Basic stock trading for beginners

[Burnadell]

Learn that the price of a stock doesn’t determine how expensive it is. For example, a $5 stock can be more “expensive” than a $100 stock. It’s all in relation to the underlying companies earnings. A $5 stock can be 5x the companies earnings and a $100 stock can be 1x so you’d be paying more for the $5 stock.

I don’t invest by stock charts. Investing off past performance is like placing a roulette bet based off of what the last roll was. Past performance doesn’t determine future.

Taxes and trading commissions are your enemy.

I’ve been investing for 20 years. The plethora of stock trading threads makes me think it’s about time for the market to crash.

Agreed, and I have not seen anyone talk about fundamentals of the companies in the stock trading threads. As a banker, you understand fundamentals.

I get concerned with some of the questions and comments on the stock threads that indicate the newbies that want to get "in the game" are just gonna throw their money away without understanding what they are doing. The fundamentals of GME, in my opinion, are horrible, and I cannot imagine someone wanting to pay $20-$100 (let alone $300 ) for a company that is LOSING money and closing stores. NONE of the penny stocks are profitable companies. How does one even determine the fair valus of start-up/developmental companies with NO REVENUE? I just shake my head.

[Rick]

I use my broker, he does it for a living. I just don't have the knowledge nor the desire to study the markets to really know what i am doing. And some days when i look at my account and see the DOW is down, but my account is up, i feel even more sure it is the right decision for me. There are plenty of down days, but that is part of it. I am a big proponent of not paying others to do what i can do myself, but this just is not one of those areas...

[RiverRat1]

Agreed, and I have not seen anyone talk about fundamentals of the companies in the stock trading threads. As a banker, you understand fundamentals.

I get concerned with some of the questions and comments on the stock threads that indicate the newbies that want to get "in the game" are just gonna throw their money away without understanding what they are doing. The fundamentals of GME, in my opinion, are horrible, and I cannot imagine someone wanting to pay $20-$100 (let alone $300 ) for a company that is LOSING money and closing stores. NONE of the penny stocks are profitable companies. How does one even determine the fair valus of start-up/developmental companies with NO REVENUE? I just shake my head.

It's getting more insane than you probably know. Take a few SPAC plays for example. People, and I mean big traders, have price targets for CCIV already for when they merge with Lucid. I try to tell them they don't have a clue what the merger deal is so it's literally impossible to come up with a price. It's insane.

I assume that anyone throwing money into penny stocks is only using beer money. I try to keep saying it's the same as the craps table. I hope people listen. I throw a lot at some penny plays (up to 20k) but I've traded them for 25 years and watch like a hawk when in that deep. And I've been burned bad a few times losing over 10k on a penny trade. But over all I make good money on them... But again it takes years of trading them AND losing to learn all the pitfalls.

I sure hope no one is buying GME as an investment. I think what you may be missing Randy is more and more people putting money in stocks are not investors, they're traders of some sort. People who are good can play short squeezes on bankrupt companies and make money. Sure it's crazy but it works.

I'm the worst at investing long term so I don't do it. But I'm good at seeing future hype on crappy stocks and profiting from it and getting out. I've been trading for almost 30 years and have had 2 negative years and one break even. You don't need to invest in quality names to make money but you better not be holding them long either.

[Burnadell]

It's getting more insane than you probably know. Take a few SPAC plays for example. People, and I mean big traders, have price targets for CCIV already for when they merge with Lucid. I try to tell them they don't have a clue what the merger deal is so it's literally impossible to come up with a price. It's insane.

I assume that anyone throwing money into penny stocks is only using beer money. I try to keep saying it's the same as the craps table. I hope people listen. I throw a lot at some penny plays (up to 20k) but I've traded them for 25 years and watch like a hawk when in that deep. And I've been burned bad a few times losing over 10k on a penny trade. But over all I make good money on them... But again it takes years of trading them AND losing to learn all the pitfalls.

I sure hope no one is buying GME as an investment. I think what you may be missing Randy is more and more people putting money in stocks are not investors, they're traders of some sort. People who are good can play short squeezes on bankrupt companies and make money. Sure it's crazy but it works.

I'm the worst at investing long term so I don't do it. But I'm good at seeing future hype on crappy stocks and profiting from it and getting out. I've been trading for almost 30 years and have had 2 negative years and one break even. You don't need to invest in quality names to make money but you better not be holding them long either.

I know that you, and probably a few others on here, are experienced traders and know what you are doing and you understand the risk involved, which is extemely high. Just based on the comments and questions of others on here, however, most are clueless about what they are doing...gambling. I have discussed with you before that I think we can do a disservice to novices with threads like this, especially when I see them post about "jumping in" or "pulling the trigger" when they have no idea what they are doing. If they want to speculate without suuffficient knowledge, then fine...as long as they know they are just rolling the dice.

[bphillips]

I know that you, and probably a few others on here, are experienced traders and know what you are doing and you understand the risk involved, which is extemely high. Just based on the comments and questions of others on here, however, most are clueless about what they are doing...gambling. I have discussed with you before that I think we can do a disservice to novices with threads like this, especially when I see them post about "jumping in" or "pulling the trigger" when they have no idea what they are doing. If they want to speculate without suuffficient knowledge, then fine...as long as they know they are just rolling the dice.

This is why I don’t throw out many of the plays I’m in. I don’t want someone who doesn’t know what to look for try to go long on a swing I’m playing. I would feel really bad if it hurt them and I’m doing something completely different

[Burnadell]

This is why I don’t throw out many of the plays I’m in. I don’t want someone who doesn’t know what to look for try to go long on a swing I’m playing. I would feel really bad if it hurt them and I’m doing something completely different

Exactly. My impression is that you know what you are doing.

[bphillips]

Exactly. My impression is that you know what you are doing.

This last year has made me feel better about my abilities

[Huntindad]

I know that you, and probably a few others on here, are experienced traders and know what you are doing and you understand the risk involved, which is extemely high. Just based on the comments and questions of others on here, however, most are clueless about what they are doing...gambling. I have discussed with you before that I think we can do a disservice to novices with threads like this, especially when I see them post about "jumping in" or "pulling the trigger" when they have no idea what they are doing. If they want to speculate without suuffficient knowledge, then fine...as long as they know they are just rolling the dice.

Randy,

Not sure why you are posting on this.

Tim was asked his trading thoughts. he gave an honest answer. Folks have to be held accountable for their actions.

[bphillips]

Randy,

Not sure why you are posting on this.

Tim was asked his trading thoughts. he gave an honest answer. Folks have to be held accountable for their actions.

A little reality check is good also. May help someone with no business doing it keep from losing money they shouldn’t be playing with

[RiverRat1]

I know that you, and probably a few others on here, are experienced traders and know what you are doing and you understand the risk involved, which is extemely high. Just based on the comments and questions of others on here, however, most are clueless about what they are doing...gambling. I have discussed with you before that I think we can do a disservice to novices with threads like this, especially when I see them post about "jumping in" or "pulling the trigger" when they have no idea what they are doing. If they want to speculate without suuffficient knowledge, then fine...as long as they know they are just rolling the dice.

You are correct. In the long run most will lose money. But if they're going to jump in and lose I have no problem helping them to better their odds.

I know at a few points in life I wish someone would have helped me because I kept trying and trying and losing until I finally figured it out.

I have zero issues telling them it's gambling. I try to tell them that myself. There is no get rich quick trading.

[Bassdeer]

I pretty sure most guy's on here are just trying to learn more about the market (like myself) then make enough money in the market to retire on, We have a financial advisor that does all our big time investing and we will have more then enough when we retire.
As for myself if I lose what I have in there it's no big deal, I am up 100% from my $3000 investment. Keep it up RiverRat1 your doing a good thing. I'll be jumping in and pulling the trigger tomorrow morning.

[Darrenkw]

What exactly does it mean when a stock is "shorted" and why and when would you want to buy calls?

If you asking for educational purposes, in a nut shell it means you have a $500 bow and someone else also wants to buy a bow, so I borrow your bow because I think that bow is going to go on sale. I then sell your bow to the person that wants a bow at $500. Next week as suspected the bow goes on sale for $250. I buy that bow and give it back to you and pocket the profits and the person I sold the bow to is screwed.
If you’re asking to short something, DON’T! Only the big dogs making millions and billions know how to do this accurately. The ones that shorted Game Stop are literally out Billions right now. This is because the price of the bow did not go on sale it went up 500% and now they have to pay that much in order (roughly $250,000 a bow to give the bow back to its owner.

[bphillips]

If you asking for educational purposes, in a nut shell it means you have a $500 bow and someone else also wants to buy a bow, so I borrow your bow because I think that bow is going to go on sale. I then sell your bow to the person that wants a bow at $500. Next week as suspected the bow goes on sale for $250. I buy that bow and give it back to you and pocket the profits and the person I sold the bow to is screwed.
If you’re asking to short something, DON’T! Only the big dogs making millions and billions know how to do this accurately. The ones that shorted Game Stop are literally out Billions right now. This is because the price of the bow did not go on sale it went up 500% and now they have to pay that much in order (roughly $250,000 a bow to give the bow back to its owner.

Here here is something make the decision NOT to short easier

If you buy at $10/share and your stock goes to $0 you’re out $10/share

When you short and it goes wrong there is no limit to your losses until you cover. Stocks can only go down so far but limitless going up.

[Bassdeer]

, so I borrow your bow

This is what I don't understand. How are they borrowing stock and who are they borrowing if from?

[DosToros]

Even if you don't have any idea what you are doing I don't think it is a bad idea to self invest in a few stocks. Nowadays the trading platforms have made it so easy to open an account. Take 500 bucks to td ameritrade and open an account. The key is to have realistic expectations and to be patient. There are SO MANY resources to help people learn basic trading. You can start investing 20 bucks here and 20 bucks there and just learn.

or

Pick 6 or 7 blue chip stocks or conservative dividend stocks and start investing a SMALL portion of your savings in them as a diversification. The younger you are the more I think it is a good idea.(not to say that it is not good for the gray beards too).