How do I open a small stock trading account?
 

I don't know much about stocks, and I don't really find them interesting enough to study. But I know they are good to own. So I'd like to open a small account and just start buying a few here and their, by small I mean less than $500. Its a start, I'm hoping to grow it. My plan is to buy stocks from companies that I understand and like. HP, GE, Toyota, MB, Google, big blue chip companies, then hold them for a long time.

Anyone use E trade?

www.thinkorswim.com has a nifty interface but I think the minimum account is $2500.

Sixto
87 300D

You should take a class on managing risk before put any money out there.

Sixto
87 300D

TD Ameritrade is perhaps one of the cheapest FULL-service brokers. Thy're in Omaha, Nebraska........their corporate office is 2 miles from where I grew-up in Omaha. You can walk right in, and buy stock in person, if in Omaha. :)

Send them $2,500 to fund your Money Market checking account, and you're in business. You don't want a Fidelity, or some overpriced brokerage firm.

I bought my first shares of common stock from Omaha Securities, the predecessor of Ameritrade in the late '70s. Mr. Joe Rickets was a struggling broker back in the day.......now, he's a gagillionaire........founded Ameritrade. Joe drives a late '90s S500, black in color -- last time I was by there and saw him drive up. --That was 3 yrs. ago.

Today? I dumped everything in Vanguard, Valley Forge, PA. from Ameritrade in '06.

.............or subscribe to Bob Brinker's MarkeTimer taking his advice, OR, buy shares of Berkshire-Hathaway, Inc. stock -- that is all I do. It's working out real well for me.......especially the Berkshire stock.........closed today (yesterday) @ $134,940.00 a share,:eek: record high.......no tax implications/event either, 'til you sell.......the market tanks, Berkshire goes up........the market goes up.......Berkshire goes Up......it's a win-win stock. :) http://www.marketwatch.com/quotes/brk.a

Check it's history vs the S & P 500 index, since 1965........up over 22% per year average, COMPOUNDED! My portfolio is jammed-up with Berkshire stock......that ain't gonna change while I'm alive.

I am not in favor of those who trade stocks as a vehicle for "investing".

Those that buy stocks for a short term gain are gamblers, not investors.

Investing is a long-term proposition, and holding stocks or bonds for the long haul is essential for optimal returns.

Only buy stocks that you plan on holding for the forseeable future, and avoid the two major pitfalls that lead to poor returns in investors portfolios: rapid turnover and market timing.

Why don't you follow the example of Warren Buffet?

Warren Buffet is my hero and is without a doubt America’s most successful investment manager. The turnover in his portfolio is not only low, it is nearly non-existent. His philosophy is best explained in this 1996 Annual Report of Berkshire Hathaway: “Inactivity strikes us as intelligent behavior. Neither we nor most business managers would dream of feverishly trading highly-profitable subsidiaries because a small move in the Federal Reserve’s discount rate was predicated or because some wall street pundit had reversed his view on the market. Why, then, should we behave differently with our minority positions in wonderful businesses?” “…we keep most of our major holdings regardless of how they are priced relative to (current) intrinsic business value…a ‘til death do us part attitude… As investors, our reaction to money managers who trade stocks daily is much like our attitude toward space exploration. We applaud the endeavor but prefer to skip the ride. …Indeed ‘institutional investor’ is becoming one of those self-contradictions called an oxymoron, like ‘jumbo shrimp’, lady mud-wrestler’, and ‘inexpensive lawyer.’”

Simple. You don't!

Please consult a financial advisor, preferably a CFP, before you proceed. Otherwise you are doing nothing but gambling.

There's a distinction to be made between gambling and trading, both of which are separate from investing. I sure hope fund managers are trading and not gambling.

The trader's best friend is the gambler. Someone has to contribute all the money being made in the market.

IMO the key is to develop and hone a trading strategy using paper money. When your strategy consistently outperforms a solid indicator like the S&P 500, slowly edge into your trading strategy with small doses of real money. Mind you, building a successful trading strategy is more work than getting a college degree.

Sixto
87 300D

True - hence my warning after reading the first sentence of the original post!

People have zilch attention spans, is what I surmise, suginami. The masses are clueless on acheiving personal financial wealth.......

When I started buying shares of Berkshire-Hathaway stock, in the $1,000 a-share-range over two decades ago, I noticed how people involved in financial sales products, would instantly become very uncomfortable in comparing their products to my Berkshire holdings. Financial sales people (and their sheep) have nothing that can compare to Berkshire's 22%+ a year, compounded performance since 1965.:)

Berkshire-Hathaway is currently trading in the $135,000 a share range........

Don't do it, man! The only way I would advocate such an account is if I could take the specified amount of cash (in your case, $500) out of the client's pocket and burn it on my desk while he watched-and he didn't twitch. Stock accounts traded short-term are, as many have mentioned here, gambling. Get with an adviser you trust and set about building a long term, diversified, appropriate-for-you portfolio.

Open a Roth IRA at E Trade or somewhere like that. I think they will open an account with as little as $500. Then just put some of every pay check into it. Once it's in there you can invest it in any number of things, a money market fund, if nothing else. Then when you have enough there, and have a solid investment idea, you'll have the wherewithall to invest in it.

E Trade is what I have been using for some time. They have good tools for reearching companies, and they have some nice educational stuff on their site, too. Good luck with investing. Time IN the market is more beneficial than tim-ING the market. So, it sounds like you have the right idea.

If you have to ask, STOP. As someone else said get some education first.

You can loose a lot of money faster than the Colt's went down last Sunday!

It is, after all legalized gambeling. My wife is a Chfc, and even she leaves our investments to someone else.

The Doctor does not treat is own family.

John

Let me be more clear I don't think I should have used the word "trading", I have no intention of being one of those gamblers that trades every day. When I buy something I'll probably hold forever. This year I'm going to have a few hundred extra bucks, I wanted to buy some stock in big companes like say GE. Figure if I buy a little bit each year and hold it, in a few years when I actualy have money and some stock built up, I'll be able to turn everything over to a manager.

My strategy will be right out of Warren Buffett's book, because I have read his book.:D

I figure I'll be able to get a better return on my $300 buying probably some GE and HP stock, then leaving it in the bank. This will also get me in the habit of buying investments.

:confused:

Other than co-authoring an assortment of essays many years ago, Warren Buffett has never written a book.
If he had, he'd of been promoting it at our annual shareholder meetings, which he never has......

Good luck anyway!:)

Again, you need to consult a financial advisor.

I don't have enough money for them to give a crap.

Hattie, a good start is a savings account with a decent interest rate with a $500 investment the simple cost of the trade is going to eat up any profits that you may have the gains may be small......but its a gain. If you want to "own" a piece of a company check out share builder and you can buy small pieces of stock at a reasonable price, get yourself on a small program of depositing $100 a month and watch it grow. Personally I think you should devote whatever money you have to buy leads and knock on doors, if you be aggressive with purchased leads you would easily get your money back. The only 100% measure I can think of to insure success is get an education and work your ass off, that is the only common denominator I have seen.

Pulling gains out of the stock market right now it tougher than you think, if you want a good ROI buy a POS fixer upper and live in it. You may have to live in a tough 'hood but at least its a start.

True, thats what everyone is saying.

I'm not giving up, not by a long shot. I just started working and calling expireds last week, no luck yet, but I'm confident I'll get something soon. Eventualy something has to pan out, if you do it enough by defualt!

Working hard, check
Education, in progress.
flat broke, check.:D

I need to invest in advertising to help bring in leads.

I want to buy a house, as soon as I have some cash. Its amazing all the deals out their. I can get for like $250k a POS house on a street full of $700k-$1m homes. Its the worst house on the street by a long shot, but its on a decent lot.

Now that would be a good deal!

You have to get started somewhere, and E*Trade is one reasonable choice. Ameritrade is the other. You will be hit with a service fee at E*Trade if your balance is below $20,000 and that tends to lead people toward Ameritrade.

E*Trade now has "global trading" and allows you to convert your weakening dollars into a more "hard" currency like Euros. The return on doing that might beat a savings account with its typical interest. You can still get in under $1.50 per Euro. :)

I have not converted any dollars yet as I have not been able to select anything to invest in with Euros. The French and German markets can be traded. I'd like to find something rather secure like ticker TIP is in the US market, but hold it in Euros. Seems more stable than holding TIP in dollars.

:)

Ken300D

P.S. You should look into the concept of the Direct Stock Purchase program a lot of companies have set up. Dividends are re-invested automatically, and you can get set up for automatic monthly withdrawals. In many cases, the company pays all the investment costs, and in some cases will offer a discount off the market price of a few percent. A DRIP in a REIT has been my best steady performer.

That's too bad. I thought you were going to buy a share of Google today..?

Hatt, no one has answered the question poted in the title of this thread. In the time you have wasted posting, reading and responding to the advise, you could have gone (probably walked both ways) to a bank and had an account open by now.

There is a lot of financial bsing on the internet--horrible place to get financial advise from individuals. However, if you insist on using the tool, when I typed in the title to your thread on google, about a thousand different options including minimum amounts, ect.... popped up.

I did, Sharebuilder has a $4.00 minimum deposit.

That doesn't answer the question of "How do I open a small stock trading account." To me anyway.

Sorry go to www.sharebuilder.com -------------> enter information ----> deposit money -------------trade.

Finally, an answer:D

I was already did a Google search and got a million hits. I was looking for advice like, I use such and such, and it works good, and the fee's are low.

Trading fees and performance are one thing. How about other services? How much research material is available and do they charge for it? What's their policy and history of accommodating you if press the wrong button while trading? The sell button is awfully close to the buy button and it can be catastrophic to sell something you don't own. How good is their phone support? I don't even know what else to ask.

Is there a Consumer Reports review of on-line brokerages?

Sixto
87 300D

Sometimes it easier to have a small brokerage account if you start by putting a lot of money in it.

Somebody once defined "stock broker" as "Someone who invests your money for you until it's all gone."

They're not really THAT bad, but sometimes the definition will feel apt.

First I have been investing for 30 years, and a "Gambler", although I prefer active trader, on and off for the last 10 years.
I do not Gamble, if you knew how I trade it would scare the pants off ya, in the past 3 weeks I have executed 56 trades (round trip), 53 winners, 2 losers, and one +/- a couple of bucks. While this is above average for me, it isn't far.
BUT I do not recommend anyone to get into it, the stress is brutal, and the hours are terrible. I spend hours and hours every night studying, researching ... although it is starting to pay off well.



Onto the purpose of this thread.

I would say anyone with under about 10k to invest find a good No-Load Mutual fund and put it there. You won't be able to buy enough shares of most stocks to make a profit after commisions.
Many No-Loads allow you invest with them directly, for no fee. Although I think most have a 2500 minimum for Non-IRA. Your bank may offer this service or any of the name brokerage firms, not the full service, just don't go to joe's investment house.

TD Ameritrade, Schwab (who I use), or any of the others mentioned here will do nicely.

Pick up something like the Forbes review of Funds, they have a good review of all of the funds. Look for a fund that has delivered well over the longer term, 5 or 10 years. The Forbes review also shows performance in up vs. down markets. So if you get a fund with an A in an Up, and D in a Down and the market tanks you get hosed bad.
I would look for an A or B Up and B or C down.

There are other reviews, Forbes is my favorite.

Even the small investor has to do some research.

Finally, setup an automatic transfer 50 bucks every paycheck, whatever amount, into the account. Or even into a plain old bank savings account.
This "becomes" a bill, before long when you sit down to pay your bills just becomes on of them. Doesn't sound like much, after a while you'll be surprised. And since it is a "Bill", at least in your mind it gets put away every month.

Pay yourself first !!!!!!!!!!!!!!!!

Do ETFs skip fees and loads altogether?

Sixto
87 300D

Basically yes, but you would have commissions to buy and sell.

They are basically sector focused Mutual funds.

For a small investor, a regular Mutual fund provides better diversification.

Also, I would look for a fund that has some international exposure.

What type of net, post capital-gains is "really well," for your 3 weeks trading? Reason I ask is because no one in my social and investing realm that is into this type of trading, ever has any profits to talk about. --Ever.. I have to believe they've made none. One guy that trades like crazy, is still driving the 13 yr.. old Lincoln Town Car that he had before he started trading...... Cars usually tell a story about their owners.....

Like Warren Buffet?

I rarely put more than about 15k at risk, I trade options primarily.

Usually 5 to 10k, that too is if I let it all get away from me, Stops limit that.

That said, I was averaging a rate of 5% / day, although that was a lot of up today down tommorrow ... Since I locked onto a special technique (If I tell you I will kill you), 10 to 20 % / day, with fewer and fewer down days. I have only lost money once in that 3 weeks at EOD and did extra well these last 3 days with the market in the toilet.

I am averaging just over 3k / day for the last 3 weeks, net commisions still have to pay taxes, though. The number has been slowly rising since mid summer.

I use the 3 week figure, as I do my stats based on Options Expiration, so my "Month" ends next Friday. Just my way of doing things.

I am still trading lightly. For a long time I was like that guy with the lincoln, maybe a bit better. Making a decent living, but not the big $ that people think of when they hear you are a trader. And a lot of up dwn up down ... fortunately the ups were a little better than the downs.

As I get better with these techniques, I will slowly allow my at risk to increase. Although, reviewing my trades, I think as I get better with these techniques I should/could at least dble the return without risking any more.
I netted 4100 yesterday, if I would have done it by the book, 10+ easy, but I still take my profits early, and enter later than I should.

I have had high stress corporate jobs etc over the years, just a walk in the park compared to trading. Although as a Nerd working with 24x7 systems, the hours aren't a lot different.
I figure at the low end 60 hours a weekly, on the trading and studying. Not counting the bookkeeping etc at EOD. Hopefully if I can keep this up, maybe I'll turn it over to an accountant.

Remember too, I'm not a newbie. I bought my first stock in the early 80s, my first option in the late 80s. Although it wasn't until the mid 90s that I day traded. Then I took a break, LUCK not skill, got a job offer I couldn't refuse right before the 2001 meltdown. Y2k stuff actually, so the account got hit then, but so did most peoples.


PS I drive a 2004 Escape, 11k miles, never leave the house.
But I'm a cheapskate, I prefer Frugal, so I wouldn't buy much more no matter what.
Even the SL, I'd probably go older, ie 107, if I found a good one.

Most of what you posted is not correct.

ETF's (exchange traded funds) are index funds that are listed on an exchange and can be bought and sold like any other listed security.

They still have fees, just like any mutual fund. They are very low.

An ETF provides the same diversification as the index fund that they are emulating.

The difference is that an ETF trades like a stock, so the investor can control capital gains distributions, which makes them very tax efficient and are excellent for you taxable account.

Yeah they spend their money on more important things?

Not really incorrect, yes they have very small built in fees.

But depending on the ETF they are more like sector focused Mutual Funds.

For Example OIH is an ETF based on certain Oil Companies, drillers and explorers more specifically. SMH tracks Semiconductor companies.
There are ETFs for various industry sectors, Retailers, Financials, even country specific etc.
These can be good to get some diversification within a sector, but you have to do more homework than a mutual fund, less than specific stocks.

The more commonly know ETFs, DIA, QQQ, ... are index funds and match the index they track.

All are still more narrowly focused than most Mutual Funds.

There are now dble long (they use margin heavily), Short, and Ultra short ETFs as well.


I would never do trading based on Taxes. Fundementals, or technicals Only.

Possibly dumped a big loser to offset a big gain, maybe.

Or a trick I sometimes look at, find stocks that have had a HUGE gain during the year, many people will dump them near year end.

Not necessarily........

I like your jib 'n detail to my Q......thanks! Keep tabs on your annual income from your annual trading labor.....AFTER INCOME TAXES......and keep a solid eye on your trading's net worth.......(if you are really interested in your progress)

--The words in your quote I bolded, are usually the downfalls of your trade-profession......that is, if you need to increase the $3K a day income you are now earning, ($750K a year) you will likely keep shooting for the Moon......you're eventually going to crash and burn. Rarely will someone make, OR KEEP earning $3K a day.....

You may be an exception to the stencil-traders.......time will tell..

Keep us posted!......and GOOD LUCK!;)

Thanks Joe.

First I am a cheapskate, again I prefer Frugal.

Our needs are significantly less than what I am making, and I don't see that changing much. I am a simple person, not into show.

For example when we bought our house 20 years ago, we could have afforded much much more. But I put a cap on the Mortgage amount that would actually have (and has) allowed us to live comfortably on either income. It helped that we found a house we both loved, actually below the cap I put in.

My plan and goals are much less than I have been making, once I hit that goal each day, I significantly throttle back. Going for near perfect setups, in smaller quantities, with tighter stop loss #.

I plan to be slow and cautious, the "Ego" factor is an ongoing problem, heck the trading mental frame of mind is difficult to manager.

I will try and post a note or two, and if this continues maybe share the techniques. Actually where to learn them.
It's not Wiztrade or Teach Me to Trade or ... Don't bother, some people do reasonably well with them, most do not. I have not taken these classes, I just don't trust people that sell systems, that don't use them.

The gentleman that teaches my system severely limits class size, only a few a year, and the rest of the time is online with us Trading, has been for years. Interestingly they aren't that expensive, much much cheaper than any of those you see on the infomercials.

I think he honestly enjoys it.

Trust me though, it still ain't easy, and you have go into it 100%.

There are a few necessary steps before you do this. I've been trading for a few months and I can say with certainty that it needs fixing. I have a full-time job as a programmer and have a pretty good steady paycheck. So I decided to start investing or trading. After thinking and researching online sources, I chose trading because it seemed more profitable. I also took a specialized course. Then I learned how to use classic pivot point formula, so my passive income became more stable. So I suggest you have a job, don't rely on trading, at least at first, and use proven sources and programs to improve your trading. Let me know if my comment was helpful

Buffet has a much lower cost class of stock that is worth looking at as well in my opinion. My only concern is how the stock of that company may react. When Warren Buffet becomes incapacitated or dies. He is in his nineties.

A big deal to me is the man seems ethical besides smart. His operation is pretty broadly based so that is also somewhat of a safety factor. They are flush with cash and have been buying back stock. That also helps you gain.

Joe remember that when we die we both take the same dollar amount with us. No exceptions.

I would suggest to any young person to take care of owning a home first of all. Eliminate any debt. Especially any higher interest debt. As quickly as personally possible. We seem to have been entering a period of far too many people just being essentially debt slaves.

To me the standard of living has been falling really. The illusion it has not is created with accumulated and accumulating debt. In far too high a percentage of the society of north America. Plus at all government levels it seems.

Do you know you are writing a dissertation to a bot?😃😃😃

This site has provided a wealth (no pun intended) of investment knowledge over the years.
https://www.bogleheads.org/blog/who-are-the-bogleheads/investment-principles/

Never tried stocks, too, but I really want to, especially now, when the risk of recession is particularly high, and all the money that I would keep just in my bank account can lose value. That’s why I want to invest as much as possible to be sure that I will have something in case of an emergency.