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  1. #1
    Airbladenhu Guest

    Default Newbie getting into trading: what am I missing?

    Hey all... I've read online that making money in the stock market isn't easy, but I am wondering what aspects of it I am not grasping, if any.....

    My example:
    Let's say there is a stock that is currently $21 per share. It usually sits in the $45 range, but it has dipped lately. Whatever my reasons are, I feel the company value will go back up.

    I'm not saying it has to go back up all the way to $45. Even if the stock only goes up to $26, that's still a gain of $5 per share.

    The brokerage I use charges $20 per transaction if done online (there is no "per stock fee" over-and-above that unless you buy over 1000 shares of that stock).

    So let's say I bought 100 shares ($21 x 100 = $2100) and in 2 months it was worth $26 per share. If I sold my shares at that point, then I'm looking at:

    Selling for $2600 ($26 x 100), minus the $20 fee to buy, minus the $20 fee to sell = $2560

    That is still a profit of $460.

    That sounds easy enough. The above is just an example for the sake of simplicity, but I am wondering: is there anything glaring I am missing?

  2. #2
    Airbladewtr Guest

    Default

    Nope, it's just that easy. Now go make yourself rich! :elefant:


    Er, all kidding aside, what you're missing is that:

    1) Your assessment of the stock may be wrong.

    2) Even if you're right, it may go against you for quite a while first...

    3) ...which may cause you to lose patience and sell at just the wrong time.

    And there are exactly 2,488 other reasons that trading is not as easy as it sounds, but dinner's calling so I won't list them all now.

  3. #3
    Airbladeyui Guest

    Default

    While informative, I suppose I should clarify. I wasn't asking about the base assessment in a certain stock -- I know it could be wrong, and I understand there is a risk.

    Instead, I was asking:
    1) Ignoring the market itself, in terms of the process, is there some major underlying variable that I am completely overlooking?

    Example:
    If you were to say "there's also a 40% tax on those profits when you file your taxes, plus a fee if you sell on Thursdays, and another fee if you buy stock on an empty stomach", then I would say "whoa whoa whoa. that's a big piece of the equation to factor in." (obviously made up, lol, but you get what I mean)

    and

    2) If there is not some big oversight on my part, is the process more-or-less as I described?

    Example:
    If you were to say "you can only buy and sell at X times and only under X conditions" then I would really have to re-evaluate, because as far as I know, you can buy as long as you have the cash or margin to cover it... and you can sell at any time. If I'm wrong, pleeease tell me.

  4. Default

    First thing I would suggest, if your broker charges $20 per trade is find another broker.

 

 

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