Investment Forum - hi all, newbie here in need of help
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Started by rskye Jan 26 2012, 16:55
Jan 26 2012, 16:55
Hi all,
I've just started trading on a fantasy trading account about a month ago. looking to gain experience before i start trading with real money.
i have a question regarding the pricing of shares. I recently brought shares that were priced at approximately 6.6p however i received them for 6.7p. i then tried to sell them when the market price had risen to 7p but i could only sell them for 6.87p. this has happened to me on pretty much every deal I've tried to make. can anyone help me and explain to me why this is? Should i be expecting this on every deal I make? thanks in advance.
Quite excited about this forum. look forward to benefiting from the wisdom of more experienced traders.
Hi all,
I've just started trading on a fantasy trading account about a month ago. looking to gain experience before i start trading with real money.
i have a question regarding the pricing of shares. I recently brought shares that were priced at approximately 6.6p however i received them for 6.7p. i then tried to sell them when the market price had risen to 7p but i could only sell them for 6.87p. this has happened to me on pretty much every deal I've tried to make. can anyone help me and explain to me why this is? Should i be expecting this on every deal I make? thanks in advance.
Quite excited about this forum. look forward to benefiting from the wisdom of more experienced traders.
Jan 26 2012, 18:53
From your question it is obvious you just don't understand how the market works and this can be costly (learn first, trade second!). Have a look at this article but by all means ask more questions (or more specific questions) http://www.shareworld.co.uk/index.php/news/35/230/Level-2-Explained/darticles/
From your question it is obvious you just don't understand how the market works and this can be costly (learn first, trade second!). Have a look at this article but by all means ask more questions (or more specific questions) http://www.shareworld.co.uk/index.php/news/35/230/Level-2-Explained/darticles/
Jan 26 2012, 21:51
hi raysor, thanks for the reply.the link was very helpful. I do have a question though. Using the example in the link, if the bid price is 28p and the offer price is 33p what happens to the 5p difference? where does it go? What i mean is why do i only receive 28p per share when the buyer is having to pay 33p per share?
Do you have any advice on where i should/could start in order to learn?
hi raysor, thanks for the reply.the link was very helpful. I do have a question though. Using the example in the link, if the bid price is 28p and the offer price is 33p what happens to the 5p difference? where does it go? What i mean is why do i only receive 28p per share when the buyer is having to pay 33p per share?
Do you have any advice on where i should/could start in order to learn?
Jan 26 2012, 22:15
That goes to the market maker. If he can sell thousands of shares at 33p and buy thousands at 28p he will be laughing all the way to the bank. Remember the stock in the article is explaining the 'Market driven' system. The larger shares, like FTSE100 are traded under a system called order driven. But it is good to learn the market driven system (the origu=inal market floor system) to understand the Order driven one.
Learn here!! The thing is you don't have much control over the price (and there is miles more to it than most people will ever know)but you just need to understand how the two systems basically operate. Learn how to judiciously use limits maybe. The main task is getting the share price direction right (that's all there is to it, LOL!)
That goes to the market maker. If he can sell thousands of shares at 33p and buy thousands at 28p he will be laughing all the way to the bank. Remember the stock in the article is explaining the 'Market driven' system. The larger shares, like FTSE100 are traded under a system called order driven. But it is good to learn the market driven system (the origu=inal market floor system) to understand the Order driven one.
Learn here!! The thing is you don't have much control over the price (and there is miles more to it than most people will ever know)but you just need to understand how the two systems basically operate. Learn how to judiciously use limits maybe. The main task is getting the share price direction right (that's all there is to it, LOL!)
Jan 26 2012, 22:47
i think i get the gist of the level 2 article, but i'll probably re-read it at a later time. i'm going to do more reading on this site and i'm sure i'll be back to ask more questions.
I was wondering about day traders; how do they make any profit? Surely share prices don't rise a whole lot in one day. How can day traders be sure that later on in the same day the bid price will rise above the order price that they payed for the shares? Or should I just forget about the whole business with day traders until I've done some more reading? I'm not looking to be a day trader myself but i am curious as to how they analyse and predict share prices.
i think i get the gist of the level 2 article, but i'll probably re-read it at a later time. i'm going to do more reading on this site and i'm sure i'll be back to ask more questions.
I was wondering about day traders; how do they make any profit? Surely share prices don't rise a whole lot in one day. How can day traders be sure that later on in the same day the bid price will rise above the order price that they payed for the shares? Or should I just forget about the whole business with day traders until I've done some more reading? I'm not looking to be a day trader myself but i am curious as to how they analyse and predict share prices.
Jan 26 2012, 22:58
Well like anything about stocks and shares there is never a single simple answer! Day traders come in all sorts of shapes and sizes. Some are ignorant people with too much time and money that may go through a good period when matket conditions are favourable and then in a bad period blow a couple of years profit and a whole lot more. Whilst there are a few who are extremely professional, knowledgeable and canny and accumulate a fortune over time. And many in between. But, as you say, best to forget about that and come down to reality. A good point you made though is how you get enough movement to make a profit. And of course you have to work out whether your stake and the share price is adequate to make a profit (after charges) But if you take the last couple of weeks, just look at Aviva. You could have bought at around 300p or less and they are now 360p. Now a thousand shares (£3k) is £600 profit, less expenses. What's wrong with that? Of course it is easy in hindsight and you may have sold out at 310, 320 etc!
Last edit: raysor Jan 26 2012, 23:00
Well like anything about stocks and shares there is never a single simple answer! Day traders come in all sorts of shapes and sizes. Some are ignorant people with too much time and money that may go through a good period when matket conditions are favourable and then in a bad period blow a couple of years profit and a whole lot more. Whilst there are a few who are extremely professional, knowledgeable and canny and accumulate a fortune over time. And many in between. But, as you say, best to forget about that and come down to reality. A good point you made though is how you get enough movement to make a profit. And of course you have to work out whether your stake and the share price is adequate to make a profit (after charges) But if you take the last couple of weeks, just look at Aviva. You could have bought at around 300p or less and they are now 360p. Now a thousand shares (£3k) is £600 profit, less expenses. What's wrong with that? Of course it is easy in hindsight and you may have sold out at 310, 320 etc!
Last edit: raysor Jan 26 2012, 23:00
Jan 26 2012, 23:23
you know, i was looking at the aviva share price charts earlier today and i was thinking "would i have had the insight or awareness to buy the shares when they were at 300p?" just looking at the technical analyses, i may have but i'm not so sure. Maybe when the price reached 320p it may have been an easier decision for me to invest, if i had seen it back then. Which actually brings me to another question, where would you recommend looking to get information on companies and the stock exchange? i was thinking of paying the monthly subscription fee for the financial times.
you know, i was looking at the aviva share price charts earlier today and i was thinking "would i have had the insight or awareness to buy the shares when they were at 300p?" just looking at the technical analyses, i may have but i'm not so sure. Maybe when the price reached 320p it may have been an easier decision for me to invest, if i had seen it back then. Which actually brings me to another question, where would you recommend looking to get information on companies and the stock exchange? i was thinking of paying the monthly subscription fee for the financial times.
Jan 27 2012, 09:31
Ok. Aviva was tipped/recommended everywhere including Shareworld http://www.shareworld.co.uk/index.php/share-spotlight/december-01-2011/ although initially the shares went down. You may find this is the case: Don't necessarilly rush to buy on the tip. If you agree with the article then make a note to buy, look at the chart and see where the price has been recently, what the trend looks like etc. and try and gauge what price level looks like doing (don't try for the lowest level but slightluy higher. Usually see a buy recommendation: "a buy at 300p" but more often than not it never quite gets there so you might target 305-310p. Of course other people say work out whether you think the stock is a buy or a sell then deal regardless of the price!
As to what you should read, I would suggest either Investors Chronicle or Shares Magazine (or both!). The FT is invaluable for professionals and non-pros alike but it is fairly expensive and possibly heavy going. Not so many tips but hard facts on a variety of topics (historic?).
PS. We are shortly to re-launch Eavesdropper and watch out for the monthly rcommendation by Redmayne (Share Spotlight)
Ok. Aviva was tipped/recommended everywhere including Shareworld http://www.shareworld.co.uk/index.php/share-spotlight/december-01-2011/ although initially the shares went down. You may find this is the case: Don't necessarilly rush to buy on the tip. If you agree with the article then make a note to buy, look at the chart and see where the price has been recently, what the trend looks like etc. and try and gauge what price level looks like doing (don't try for the lowest level but slightluy higher. Usually see a buy recommendation: "a buy at 300p" but more often than not it never quite gets there so you might target 305-310p. Of course other people say work out whether you think the stock is a buy or a sell then deal regardless of the price!
As to what you should read, I would suggest either Investors Chronicle or Shares Magazine (or both!). The FT is invaluable for professionals and non-pros alike but it is fairly expensive and possibly heavy going. Not so many tips but hard facts on a variety of topics (historic?).
PS. We are shortly to re-launch Eavesdropper and watch out for the monthly rcommendation by Redmayne (Share Spotlight)