Wednesday, 26 August 2015

STRATEGIES - BUY AND HOLD

"Buy and Hold" is the most basic way to amass wealth via shares, as the name suggests you buy and hold them, not much more to it than that.

Having said that, do some research buy into solid companies that you are sure will be around years from now. Since you are basically using the dividend payments as income choose stocks with high and solid dividends.

Your trading platforms will all be different to what I use but most should have info on how much the dividends are and industry expectations on growth etc.... Since I live in Australia if I was to use this method I would by a good mix of banks, and a couple of big miners as I know they pay out solid dividends. But it may be different in your country

Also take note on how much your brokerage costs are. If you are paying $20 to buy a package of shares it can be a bit counter productive to buy them in $200 lots as you would be wasting 10% on brokerage maybe wait till you have a larger amount saved before you go in.  $20 on a $1000 package doesn't seem as bad does it?

Also it makes sense to buy across a few different industries and companies. Most experts would suggest you keep a portfolio of at least 10 different stocks as typically 6 might increase in value, one or might stagnate and one or two might decrease or worse still dissolve. Id hate to see you put all your money into one basket and loose it.

"Buy and Hold" is a great way to get started and while you're building your portfolio maybe subscribe to a magazine like "smart investor" I have found a few good ideas in that mag or bloombergs online any information you can start absorbing is good! You will start to get an idea if markets are high or low and if you want to accellerate your earnings a little you can move into the the next category of share trading

KEEP READING:





Saturday, 22 August 2015

UP AND RUNNING!!!!


Ok, we got the domain name How2tradeshares.com so now you can access this blog with the URL

http://www.how2tradeshares.com  - so bookmark it or remember it!~

I've posted some articles already focusing in on how to get started with share trading.... they are basic in nature and designed to get you started. I'm busy writing heaps more articles which will be appearing shortly so keep checking back and tell any friends you might have that are interested in share trading.

Before you start acting on anything in here, make sure you read the "ABOUT" section in this site... and then then start reading the "ARTICLES" page the posts most relevant to getting started will be listed there in the order they should be read. It will make much more sense that way than sifting through posts on the blog page... Got me?

Enjoy the page!

We'll set up a facebook / twitter and youtube pages in the near future as well!



Friday, 21 August 2015

TYPES OF TRADING

Ok, there are a number of types of share trading - you need to be familiar with these and choose a strategy which suits yourself, your lifestyle and your appetite for risk


SHARES - BUY AND HOLD
This is probably the safest, consistent and passive way to make money , you don't do much just buy the shares when you have money and collect the dividends as they pay out. Not much risk as you you are not on borrowed money but requires massive amounts of capital to get started. Probably has the lowest return, but hey... it's still cool. Its more of a long term strategy but at least you won't be having heart attacks on a regular basis if fluctuating markets are something that bothers you. To anyone doing this I would hope you have researched stocks that pay at least 5% or its probably not worth doing, just leave your money in the bank.

Important note: Warren Buffet made most of his fortune this way .... its slow, solid and long term but definatley has its upsides.


SHARES - TRADING
Still fairly safe, it is a bit more work but basically involves buying low (like say in a market dip) and selling on a market high. Other than requring a little work in reading graphs and having some idea how the market is doing (watching the news/internet etc...) its still fairly passive as an income strategy and doesn't require a lot of work but can increase your earnings from 5% to 10% maybe even 20% in a year.  This is where trading can become rater lucrative.

Only down side is that it still requires a lot of up front capital to invest before any reasonable income is achievable


MARGIN LENDING:
This is where shit starts to get serious. Essentially you take out a loan based on the value of the money you have to trade with. Example: I have $20,000 and I take out a margin lending account with my bank .... this will allow me magnify my share purchasing power.  of course this magnifies the risk too.

I opened up a margin lending acc with my bank.... (your bank probably has one... or talk to a bank that does if this interests you .... i think they're all the same from my experience) which could lend me a ratio of $4 to every $1 I had in there (4:1)

A quick example of how this works is that say I have  $10000 and I think a share is going to increase in the short to medium term (say 6 months to a year) I would use margin lending to buy up to $40000 shares.

 Lets say I was right and six months later the shares put on 10% i would make $4000 in equity evaluation  (plus any dividend hopefully 2.5% in 6 months minus any interest charges which might negate any dividend anyway but its worth noting when the dividends are due) you are left with a profit of upto 40%. this is not uncomon either and was typical of what I  was making when I traded on a margin.

Lets say I was wrong and the shares lost 10% I  would make a net loss of around 40% ($10000-$4000) which meant i would have to either hold on to the shares till they got closer to break even or made a profit or sell at a loss (remember interest is being charged the whole time you hold margin loaned shares)

Margin lending, I think is a great tool to start making money regularly if you have time to watch the markets and some appetite for risk but you need to be aware of the risks involved and not be playing with money that you can't afford to loose. This is a tool which makes it possible for average wage earners to transform their lives  and earn extra income from shares or even replace their income. without huge capital to start with

CFDS
This is similar to margin lending but for lack of a better word, is margin lending amplified. I frequently trade on these and get ratios of 10:1 upto 200:1

I watch the markets regularly and this gives me a chance to make great money without huge capital outlay. if we use the above example of buying a $10000 share package and it gains 10% with this i can make double my money on that 10% rise (minus any interest charges of course) or if it looses 10% i can loose the entire deposit.

I use this as my tool of choice but beware: CFDS's can giveth and take away in the blink of an eye!

Generally speaking I can make close to 1% a day when I'm trading on these things and provides a great income, until the markets fall apart and I have to start again







WHY SHARES?

SHORT ANSWER:

Basically because they tend to make more money than simply putting your money in the bank.

ADVANTAGES  OF SHARE TRADING:

Well picked shares should increase in value and pay out dividends generally speaking it shouldn't be too hard to find shares that yeild over 5% per annum and hold their value. Where at the time of writing this most bank accounts will struggle to yeild over 2%

Shares can increase or decrease in value as well so if you pick your stocks well, you can pull in your dividend and gain an increase in the value of your stock holdings as well.

So lets say you buy $10000 worth of shares in a company you might get a 5% dividend and the stock might also increase in value by 5% (not uncommon in shares) so if you sold your holdings  you could have made 10% in one year versus 2% by holding your money in the bank

DISADVANTAGES OF SHARE TRADING:

Shares can also decrease in value. You need to be aware of this.

Companies (just like any business) can have good and bad years or in some cases go broke. Shares are also subject to market sentiment, Which means that a company can be going well but fear, or panic in the market can artificially push the value of that company down. For example in a market crash or even the GFC which happened a few years back.


Either way with trading, time is your friend. If you buy in gradually (don't use money you need in the short term) most well thought out investments will pay out for you in the long term even if you suffer a short term drop. Generally speaking if you buy in a reasonable time (not at a market peak) and can hold out for a while the markets tend to go upwards.

WHAT ARE SHARES?

Some of you will know this already but some wont.

Generally speaking the most basic example I can give is that shares are  representation of your holding in a publicly listed and traded company. For example if you have 10000 shares in a company that issues 1,000,000 shares you control 1% of that company and are entitled to 1% of the profit distribution.

In the past shares were traded on an exchange floor (for example the New York Stock Exchange) and you would either have to be a trader or pay a broker to buy or sell shares on your behalf. Now with computer technology almost anyone can buy and sell online with a very minimal cost - this opens up the market like never before to the average person.

NEXT ARTICLES:

Why Shares?
Why do shares move up and down in value?





Welcome to my blog

Welcome to my blog on how to trade shares. I'll be posting a series of articles on this blog to help you out with your share trading ventures. This will include hints tips and strategies for staying alive in what has been a wild ride over the last few years and of course some wealth creation strategies.

First up I should say this blog DOES NOT contain financial advice as I'm not qualified to give you advice ~ but more a means to share strategies that have helped me acheive a level of self reliance from the share market and create a better future for myself.