Share dealing

[Ian C]

I may regret asking this on here

 

So - share dealing then. Has anyone got experience in it and can point me at some good broker websites?

 

Also any info on what size investment is considered worthwhile, and what sort of investments are there? I've heard of some very strange creatures out like one that involves borrowing shares (who the hell off?), selling them, and buying back when the price has gone down and then giving it back. Seems odd.

 

A link to something I can read to answer these questions for myself would be fine as well. No evangelical books or websites though Cheers!

 

-Ian

 

Looking ahead at how these things can go, I'm not overly interested in a pi55ing match between people about how much £s they think they've made, thanks

[keener]

borrowing shares (who the hell off?), selling them, and buying back when the price has gone down and then giving it back

 

This is basically called 'short selling' and is part of the reason the stock market went so badly wrong recently. Quite a few fund managers lost a lot of money 'cos they were doing this with Volkswagen shares not knowing that Porsche had been quietly buying up a big stake in Volkswagen. As soon as the news came out the share price went up rather than the down they were expecting and the bugger$ short selling lost loads! Ha ha!

 

I must admit that I don't know much about the stock market but, from the questions you're asking it seems like you don't know too much either. The stock market is sooo volatile at the moment I don't reckon it's a good time to have anything to do with it unless you really know what you're doing and can keep a very close eye on it - oh yeah, and be prepared to lose what you invest if you don't get it right.

 

With regards to brokers there's loads of online ones for small sales but make sure you know their charges and most wont offer any advice for small trades so it's up to you to do your homework on whatever you're buying. If in doubt though go with someone you've heard of - I think Barclays have a stockbroker section, for example.

[edge]

http://www.ft.com/home/uk

Dont know what you know but a look through the financial times gives a few of us noobs an idea of whats happening.

Maybe you will find a few good links on the site.

[probrox]

I decided to buy shares in January of this year. Lost a fair amount of money and now wish i'd never bothered. My advice would be to watch a selection of companies you're interested in very carefully for at least six months before buying. If i'd have done that i'd have learnt alot and might even have made a profit.

[caseys]

Will PM you some good sites tomorrow, I'll ask my friends who are stock brokers! As I work for a merchant bank!

 

Its pants for me to buy/sell shares, as I have to ask our Compliance department any time I want to do a trade :-(

 

I wouldn't recommend looking into short selling, it's too risky and volatile for your own money. You have to work out what you've got to spend, what you're willing to lose and then weigh up exposure to risk etc. And how long do you want to spend speculating?

 

Check out what happened to some biiiiig hedge funds recently who tried to short-sell VW stock..

 

http://www.telegraph.co.uk/finance/newsbysector/transport/3281888/Hedge-funds-lose-billions-as-VW-share-price-dives.html

 

Mmmmm billions.

[Ian C]

This is basically called 'short selling' and is part of the reason the stock market went so badly wrong recently. Quite a few fund managers lost a lot of money 'cos they were doing this with Volkswagen shares not knowing that Porsche had been quietly buying up a big stake in Volkswagen. As soon as the news came out the share price went up rather than the down they were expecting and the bugger$ short selling lost loads! Ha ha!

 

 

Hurrah now I understand that SniffPetrol joke! Thank you!

 

 

I must admit that I don't know much about the stock market but, from the questions you're asking it seems like you don't know too much either. The stock market is sooo volatile at the moment I don't reckon it's a good time to have anything to do with it unless you really know what you're doing and can keep a very close eye on it - oh yeah, and be prepared to lose what you invest if you don't get it right.

 

Volatile is a good time to do some jammy daytrades - I missed out on doubling my cash because I forgot to buy at the time, gutted. But yes, I'm 100% going into it with the expectation that it'll be a disaster and I'm never going to see any of my money again can't go wrong with that sort of approach I think.

 

With regards to brokers there's loads of online ones for small sales but make sure you know their charges and most wont offer any advice for small trades so it's up to you to do your homework on whatever you're buying. If in doubt though go with someone you've heard of - I think Barclays have a stockbroker section, for example.

 

I looked at Equinity's ShareView but it seemed very expensive, £20 a trade was their bargain price I'll have a look at Lloyds and Barclays, see what they say. I know £15 a trade is probably as good as it gets though. Thanks for the input

 

-Ian

[Ian C]

Will PM you some good sites tomorrow, I'll ask my friends who are stock brokers! As I work for a merchant bank!

 

Its pants for me to buy/sell shares, as I have to ask our Compliance department any time I want to do a trade :-(

 

I wouldn't recommend looking into short selling, it's too risky and volatile for your own money. You have to work out what you've got to spend, what you're willing to lose and then weigh up exposure to risk etc. And how long do you want to spend speculating?

 

Ah thank you for that, any info like that is very welcome, cheers. I don't have compliance issues as I'm not involved in that area at work, thankfully.

 

I'm going to start small and see how badly I get burned I also want to avoid complexity so that short-selling nonsense can forget it. I'd rather pick some stocks and keep a beady eye on them for a while and see if something 'clicks' where I go "aha, now is a good time to buy". I think I'll stick to a "buy at a low price and hopefuly they go up then I sell them" approach. As simple as it can get

 

-Ian

[Tannhauser]

Looking ahead at how these things can go, I'm not overly interested in a pi55ing match between people about how much £s they think they've made, thanks

 

How about how much they've lost?

 

I use http://www.iii.co.uk/.

 

From bitter experience gained ten years ago, I would say:

 

(a) be very, very cautious.

(b) behind the endless analysis and commentary provided by the financial guru industry lies the fact that the movement of share prices is inherently unpredictable. It's sophisticated gambling. The odds of getting it right are better than any other gambling system, but there are still risks. And it is so easy to kid yourself that you understand it more than you actually do.

 

I know you weren't after a moral lesson, but there you go.

[Ian C]

How about how much they've lost?

 

I use http://www.iii.co.uk/.

 

From bitter experience gained ten years ago, I would say:

 

(a) be very, very cautious.

(b) behind the endless analysis and commentary provided by the financial guru industry lies the fact that the movement of share prices is inherently unpredictable. It's sophisticated gambling. The odds of getting it right are better than any other gambling system, but there are still risks. And it is so easy to kid yourself that you understand it more than you actually do.

 

I know you weren't after a moral lesson, but there you go.

 

Ah yes, III, I forgot about them Although I've been perusing the Lloyds online share dealing and it's very nice with a good tutorial. I'm now trying to find out what "Limit" and "Stop orders" are. "Best" is easy, it's instanto-buy.

 

I'm also thinking that the term "Trade" means you've got the shares or sold them, and the term "Settlement" means when you actually pay for them or get the cash from selling them? Usually three days after the Trade event apparently.

 

I'll take a moral lesson anytime off you Cliff, no problem Yes, it's all guesswork - educated guesswork perhaps, but still just guesswork. I'm not going to be betting the house on it just yet.

 

-Ian

[MarkR]

To work out how small you're going to trade, you need to see what the company charges to buy and sell. If they charge a flat rate of £12 to buy and £12 to sell, then you need to make £24 to break even, so if you bought £100 worth of shares then you'd need to make 24% just to break even. Increase the amount of shares purchased to £300, then you'd only need an 8% increase to break even, which is still far too much unless you get really lucky. Now trade with £1000 pounds (at the aforementioned £12 quid fee) and you'd only need to top 2.4% to start making money which is far more realistic. If you're in it for the long haul then the fees start looking less important, but if it takes 3 years to break the fee structure then you'd have been better off shoving it in a high interest account.

[SteveR]

Spread betting can often be a better bet than actual share dealing Ian.

Take a look http://www.igindex.co.uk

[stevie_b]

Ian,

 

For technical queries about what terms mean, you could try this site: http://www.investopedia.com/?viewed=1. It's a bit American and quite technical in its explanations, but might help.

 

To work out how small you're going to trade, you need to see what the company charges to buy and sell....

 

Good advice there. I used to reckon on each trade needing to be of the order of £1000 minimum in order for it to be worthwhile. This was based on execution-only stockbrokers charging 1% of the transaction or £10, whichever is greater.

 

If you're doing your own research and don't need any advice, an execution-only stockbroker is what you're after (most are, like the service offered by http://www.iii.co.uk). Execution-only services will simply do what you tell them. If you asked them to buy £2000 worth of Bradford and Bingley shares in early August, they would have happily obliged, no questions asked.

 

Last time I looked into it, iii seemed to have the lowest charges, but that might be out of date now.

 

Spread betting can often be a better bet than actual share dealing Ian.

Take a look http://www.igindex.co.uk

 

I've used igindex a bit. Their web-based trading platform is nice to use. However, with spread betting, not only do you have to be right (about whether a share etc will go up or down), but you have to be right within a certain timeframe (some flexibility here, up to about 6 months IIRC), and they're very unforgiving of temporary bounces against your position. This is because of the stop-loss you usually have to have in place. If I place a spreadbet that says Marks and Spencer will go up, if their shares then dip down below my stop-loss level, my spreadbet will be closed at a loss. M&S can then go up as much as it likes, it won't make a jot of difference to me: I've been "stopped-out" and my bet's no longer active.

 

Investing in shares themselves is a much better bet (pun intended!) if you want to buy and hold, and sit it out waiting for a time to sell. Share-dealing doesn't need a stop-loss because you've already paid the broker the money to buy the shares. If the worst happens (the company goes bankrupt, nationalised etc), you'll simply lose the money you gave the broker. In spreadbetting your potential losses are unknown, so they make you set a level at which they will close the bet immediately on your behalf, to protect you from any further losses.

[Ark]

I reckon it's best to go spend the money in a casino - at least you get free drinks while you're losing your money.

[Soop Dogg]

Ian,

 

You also need to make sure you set up the right kind of sharedealing account. I know you looked at Equinity, and the main product they offer is a service where you deal on share certificates. This is fine if you're in it for at least the medium term as it takes about 2 weeks for your certificates to arrive. During that time, you obviously can't sell any of the shares you bought as you don't have possession of the certificates. This stops you reacting to fast changes in the kind of volatile market we currently have.

 

I believe they also offer a managed account where they hold your shares in trust. This allows you to instruct them to carry out the deals there and then on your behalf. This is what I'm interested in getting at the moment as I've been using the certificate type of account for too long now.

 

£20 fixed price per trade (+ stamp duty on purchases) isn't bad if you're buying a reasonable amount of moneys worth of shares. It only becomes expensive if you're buying a dew hundred quids worth of shares at a time because it can represent a significant percentage of your profit.

[ozz]

Spooky, I was thinking of posting almost the same question yesterday as I've not dealt in a few years and was looking to buy into some banking shares.

 

Rather than post I went to moneysupermarket, they recommed http://www.hoodlessbrennan.com/ so I'm signing up with them. Supposedly cheapest for low-medium trades that you can get. I'm only looking to dabble with a grand or two at the most. I have a profile on iii but the hoodless one seems cheaper. Annoyingly, the site says 10 minutes application then you could be trading, but then asks you for posted identity confirmation before it will let you...

[Wez]

Interesting thread, subscribed

[MarkR]

I was using selftrade for a while (but they were pricey at £12 buy & sell). Stopped trading at the moment due to buying a house but there are some deals to be had if you're in it long term...

[stevie_b]

...This is fine if you're in it for at least the medium term as it takes about 2 weeks for your certificates to arrive. During that time, you obviously can't sell any of the shares you bought as you don't have possession of the certificates. This stops you reacting to fast changes in the kind of volatile market we currently have.

 

What you mean here is a "nominee account". The nominee account holds the share certificates on your behalf instead of you holding them in your own name.

 

For info about stockbrokers, this might be useful:

http://www.thisismoney.co.uk/help-and-advice/advice-banks/article.html?in_advicepage_id=96&in_article_id=394196&in_page_id=90

[Ian C]

I went for Lloyds seeing as I have every other financial product I own with them it seems It's £15 per transaction, down to £11.50 if you do more than 12 a quarter, and it's a nominee account so pretty much instantaneous trading. They had an excellent online tutorial and I like their online presence anyway, it's very well done.

 

I'm just awaiting the letter through the door asking for one of their own bank statements back as proof of ID heh. Then I'll just use it to monitor some stuff to start with. Very tentative stuff

 

-Ian

[MarkR]

Nice... start looking for info and doing your research. For example: Usually (although this is not a normal market) you'll see thing like - Oil goes up, airline shares go down. You'll start to try look for these patterns and guess to see if you got it correct. Look into PE ratios as this gives you an indication of the share price relative to the income the company generates. Their is a whole lot of maths involved in this silly business.

 

http://en.wikipedia.org/wiki/PE_ratio

[stevie_b]

Here's your new avatar Ian:

 

[carl0s]

I use Barclays online stockbrokers (part of Barclays Wealth). If you trade very infrequently the trades cost £12.95. I think III looks better and is a little cheaper, but you have to wait for activation stuff through the post whereas Barclays let you credit the account from a debit card and trade right away.

[carl0s]

RBS looks like a cheap buy at 45p, but then I said that when they were at 70-odd P

[b_have]

10% up on yesterday.I bought them at 400p That seemed cheap at the time, compared to a few months previous.

[Marty]

I started share dealing about a month back using Hsbc banking, they charge £11 per transaction.

I've done well so far, through luck more than skill i think.

I work for a company called galiform, who own howden kitchens. I had been watching our shares for a while and decided to buy some 3weeks ago, at 13.5p each, i got £1000's worth. Sold them last week for 23.5p each. I also bought £500's worth of woolies shares for 3.5p each and sold them for 4.25p each. So i'm up about £800 at the moment.

Penny share's are the ones to buy if you want to make the quickest profit, but on the other hand, you can also make the quickest loss with them

I've now decided its not a good time to be buying shares any more, the ftse is on it's way down along with share price's, so i'm keeping my money in my bank for a bit, until the market recover's anyway.