Invest in the stock market

 

Invest in Shares

There are many companies who claim that you can make a fortune trading shares. I agree with them but I would like to warn you.

Some of the richest people in the world made their fortune with shares.

Some of the companies who sell technical analyses software and give share trading courses are among those who makes the most money from shares. Not by trading shares but by selling their products and courses. There is nothing wrong with most of the products or courses.

One thing you must look out in these trading packages and courses is the free trial option. The option where you get a dummy account and you can trade on real time prices, but with "play money". On these accounts you can buy and sell shares as you would on the stock market. The only problem is with the selling. Most of the dummy accounts will sell your shares immediately if you decide to sell. This is not a real life situation.

One way to overcome this problem when trading for real is to buy share with high volatility. Those are generally your more expensive share but at least you will know that you can rid of it quickly if you want to sell it.

This is probably one of the biggest downfalls of share trading compared to forex trading. You can buy shares at any time while the market is open. There are normally some sellers trying to get rid of their shares. The problem comes when you try to sell your shares. Especially if you trade in cheap shares in smaller companies. It can happen that you can battle for three or four months to get a buyer for your shares. In the dummy it looks easy. You buy low and sell high. In real life it is not that easy; You buy low and if you can get a buyer, you sell high.

The next time somebody markets their technical analyses or online share trading software make a point to ask them about this situation. If you can buy and sell immediately in your dummy account, you might think that you make a good profit and that you are ready to go live and trade with real money. The first time when you want to sell your shares and there is no buyer for it, you will realize what I talked about.

Some advice I can offer is to subscribe to a free trial. But also subscribe to an advisory service like PSG's Stock Picker (click here for details) . That way you can measure your predictions against that of the professionals.

 

Before you buy share tracking software, rather subscribe for Standard Bank's free trial on their trading platform web site. You will find most of the indicators you need in there. You can also have a look at PSG's WEN System. Although the share tracking software seller want you to believe that they sell a unique system, you can get the same for much less if you shop around. My advice is to try one of these services first. They will not require you to buy the software at a ridiculous amount, you will only pay a small monthly fee. Then if you see that your are destined to be a share trader, only then spend the R14,000 for software, if they can offer you anything better.

Before you start trading you MUST READ "The Warren Buffet Way" by Robert Hagstrom. In the book you will learn what type of shares the (once) richest man in the world prefered and why. Get it at http://www.businessbooks.co.za/warren-buffet/index.php

It is a good thing to add some small upcoming companies to your portfolio. These companies do offer a higher risk than well known established companies. But the rule of thumb is "The greater the risk, the greater the possible profit".

The advantage of small companies is that you can buy shares at low prices, even 10c per share. If this stock price rises to 20c per share, you gained 100% profit. If you invest in a big company like Anglo Gold, you might pay about R335.00 per share. Do you think the Anglo price can just jump up and give you a 100% gain on your investment? It is not very likely.

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Please note that I do not attempt to give you any financial advice on this web site.
All I do is to share my knowledge and experience with you. What you do with that knowledge is all up to you.

Stock trading on the JSE