Archive for the ‘Money’ Category

Advice from Some Guy on Reddit Who Claims to Make Good Money Doing It.

Posted here, unedited, for my future records, since it appears to be decent advice.

Start here: especially if you are a “small fry” — say, less than 100k to invest.

Register with SogoTrade (I use them as an example because their trades are only $3, but there are a plethora of good and more-full service on-line brokers to use, Ameritrade, Fidelity, Vanguard…).

Link a checking account with them (they do it with a Paypal method of making small deposits that you report).

Send them $500 to get started, ACH, check, wire…Then, buy something using their online interface. Don’t worry about economies of scale yet. Buy a couple shared of Apple, a couple hundred of Citigroup. Wait a few days and feel what it is like when it goes down a bit, or goes up a bit. Say you buy 300 shares of C (Citigroup). when it goes up a penny, you have paid the $3 commission to buy; let it go up a dime and sell. Try buying at market, limits, stop limits, and so on to get the feeling of what those terms mean.

You have just made $24 dollars. Now through the miracle of compounding, you now have $524 to invest. Repeat until rich. Sometimes you will lose. Get over it.

Buy stock when it looks hopeless and everyone hates it; also sell when everyone thinks it is going to the moon and nothing will hold it back.

It’s called contrarian trading and it has worked very well for me, and a few other investors such as Warren Buffet.

For now, do NOT USE MARGIN (margin is borrowing money to speculate). For now, do NOT consider options, currency, commodities, ETFs, or even mutual funds. These trades are like the strange side bets you see at a craps or roulette wheel at Las Vegas. They almost certainly offer less chance to make money compared to losing money (that is, possible reward compared to risk) than straight buying and selling stocks.

Play around with just buying a few shares of an ordinary stock. Master the feelings of fear of losing and exuberance of greed. When you can allow these feelings to wash over you without succumbing to their distortion, you will win over those who cannot or do not.


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