Thursday, February 19, 2015

Trading stocks

Investing in the stock market can be risky but considering the rate of returns in savings accounts and other safer methods it appears to be the only way to generate an amount of return on your investments. 

For anyone starting out the chances of instant success is not good unless you are just lucky but a little reading and practice and you will gain confidence. You will also need patience. Not everything you buy will be at it's lowest price and you may need to sit on it for a while before it goes up. This is easier said than done. On more than one occasion I have sold stocks that I though weren't going to go up only to have them skyrocket just hours after selling them.

Starting off I would suggest you invest not less than $ 10,000. You can start with less but it is harder.
You should have an online trading account set up and this is an example of how the fees work from one company.
30-149 trades/quarter $ 9.95 Flat (Cdn or US) per transaction
In regards to commission charges, your commissions can vary based on how
often you trade and your asset level. Here's a breakdown of how you can qualify for preferred pricing:
1. Trading Levels
If you place 30-149 trades per quarter:
- Canadian & U.S. equities: $ 9.95 flat (unlimited shares)
- Canadian & U.S. options: $ 9.95 + $ 1.25 per contract
If you place 150 or more trades per quarter:
- Canadian & U.S. equities: $ 6.95 flat (unlimited shares)
- Canadian & U.S. options: $ 6.95 + $ 1.25 per contract
2. Asset Levels
If you hold $ 50,000 or more in household assets with RBC Direct Investing:
- Canadian & U.S. equities: $ 9.95 flat (unlimited shares)
- Canadian & U.S. options: $ 9.95 + $ 1.25 per contract
Your quarterly trading activity will be reviewed monthly and the pricing will go into effect on the 22nd of every month; you must re-qualify monthly for the pricing to stay in effect.

It is beneficial to gain frequent trader status as it will decrease your commissions allowing you to make more off smaller percentage increases in your stock selections. By taking your $ 10,000 and buying 5 different stocks and investing $ 2,000 in each one if you can sell them at a break even point after commissions, (hopefully more than break even), but if you can do this for 3 months you will have gained frequent trader status. From there it is a lot easier to make money. The reason is simple. A $ 2000 investment needs a 3% gain approximately to break even where you only need 1% once you have gained frequent trader status, the other 2% is yours.

What does this mean? Simply put, you buy $ 2000 of ABC stock and it goes up 5% and you sell it making $ 100, you commissions to buy and sell are $ 60 and your profit is $ 40. Your agent makes more than you. With the reduced rates your agent makes $ 20 and your profits are $ 80.
I intend to write more articles on strategies so if you found this interesting I hope you follow along.
http://www.verifiedtrader.net/