There are a few things that you need to acquire in order to physically start trading.
The first is a PC/Mac/Laptop/Tablet or even these days mobile device with an internet connection.
The second thing you need is a trading account. If you’re a normal resident in the UK then you have scores of options. If you’re not a UK resident but want to use a UK based broker, then options depending where you are in the world are very limited. The only provider I know of in the UK that provides access to expats in the UAE for example is svssecuties or if you are fortunate enough to be an HSBC Expat customer you can use them too. The other banks like Barclays may have a similar service if you bank with them – you’ll need to check this directly with them.
If you are UK based then what you want is an execution only broker. This means that you’re wanting to trade without any advice. Obviously you can do down the advisory brokerage route but that will come with additional costs.
For me, my main criteria is how much each trade will cost me. Typically every time you trade you will be charged to buy shares and then again to sell them. Remember that the more you pay to a broker for whatever service, the less profit you will earn. So do your due diligence.
I have used www.iweb-sharedealing.co.uk, which is only £5 per trade and they don’t have any no activity fees but they do now charge a £200 account opening fee. The platform is pretty basic and doesn’t have a lot of the other tools that other sites have but it does the job.
IGindex have recently offered a service and given how happy I am with their spread betting service, I will have a go at using them soon. The cost per trade is at the lower end of the scale too.
The International Investor has a decent comparison table to make the decision easier for you.
Worth a mention is interactive brokers, I’ve been reliably informed recently that for US stocks they only charge $1 (at time of writing), so if you are interested in trading on the US markets these guys may be worth checking out.
Remember that you can open more than one account and always move brokers if you decide that one doesn’t suit you too well.
Now we’re getting to the important things.
Data – and lots of it
The second most important thing in my opinion when it comes to trading or investing is getting the right data at the right time. I say the right data, because the internet is awash with lots of useful information and even more garbage that you want to avoid.
In principal I would say that any decisions you make regarding any potential stock pick should be made on hard facts rather than anything you may read on bulletin boards. Now I’m not saying that some of the discussions on these boards can’t have some useful information in them, in fact sometimes they do. The problem is that in general many of the people posting on these forums don’t have any more cold hard facts than you and try to sway others one way or the other depending what interest they have in a stock.
So great sources of data I use are:
This site is really very good for going through company news announcements which are released every day. We’ll go into details later on things to watch out for but this site makes it easy to go through each announcement one by one.
This site is my go to for checking what the profit forecasts are for any company I’m looking at. I’ll go into detail later as to why I find this important.
Investor relations sections on company websites.
Many websites list what a company’s key figures are but you can’t always trust them to be up to date or accurate. The best way to find out anything you want to know about a company’s figures is to go direct to source and view their reports / statements directly in the Investor Relations section of their websites. I’ll go into what to look for and why in sections further down.
I do use a selection of other websites too but I’ll come to these in later sections.
Money to Invest / Trade
This may sound like an obvious one but one thing that may not be that obvious is that you need to have a certain amount of money to trade with that you can live without. The last thing you want to do is put money into trading that you can’t afford to lose or will be relying on.
The right attitude
If you’re a gambler at heart and see trading as having a bit of a punt, this probably isn’t for you. Trading is far more than having a gamble and “hoping” things will go up in value. You need to be of the temperament that can make calculated risks and can make a decision whilst taking the emotion out of it. Believe me, this is absolutely one of the hardest things to master!
Right, well now you have essentials covered, let’s begin to look at techniques in order to help you make a trade.