A Virgin Trader

Transense Technologies (TRT), the tyre pressure monitoring specialist who, among other things, develop surface acoustic wave (SAW), wireless, batteryless sensor systems for the automotive industry, is a stock I noted in my first week of virgin trading – July 09 (it feels like much longer), as a potential one to watch.

Everything I had read while doing my research screamed ‘potential for the future’, although how far in the future is another question. There was a management change (half the board arrived in the last year), lots of new partnerships were forged including: Honeywell, Melexis, Michelin, Sengenuity, Stack, Tai-Saw, Texas Instruments, SCHOTT, McLaren Electronic Systems and Carbon Motors.

On the downside it has had its share of troubles and current investors have had a long and patient wait to taste real success.  Oh yes; it has yet to make a profit, it has very low volumes – as you would expect, and the market spread – the buying/selling transaction cost – is bigger than I would like.

However after sitting more or less dormant for quite a while, news came  during the week of a supply agreement with Goodyear Dunlop Tyres. Brewin Dolphin said (and I quote from a guardian newspaper report):

This news is further evidence that Transense’s new management (since the first quarter of 2008) are continuing to transform the business model in line with strategic goals: to reduce reliance on a small number of major licensees; to generate revenue through supplying product not only through licensing intellectual property; to find quicker routes to market and to transform the company into a sustainable cash generative business.

Anyway last week I jumped in again with some ready cash the second I heard that the deal was done. Now I think it is a case of joining the patient crowd to wait and see where they go from here.

Time for a cup of coffee and a very, very long good book to read.

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Tags: Transense Technologies

Following an unexpected but exciting summer rally in the markets I am beginning to feel the jitters. Everywhere I turn I read either that the world economies are coming out of the worst recession for over 50 years, and prospects for growth are on the up, or I read that investors should be very worried as we’re heading for a serious downward market correction. Which is it? Many commentators are of the view that it is just too risky to buy and that the best place is in cash.

Several of the stocks I have been watching over the summer period are now at a price I had earmarked as a buy signal but, given all I have read, perhaps I should wait for this ‘market correction, first? All part of the learning curve.

As a virgin trader it is all a bit unsettling. Are we at a critical point right now? Are we about to feel a painful market correction or are we about to go into another strong rally defining the end of the credit crunch?

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Following on from my last article on RBS, I had a chat with ‘the trader’ to get his opinion. As he is never without a word or two on these matters he suggests, the RBS’s rights issue is an attempt to avoid the government increasing its holding from 70% to 85% by way of a fee for putting £325bn of toxic assets into the bad bank. The rights issue has caused a flutter in the dovecotes (bulletin boards) as no one really seems to understand its potential impact.

Look at it this way: the government has an interest in seeing RBS and its other banking waifs and strays prosper. That way they can not only be shot of the unwelcome lodgers on the governments balance sheet but, more importantly, the government wants to be in a position to get shot of them at a profit. Taking the toxic assets out of the equation already improves the picture and for a government that is more strapped for cash than a drunk without the taxi fare home on a wet night, they will take any measures they can to cash in as soon as possible – knowing the government that would be before the election if they had a snowball’s hope of meeting all the requirements by then.

You can always count on ‘the trader’ to be colourful.

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Tags: RBS, RBS rights issue, Royal Bank of Scotland

Has the summer winning streak come to an end for RBS shares? It looks as if the Royal Bank of Scotland are desperate to escape a tightening government grip, as rumours spread over a potential cash call by part-nationalised RBS to keep the taxpayer’s stake at 70%, and who can blame CEO Stephen Hester for trying.

According to the media this week the part-nationalised bank, which is 70% owned by the taxpayer, is testing the waters with key investors about potentially issuing preference shares or launching a rights issue of up to £4 billion. If there is enough support, it could all start happening in a couple of weeks.

The bulletin boards are all in a frenzy with no shortage of views on the subject, all pointing in different directions – don’t you just love them? They are a mixture of panic selling by some and just plain boasting by the – ‘look at me I made a mint from RBS and I am off to make a wad of cash in another stock’ bulletin board guru’s.

As a virgin trader, who did invest back in July at 43p, it is all a learning curve and nothing to panic about. Now is not the time to sell (famous last words?). I will just watch and wait, even perhaps enjoy a bit of  RBS bulletin board entertainment cause there certainly is a lot of it about.

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Tags: RBS, Royal Bank of Scotland

Now listen!, I’m not trying to put anyone off here. I love being a virgin trader, but online brokers have got the whole deck stacked against you.

Why?

Well, I’m glad you asked. To begin with they are in business to make money from you and who can blame them. They have to make money from someone and believe me it is YOU. Yes, they are happy to give a bit of advice along the way, but you are the only one they can make money from so, be very careful.

The costs include:

• The commission for buying shares
• The commission for selling your shares
• The share price spread (in any other business that means the markup)
• In some cases an inactivity charge (usually quarterly) if you don’t use your account enough
• Often a managment fee (usually quarterly)
• If its an ISA trading account there’s, an administration fee
• Some like ‘Interactive Investor’ even charge you to apply a stop loss to every deal. Then after 90days if you have not sold your share, you have to pay again to reapply the stop loss.
• A charge for transferring a stock from your broker to another broker
• A dividend reinvestment charge
• An additional charge if you wanted to by or sell a share on another exchange like the NASDAQ

All of these various charges add up to a sizable overhead on each deal you make. This means that as soon as you press the buy button you have lost money. It’s a bit like buying a new car; the second you drive it out of the showroom it’s worth thousands less – instantly.

Trading shares is no different.

A lot of virgin traders forget to take these overheads seriously. Individually they may look small but they add up and the more trades you do the more the broker takes off you.

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Tags: Online Broker Costs

StockTwits is a new online platform, which uses Twitter. It allows amateur (virgin share traders) and day traders to message each other in the usual succinct Twitter format and it is proving a big hit, according to its co-founder.

StockTwits is fast becoming one of the most popular ways for traders to track relevant discussions on Twitter. About 90,000 people have already signed up to the site, with around 15,000 actively contributing while the rest listen in and is one of the Twitter app success stories.

“There is an ability to connect fast with like-minded people, share and chew on ideas, banter, advise, yell at dumb ideas and gather conviction if need be,” Howard Lindzon, StockTwit’s co-founder told the FT. Lindzon envisions this new app as the “Social Bloomberg” or the “Facebook for Finance.”

According to the Telegraph, one user of StockTwits, an airline pilot who trades in his spare time, said that “You don’t go to Twitter for stock tips; it’s more useful to learn how other guys trade.”

If you’ve used TweetDeck, one of the many twitter apps to manage your twitter messages then the new StockTwits Desktop will be very familiar to you. Unfortunately for those of us living outside the US Stocktwits is very NASDAQ focused.

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Tags: StockTwits

Normal traders don’t apply stop losses!

I have just opened a normal trading account with ‘Interactive Investor‘ (www.iii.co.uk). They sell themselves on the platform of being completely transparent with their charges. However, as I found out to my frustration hidden charges do exist.

If you open an ordinary trading account it says:

• £10 commission for real-time UK trades
• £15 commission for US and European trades
• £1.50 for regular trades
• No inactivity or subscription fees
• No ISA or other administration fees
• Phone trading at no extra cost

What they don’t mention, is that the most basic of trading tools a ’stop loss’ is classed as not part of a normal trade. If you want to use a stop loss – and who in their right mind would not, it is an extra charge.

Unfortunately this only becomes apparent after you have made your first deal and try to apply a ’stop loss’ to it. It is only then that you find it is not available unless you open a ‘TradePlan’.

When I rang the Interactive Investor trading team to ask why I could not apply a ’stop loss’ they said it is not seen as a normal part of trading.

Just another part of the virgintrader learning curve I’m afraid. I would recommend opening an account with another broker for example share.co.uk at least they have stop losses as a normal part of the deal, at no extra charge.

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Tags: Hidden Charges, Interactive Investor, share trading tips

To a virgin trader the stock markets have without at doubt, been very interesting over the last couple of months to be a virgin trader.

Having started the summer (and my virgin share trading journey) waist deep in bedtime books on -yes you guessed it, share trading (well we had friends staying and I was sleeping in the den, so what else would I be doing?) I have come to realise it is no plain sailing – the risks are high. Yes, of course I could trade FTSE 100 shares in relative safety – if I could afford them. The big blue chips can be bloody expensive for the virgin trader budget, two shares and my account is empty. Anyway, most blue chips just bob up and down all day – little moves here and there. I suppose that is the whole point; no sudden huge drops or vertical leaps but, unless you’re playing with BIG money, your returns are going to be less than the actual costs of trading the damn things.

Now, I am not saying I am staying clear of them. I did venture into RBS shares over the summer and considering the state this bank is in, the shares have performed pretty well. I bought them at around 35p and they are now around 57p. That’s better than a kick up the derriere.  I also bought into West China Cement early in the summer – before I had really done some proper research, in fact the risk paid off. Beginners luck? I bought them at 165p and now they are around 400p. Unfortunately the virgin sold them too early at 253p (a rookie mistake) but hey, that was a good profit. If they come back down a bit I will try and buy back in (budget allowing) as they look pretty good to me.

From the look of the markets this week I think things are settling down a bit now – or will that sentiment come back to bite me? This week I have a number of stocks I have been watching all summer, patiently waiting for the right time, and price (of course) to jump in. I can’t wait. Remember timing is everything.

It is certainly a scary adventure but to be honest it has got me by the short and curly’s.

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Tags: Online share trading

The truth is out there!

I have been doing some ‘virgin trader’ talking to ‘the broker‘ again, this time about gold, oil and the dollar.

Now, not normally the sort of person to mince words, he said that the US economy relies very little on the international market, it is a massively domestically fuelled economy. The Chinese are to a large extent the same. Europe and especially the UK are dependent on international trade and in particular the trade in imported commodities i.e oil. He thinks that opening the X-File on the dollar will harm Europe’s fledgling recovery and make recovery in the UK more difficult to achieve, especially if sterling splutters and dies, which it may do for the same reasons as the dollar – there are just too many of them about.

Resources stocks took the FTSE over 5,000 (although it has now fallen back) as they would receive higher dollar prices for their commodities – the problem arises (a realisation that has brought the FTSE back below 5,000) when a lower dollar makes the US more competitive at the same time as high commodity prices choke of any signs of industrial recovery.

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Tags: Share trading for beginners

I thought this title might get you interested; it’s a classic blog sucker title. I feel almost guilty using it. I remember reading somewhere that if you want to get people to read your article, blog, story, etc on the internet, put ‘top 10′ or ‘top 100′ in the title.

As a virgin share trader who has read more books on share trading, in the last couple of months, than is healthy for any normal sociable male, it’s time to share my top ten – share trading mistakes.

To kick off, the first (and in no particular order) is:

1.  Bulletin Boards
Listening to closely to the bulletin ‘bored’ gossip. Don’t get me wrong, some contributors are committed to their chosen subject, know what they are talking about and really want to help pass on information. Some will even cut and paste relevant data from company reports and statements and many are only too willing to give advice. However on the whole, I think that whilst they should be seen as part of your research, don’t take them too seriously, there are definitely some mischief-makers out there.

2.  Tipped shares
Now I know it is tempting, and I have flirted with that option myself, after all why not ‘take the advice of an expert’ I hear you say. Tipsters, journalists, brokers, they all say they have the inside track and when you’re a virgin trader everyone knows more than you. If you want to follow a tip, then add some research of your own before you spend good hard earned money.  If you buy purely on the strength of a tip then you only have yourself to blame if it all goes **** up.

Remember – I told you so.

3.  Overtrading
Every book, article and comment I have read so far mentions this somewhere. “Don’t overtrade”.  The important thing to remember here is that trading costs money. Each deal has its associated overheads –  commission (on buying and selling), stamp duty, etc. The more deals, the more overheads. “Simples” as the animated character on the TV ad says. You know the one for that well-known price comparison website.

Costs aside, overtrading also gives you a sense of over confidence, especially if you have made a few early profits.  Over confidence for a virgin is very, very dangerous.

4.   Hanging onto losers
In this current ‘summer rally’ that would be difficult. Everything has just gone up and up for the last few months.  You would have to be a Muppet not to have made any money this summer, but it will not last.

The point I am trying to make here is that you must not get emotionally attached to a stock.  Forget that it was the first share you ever bought and you love it. ‘It is not a puppy’.  If it is going up and up, take some profit. If it is going down, get rid of the bugger.

DO NOT hang onto it thinking ‘l’ll just wait until it goes back up’. That is what stops are for.  Add a stop to every trade to minimise any loss. Remember, money tied up in a dropping stock is money you cannot trade with. So get rid of it.  You must accept the loss and move on. Having said all that however don’t sell too quickly either. Don’t sell every time your shares go up a couple of pence; remember what I said earlier trades cost money.

Did I say ten? I meant 4. I have work to do now and the markets are open. I will give you some more Virgin Trader Top Ten Mistakes tomorrow.
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Posted via email from a virgin trader’s posterous

Tags: Top 10 mistakes