Sticky Thread for newbie investors like myself

[Big Moe]

I have been reading the forums for a couple hours now to learn what I can before I start anything, and I will likely be reading for several days before I make any moves.  One thing I have noticed is questions by newbie investors scattered throughout the forums about recommended stock brokers and recommended real time stock screeners and there were several other good questions too that I cant recall at the moment.  Would it be possible to have a sticky thread in the Beginners Guide that lists these great investment tools?  I understand that SSP is not able to make recommendations for certain things like which stock brokers are the best etc., but maybe some of the more experienced users on this site can make their recommendations in the sticky.  My hopes are that the sticky thread will not be a discussion thread so much as a point in the right direction for new investors looking to get started without all the searching through forums.  I have been on forums for other sites, and most people find it aggravating when people keep asking the same questions over and over and the answers are already in the forums.  If the answers are centralized to a beginners sticky, maybe these repeat questions would be reduced.

This ended up being a lot longer than I originally planned so I will end it here.  Thanks to any who respond,

Morgan

[Super Stock Picker]

Hello,

Indeed, that could be a good idea to get this beginner sticky at the the top of the beginner's guide forum.

Would you like to propose the first topic that you would like to get answers for in this beginner sticky?

After that, new questions would be answered as they come...

[Big Moe]

I guess my first question would be:
When I finally get the cash I will probably be starting with a relatively small portfolio ($5000 - $10000.) Based on that, what would be a few recommended online stock brokers (as far as low transaction fees)?  This to me is a very important question for new investors since most of us will have to start small and like Brian and/or Victor keep saying throughout the forums the transaction fees will eat up potential gains on smaller portfolios.

Any additional information on this topic would be most welcome too,
Morgan


 

[LuckyWon]

Hi Morgan,

I have been using Interactive Brokers and QuoteTracker charting software.

IB has the lowest commissions I have ever seen (about $0.01/share for Canadian equities and even cheaper for US equities). So for a 100 shares the commission is only $1!!  However IB does not have any RRSP accounts.  So it won't help you if you plan on using SSP within your RRSP.  Also, it is 100% electronic.  So there isn't too much human interaction, and instead of margin calls they just sell stuff for you.  But I still think that it is the best deal around for anyone who does more than 5 to 10 trades a year.

You may not need QuoteTracker.  I use it for technical analysis for some futures trading.  However there is a free version where I think the only difference is advertising. So if you can put up with the ads its a great deal.

Happy trading

[bryanmcn]

Morgan

As noted my advise is not to invest with less than $50K. Buy a GIC, pay down your mortgage or reduce your dept.Any of those options are a better strategy in my humble opinion. Boring maybe ... but smart.

If you insist on trading the V5 holds the least stocks and performs as well or better than the other portfolios. For the V5 in the last 72 closed trades there were 35 losss and the average performace was +12.1%.

The losses ranged from just under break even to -79% with the most frequent being between 25 - 37%. The average loss was -12.9%.

Of the winners, the gains ranged from 0 - 373% with most frequent being between 37 - 45%. The average gain was 35.7%

What this means is that you have about a 50/50 chance of getting a winner with your first V5 pick. If it is a winner you will probably gain around 40% but if your lose you will probably loose around 30%.

Realize that you could lose a lot on the first trade. First time traders usually let emotion rule their decisions because so much of their savings are at stake. If you loose 50% on the first trade you will need a gain of 100% on the next one just to break even. In the past four years there has only been 2 trades out of 72 that returned better than 100%.

If you win, you'll probably sell early and then throw all your winnings into the next trade like a drunk gambler thinking that you'll be just as lucky. Its human nature. 

GOOD LUCK!