trade anyway.
Since you are considering going into the stockmarket, most likely you are making plans to get a big return on your investment which also should be better than what you would get buy investing your money into mutual funds (less dodgy than single stocks) or maybe no-risk certificate of deposits (CDs) where returns are guaranteed[**].
Well, how can you get such returns? The answer naturally is straightforward and well known: buy low, sell high. If you manage to do it much of the time you'll be a successful investor. Now the first problem comes: how do you know when to buy? There are potentially many ways to do that, we do not discuss this here, let's make the assumption that you know somehow or think you do know. We could say you got lucky and the stock after you bought it is going up, just as you planned.
Now another problem comes: when to sell? After the stock is up 20%, what do you do? Sell now, or wait until it is up 50%, 100% or 200%? Do you listen to financier news and do what everybody else does: selling, buying more, or continue holding the stock? If you select one of the first 2 options, what quantity of the stock you should buy or sell? Or if you hold the stock, are you sure it will continue to go up, or you'll end up waiting till the stock price is back to the original and than lose it's value leading to your losses.
The reality is a few of the people actually do know the solutions to those questions much of the time and basically make profit. The issue is, are you as good as those people? Most people are losing cash making a guess and making an attempt to time the market. If you are new in this game and not planning to spend much time on research, chances are that you will lose. You'll be contesting with pro traders, big players and insiders who profit usually because many others keep losing. Plus what are the possibilities you can envision the market? The possibilities are very slim.
Some may argue: I had that stock, I sold it when it was up 20%, but if I did not sell it at that point, now it'd be up 300%. How stupid I was when I sold it, if I did not I'd made a lot of money. I must do this again. It really proves that I am able to make a lot of money there and it's easy!? That is right you can make lots of cash, but it is not that straightforward as it looks. Let us assume you didn't sell the stock at the time it was up 20%. Then what makes you think you would wait until it is up 300%? You may have sold it when it was up only 25%. Or it may go down many times below 20% increase, you may have believed that it was going down forever and sold it even with a lower than 20% profit.
The bottom line is that it is easy to glance at the past and see all of the mistakes you have made. However it is extremely tough to do right things for the future. Unless you know market trends well, understand related industries and stock company financials, probably you will be unable to make lucrative trades. Even professional traders do mistakes and lose cash. If you're not one of them or not planning to become one, your best shot would be investing into CDs, hedge funds or your own business.
Since you are considering going into the stockmarket, most likely you are making plans to get a big return on your investment which also should be better than what you would get buy investing your money into mutual funds (less dodgy than single stocks) or maybe no-risk certificate of deposits (CDs) where returns are guaranteed[**].
Well, how can you get such returns? The answer naturally is straightforward and well known: buy low, sell high. If you manage to do it much of the time you'll be a successful investor. Now the first problem comes: how do you know when to buy? There are potentially many ways to do that, we do not discuss this here, let's make the assumption that you know somehow or think you do know. We could say you got lucky and the stock after you bought it is going up, just as you planned.
Now another problem comes: when to sell? After the stock is up 20%, what do you do? Sell now, or wait until it is up 50%, 100% or 200%? Do you listen to financier news and do what everybody else does: selling, buying more, or continue holding the stock? If you select one of the first 2 options, what quantity of the stock you should buy or sell? Or if you hold the stock, are you sure it will continue to go up, or you'll end up waiting till the stock price is back to the original and than lose it's value leading to your losses.
The reality is a few of the people actually do know the solutions to those questions much of the time and basically make profit. The issue is, are you as good as those people? Most people are losing cash making a guess and making an attempt to time the market. If you are new in this game and not planning to spend much time on research, chances are that you will lose. You'll be contesting with pro traders, big players and insiders who profit usually because many others keep losing. Plus what are the possibilities you can envision the market? The possibilities are very slim.
Some may argue: I had that stock, I sold it when it was up 20%, but if I did not sell it at that point, now it'd be up 300%. How stupid I was when I sold it, if I did not I'd made a lot of money. I must do this again. It really proves that I am able to make a lot of money there and it's easy!? That is right you can make lots of cash, but it is not that straightforward as it looks. Let us assume you didn't sell the stock at the time it was up 20%. Then what makes you think you would wait until it is up 300%? You may have sold it when it was up only 25%. Or it may go down many times below 20% increase, you may have believed that it was going down forever and sold it even with a lower than 20% profit.
The bottom line is that it is easy to glance at the past and see all of the mistakes you have made. However it is extremely tough to do right things for the future. Unless you know market trends well, understand related industries and stock company financials, probably you will be unable to make lucrative trades. Even professional traders do mistakes and lose cash. If you're not one of them or not planning to become one, your best shot would be investing into CDs, hedge funds or your own business.
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