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Community


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Online Share Trading

Engage and learn about markets and trading online

For the Beginners

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Not applicable
This is what I have learned over a period of 3 months so far: Purchasing Ordinary Shares: 1.The bigger the market cap, the less the risk. 2.Time is your friend. 3.Greed is your enemy. 4.Don't listen to the noise. They can not see the future. 5.Fees are your enemy. 6. Mr Market does not care, has no feelings and cannot be relied on at all. 7.Dividends are pretty useless unless you own a massive amount of a share. Warrants: 1.Are pretty useless unless you own a massive amount. 2.Gearing allows you to buy more with the money you have. Share Installments: 1.It's a dividend play. 2.Are pretty useless unless you own a massive amount. 3.It's the poor man's way of buying expensive shares.
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16 REPLIES 16
SimonPB
Valued Contributor
what's a "massive amount" ??
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Not applicable
One example is buying a warrant at 39c and selling at 45c. You need one heng of a lot to make it worth your while. I see guys wanting to sell 150 000 x 39c =R58500 and sell 150 000 x 45c = R67500. They make 9000 bucks. Now you still have to bring fees, vat and other stuff into the picture. You have to play it big. If you try this with 10000 bucks, you will take home +- 1500 bucks. Seems like peanuts.
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SimonPB
Valued Contributor
cosst aside .. it's not about peanuts, it is about percentages ..
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Not applicable
Absolutley percentages. Make 5% per trade 3 time per month you are up 15% (less costs maybe 11%) in a month. over 12 months that is 132%....double your money, sorry read that again DOUBLE YOUR MONEY IN A YEAR!!!!....show me a deposit account that can do that for you?
So do it 2x per month your profit is 7% (conservative) over a year 84%.....usual consensus that if you can make 30%+ growth per year you are an elite trader!
So do 1 trade per month @ 3% profit and you are at 36% for the year.
Risk yes but if you manage them correctly you are better off than most. UNDERSTAND THE PRDOUCT AND THE SPREADS PLUS RISK & YOU MAKE MONEY
In your example R1500 profit is 15% PROFIT on the R10k same on the guy that made 9k on his 58k....he has more money to play with so he takes bigger risks, but you grow your portfolio and in 3 to 5 years you can be the guy doing R60k trades and not even blink an eye.....
The guy punching 60k a shot made his money the old fashioned way - HARD WORK, even if that work was trading is still takes effort of some sort.
OMO
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NJ_1
Frequent Contributor
But 5% three times a month only gives you 15% per month return if your position size is 100% each time.
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zudy
Contributor
Snakepit the problem is you sell at a profit then everything is too expensive to buy so what do you do with the money
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zudy
Contributor
Snakepit the problem is you sell at a profit then everything is too expensive to buy so what do you do with the money
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BRE
Regular Contributor
Wait for the next opportunity?
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GarethJ
Regular Contributor
An important psychological key to trading is that price is relative, not absolute. Selling OML at R14 means nothing in absolute terms - question is whether the price is going Up or Down. If OML is sold at R14 buy something else that is going up - doesn't matter what the price is. In 2 months you may buy OML again at R18 which is just fine as long as it goes up. For trading there is no inherent value in the price - only movement counts.
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Not applicable
Hey NJ, good point! Can be done with leveraged positions where you use a fraction of your capital to put on a couple of simultaneous trades that each give you the exposure of your full capital. You then limit the losses to the usual 2% stop (if u want). And hope to make 5% on 3 good trades... Perhaps the daytraders out there aim for this kind of returns.
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Not applicable
Well Yes and NO, you dont have to put 100% of your portfoilio into a trade. If you have a 50k portfolio you can trade 50K or you can trade 10K. If you trade 10K and follow the scenario of 5% (and in my opinion 5% is not difficult to achieve and alot easier than 10, 15 or 20%) you can double that 10K in a year.
BIGGEST PROBLEM I find with newbies lured into trading by the market hype is they all want the 100% score in a few days. Aint gonna happen. Ask me I made the same mistakes when I started and I still make mistakes. These days less risk more reward and smaller well researched trades.
Do I loose money? Well I try my best not to but I occasionally am forced to get out where I started so I loose the trade fees, brokerage etc. Occasionally my stops kick me out but I avoid these if I can
Point is I try not to shoot the stars out with every trade. If a share bolts after I take profit I re-look at it and if it makes sense I jump righ back in for another 5%. If not I stay out till the panic has settled and re-enter for another position. This might be days or weeks later on that share. SOmetimes the hardest thing to trade is time, i.e. DO NOTHING.... OMO
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Not applicable
So my point is you can turn 10K into 20K in a year or less with some effort, paitience, dedication, management of time and risk and a little hard work. But it is easier than putting that 10K in a bank and getting 10.8K after a year.
All You newbies want your 10K to be 1 mil in a few months. That attitide will get you wiped out in weeks or months at best. Rome was not built in a day and your portfoilio will also take time so learn that 15% profit is 15% profit stop looking at the fact that it might only be R1500 or R15,000. its a percentage and a heck of a lot more than you will make anywhere else.
Thats what I learnt with my time in the market so if you use it use it if not make your own mistakes and see you around. .... OMO
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jack12
Super Contributor
I swing trade, so the price is only a number. What is important is if the number is trending and which cycle it is in. Bottom rising means buy and top falling means sell. now is the complicated part 'how much do I want to make?' and 'how much can I make? (this can be vastly different if I have unreal expectations, just because OML moved 200 in one day does not mean it will move 200 everyday) reduce this amount by 20%(for market fluctuations and costs)' I use the open price to determine all my entries all my indicators have been modified to reflect opening prices and the value of a share remains irrelevant during this process as it is the % profit I can make is important.
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Alonzo7
Frequent Contributor
CPS...You have summed it up so nicely!!! If this does not make sense and (Rands) then I simply do not know what else could assist some of the "newbies".
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Not applicable
Reading all these comments, it comes back to one comment I made right at the top again. - GREED is your enemy. The confirmed advice from all of you - Take it slow and take it in small bits.
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Edge
Frequent Contributor
you guy summed it up nicely!Sometimes all the technical stuff is all so just guess work - the market does its own thing!
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