A Virgin Trader

There are loads of online brokers to choose from offering a whole host of different sorts of trading products, but beware, choose your weapon carefully. As a virgin share trader like myself, I would suggest a basic share dealing account and a self-selecting ISA account. Plain and simple. Leave the more exciting and dangerous trading activities for further down the road to market trading wisdom.

There are two main types of broker: ‘advisory‘ and ‘execution only‘ brokers. As the names suggest an advisory broker will give you advice on what stocks to acquire and sell, an execution only broker gives you no advice but will execute the buy and sell order on your behalf. I chose the ‘execution only’ route for my share-trading journey.

At first glance they all seemed to offer the same sort of service, the only real difference was price. However beware! It is important to check for any hidden costs. Several had trade commission offers, but on closer inspection these depended on a minimum number trades per quarter.

Most of the brokers I came across had annual management fees, and account inactivity charges.  Dealing fees were usually between £10.00 and £12.50 per trade whether it is a buy or a sell. There is also stamp duty to pay on trades at (0.5%).

A couple of online brokers had sign up deals such as ‘your first 10 trades free‘, but as we all know, or should, free does not infact mean free at all. Free usually means until we get your direct debit setup and start sucking the money from your account then what a surprise it is not free anymore.

E*TRADE were particularly expensive on additional hidden extras. Although the dealing fees were £11.50 they also had management charges, inactivity fees, as well as minimum monthly trade allocations. It all adds up to an unnecessary overhead to have to cover on each trade just to break even. (www.etrade.co.uk)

The Share Centre was very reasonable at £7.50 per deal with no inactivity fee. They did have a £2.50 quarterly administration fee. (www.share.co.uk)

For example if you buy 500 shares of company A at £1.00, your costs for this deal would be:

Tags: Online Brokers, share trading tips

As a UK virgin share trader using an ISA (Individual Savings Account) as a trading umbrella makes a lot of sense as a good way to start your online trading journey.

A self-select ISA means you can invest in UK and international equities, collective funds such as unit trusts, investment trusts, corporate bond funds, OEICs (open-ended investment companies) and ETFs (exchange traded funds), gilts and cash, as well as warrants, covered warrants and CFDs (contracts for difference). Yes I know it sounds a handful but after a bit of jargon Googling you will have your head around it in no time. In fact I will explain what they are in a later post, once I find out myself.

Most online brokers offer ’self select’ trading ISA’s. This means that you can basically trade the money inside your self-select ISA without any capital gains tax liability or income tax on the profits. Very cool.  From what I have read on various broker sites it is very easy to setup and trade using an ISA umbrella. Most broker sites have an ISA signup button on the homepage. And if you shop around you should be able to find one that has no ISA administration fees or inactivity fees.

m

Tags: Share trading for beginners, share trading tips

For any virgin share trader the sheer amount of information out there on the internet is enough to make you turn to drink. So where the hell do you start?

There are forums, financial blogs,  get rich quick sites, bulletin boards, feed sites, statistical data sites, spread betting sites by the hundreds, all trying to get you to sign-up to something that will make you gazillions by the time the coffee is ready.

I realised the first step is to get cynical and quick. Take most of it with a massive pinch of salt then pick up a good book on trading for beginners, sit back in a comfortable chair and begin to get a grasp of the basics. Then, at least,  you will be able to make sense of the market jargon.

Yes, I know there are hundreds on books on said subject, so is it out of the frying pan into the fire? All I can say is that, luckily, I was recommended a couple of books by a friend who is a financial journalist (I can hear you saying ‘who would trust a journalist?’ Good point; and he is not rich. Another reason to doubt his opinion). Anyway, I quickly read Investors Toolbox and The Naked trader and I already feel confident enough to turn the computer back on again.

Brokers

Now that I feel I understand some of the ground rules, the next step is to look for an online broker. To start trading you need a broker and there are loads to choose from.

As I am a UK based virgin trader I began looking close to home. Here are a few of the brokers I checked out:

• www.tdwaterhouse.co.uk
• www.etrade.co.uk
• www.stockbrokers.barclays.co.uk
• www.iii.co.uk (interactive Investors)

In the end I chose ‘Interactive Investor’: the language was simple and straightforward, no jargon, and they outlined their offer clearly upfront:

• £10 flat fee for real-time UK trades with no inactivity penalty
• £15 flat fee for US and European trades
• Trade Shares, Investment Trusts & ETFs
• FREE transfer of share certificates
• The iii.co.uk website also has a wealth of useful market information about trends, sectors, hotspots, new issues and more.

I am now set up with a free account and ready to roll.  But not yet. I still have much to learn before I press any sort of ‘Buy’ button.

m

Tags: Online Brokers

Having spent my first night as a virgin trader I woke with a headache after staying up way too late starring at my laptop, trying to make some sense out of the hundreds of sites covering the stock markets. Live feed sites, sites offering technical stats and graphs, business commentary pages and blogs as well as dozens of get rich quick scams.

However it was not all time wasted, I did come across a few helpful ones including:

http://www.iii.co.uk (lots of good stuff here. 15 minute feeds, sector news and commentary etc)

http://www.google.com/finance  (looks good)

http://www.advfn.com (more live prices and great research tools)

http://www.shareprice.co.uk (another good site)

Apart from that I have just finished (in record time for me) a beginners book called ‘The New Investor’s Toolbox’. A little out of date now but perfect for the beginner like me.

m

Tags: Online share trading

Today I begin my journey as a virgin online trader and this blog will detail my experiences for good or bad every step of the way.

I am under no illusions that the stock market will be a tough crowd to crack and that my daily mantra must be research, research and yet more research but as my favourite author/journalist Hunter. S. Thompson once said, buy the ticket, take the ride.

Any help and advice along the way will be much appreciated.

m