Do I want stock tips or advice from a stockbroker? Am I satisfied with just looking at stock charts and hearing financial news? Do I have enough cash for investing? Do I have enough time to do research?

All these questions should be considered when deciding if online stock trading is good for you or not.

Its really your preference on how you want to manage your own investment. It’s your own money so it is important that you are comfortable with the stock trading method.

Still thinking of those questions huh? Well, we have different stock trading personalities and so you can answer those differently. Hey to help you decide better, here are some important factors you must consider.

Cost
Before you can start actual buying and selling of shares, you must have a stock broker (stockbroker). Yeah you can’t just go into a stock exchange and buy and sell stocks immediately hehe.

Online stock trading involves online brokers or discount broker (whichever you call them). They provide low cost fees or commissions because they offer less services (meaning more work on your part). Full service broker provides lots of services (read on). Low cost is a way to go for most people. But check if the services they provide is all that you need to trade effectively.

Service
Full service brokers provides guidance so this is good for those rich “can afford” stock traders. If you are just starting in the stock market, having an expert trader talking to you let’s you avoid those stupid mistakes. You can call you stock broker, ask anything, and they can provide you with instant stock tips or stock advice.

On the other side with online stock trading, you are alone hehe. You initiate the buying and selling of shares through an online website. This means you have to do the research yourself and decide which stocks you invest into. You are only provided with a bunch of tools to help in your decision like stock charts, news, articles, and a variety of information.

Reliability
Another factor you must consider is reliability of the stock broker.

In online stock brokers, you must consider the reliability of their online system. They must have very high uptime. When stock trading opens, can they handle many clients accessing their system. Does their online system lag.

This is needed so when you do those important buying and selling transactions, you can do it at the right time (timing is important in the stock market).

In full service brokers, reliability of the service they provide. Stock brokers can provide you with stock tips and stock advice but don’t take their word for it. Do some research. Trusted stock brokers are those that put your best interest first before their own.

Check also their services if they have good support and you always have someone answer your inquiries or problems with their system.

The Verdict
Both online stock trading and full service brokers have it’s pros and cons. You have to consider these factors and eventually pick which one is right for you.

So which did you pick? What other factors did you consider? Comment below ^_^

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Let’s get right to it. Here is a quick guide on stock market for beginners.

1. As stock trading opens, a stock price goes up or down tremendously

I always thought the when the stock exchange opens, stock traders always use the previous closing price as the buying price. And that is why they the financial news often reports about historical share prices or previous closing stock prices of shares. Well wrong wrong wrong. While this can happen also, you also need to consider this scenario: A stock trader buys a stock at a higher price than the previous day close. If your thinking why would anyone do that, I was thinking the same thing hehe. But analyzing this, some traders bid higher because they expect the price of a stock to skyrocket. Since they want to get in early, they bid higher than the previous close so they can be sure that there will be a match between a buyer (that’s the stock trader) and a seller (anyone currently owning a stock) when the stock market opens. Going the other way around, this also happens when the stock price is expected to go down.

2. You don’t buy a stock because the stock price goes up for the last few days and it still goes up today.

Beginners usually make this mistake (like me back then hehe) because this is really counter-intuitive. If a stock price is already way up from the previous days, it will go down eventually. Well, that’s not always the case. At times, it continues going up on the next day. Why you say?! Because the company might be performing very well and people want to get a hold of this share. It may be the most active stock or currently the “star stock” (hehe just made that up). There are a lot of reasons actually. Remember that there’s always the right time to buy stocks. And also the right time to sell them (plug for the next topic hehe).

3. When you are holding a share and the stock price goes down and down, you can’t pull the trigger to sell it.

This is the other way around. You already have too much “paper losses” because the price of your stock goes down. A few days go by and it still goes down. Heck, your thinking is - well it will eventually go up at some point. Question you have to ask yourself is when will it go up. From my experience the longer a stock goes down, the harder it is for you to sell. Emotional attachment on stocks is a big problem for new investors. It’s like telling your stock broker that you already want to throw away those hard-earned money. You may experience a situation like these. When you see this situation, don’t let your emotions get in the way. If its the right time to sell, don’t hesitate one bit.

I believe that learning through experience is better than by just reading them. I really learn a lot by entering the stock market right away but it has its disadvantages (pocket-wise hehe).

What other experiences do you have? Share them by commenting below ^_^

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Here we go year 2009. We all hope this recession will be over in the “Year of the Ox”. Sorry no horoscopes or predictions here. Only lessons from stock market gurus.

David Bach
The market right now is moving on nothing more than emotions. Guess what? It almost always moves on emotions.

• Market sentiment can drive prices up or down. Just take a look at what happen on the stock market crash of October 2008. Any negative news on the market can spark fear from investors resulting in massive sell-offs of shares. Sell-offs means big losses. That is, big money losses of hardworking individuals (like yourself). For additional information, read more on where the money goes when you lose in stocks.

Sir John Templeton
The four most dangerous words in investing are “This time it’s different”.

• Did you ever hear yourself say this in 2008? “September is going to be different”, “The market is going to reverse in October”, “The worse is over, there will be changes in November”, “The past three months are losses, December is sure to be a gain”. Well, read the financial crisis in 2008 and see if it was any different. Loss, loss, loss, and another loss. Well, 2009 will be different hehe. I certainly hope so, but the lesson here is understanding the stock market situation first before you start investing your hard earn money. There are lots of ways to get stock market education even with a low budget as described in the article (follow the link to know more).

Warren Buffet
Only buy something what you’d perfectly happy to hold if the market shut down for 10 years

• Is the market shut down mentioned here about the collapse of the ever dependable Dow Jones of 2008? Well, you might be thinking of going long term if you still have stocks positions you haven’t sold. This seems like your best option to avoid big losses. I know. Paper losses are unbearable to look at. But hey if it will somehow make you feel better, there are some people that are actually doing cost averaging on stocks last 2008. You are not alone on your paper losses hehe.

Do you know other quotes from famous investors? Do you have your own quote? Don’t be selfish and share them. Learn then earn everyone ^_^

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There are cheap and better ways to learn stock market (really there is hehe). You need a few extra bucks for this but some are actually free. To really learn something, you need to put your heart out and dedicate your time to it (sorry no shortcuts here). Take little baby steps (forward) like allotting an hour or so in your stock market education and you will see yourself progressing along.

Below are 7 tips that will help you get started. The associated cost for each tip is also included (just humor me hehe).

1. Ask stock market questions
   Our mind is complex and lots of questions pop-up all the time. Don’t just let it get stuck on your head. Speak out. Ask experts or sites like [Do Online Trading].

   Cost: internet, thinking of the right questions to ask, confidence to ask

2. Participate in a stock market trading game
   What better way to learn but by actually doing it without using real money. Playing the stock market through a game will let you experience first hand how trading action happens. This is also a way where you can test out different strategies and see if it works or if you should just scrap those strategies.

   Cost: time / patience, finding good players, self control to learn first before getting into the real thing.

3. Enroll in a stock market seminar
   Some seminars cost a lot but some offer free “quality” trainings or just a few bucks worth. Why not try it?!

   Cost: Knowing those scheduled seminars before their actual schedule

4. Watch news or read the newspaper about the stock market today
   Take note that this should be done today. Keep yourself updated daily and get the feel of the market. This way, you will have a good idea on market conditions and have the best information on making your decisions on whether to buy or sell.

   Cost: TV, newspaper, analytical thinking, missing out on the sports channels

5. Read stock market articles
   There are lots of articles readily available on the internet (even by just browsing this site). Enough said.

   Cost: Ability to find and read good articles, knowing people who knows their stuff

6. Join an online stock forum
   Forums provide a venue where you can mingle with people who are interested in the same thing (sometimes called a community). Also, some people are just waiting to get their hands on some newbies to ask dumb questions (they will have a good laugh but they will answer your questions anyways hehe).

   Cost: Your reputation in the forum

7. Find a mentor
   They have the experience where they can guide you through your mistakes and tell you the right direction to take.

   Cost: A few coffee drinks or lunch / dinner, constantly telling mentors how good they are

Remember that the best things in life are cheap free. Learning is a life long process but it shouldn’t take you that long in learning to invest in the stock market hehe. Learning — priceless ^_^

Newbies who read this post also read:

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2. Picking a Stockbroker based on your Stock Trading Personality
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The stock market prices go up and down depending on several factors. I found an interesting article about how the money circulates upon buying and selling of stocks.

Let’s see how the following (fictional) story goes:

Introduction:

Three friends Joy, Juan, and Jose started investing in the stock market. They have 500 pesos each. Luckily, Globe has offered 1 share for 100 pesos (yayyy).

1^st transaction: Joy bought 1 share from Globe at 100 pesos.

Joy is excited to buy her first share from Globe. Joy tells her friends Juan and Jose.

2^nd transaction: Joy sells the 1 share to Juan for 250 pesos

Joy is lucky and sees that Globe stock prices went up to 250 pesos. She sold it to her friend Juan.

3^rd transaction: Juan sells the 1 share to Jose for 50 pesos

Unfortunately, Globe stock prices went down to 50 pesos after Juan bought it. Feeling that he could lose more, he sold it at 50 pesos to Jose. Jose now has 1 share he bought at 50 pesos.

Final assessment:

Globe and Joy gained 100 and 150 pesos respectively. However, Juan and Jose lost 200 and 50 pesos respectively. A total of 250 pesos was gained by both Globe and Joy and a total also of 250 pesos was lost by both Juan and Jose. So there you go. Every loss one makes in the stock market means a gain for another some other lucky guy.

So did the Globe company lose any money while Juan and Jose lost money?! Actually no because they still held the 100 pesos they originally sold their 1 share. Globe could actually gain by buying back the 1 share at a cheaper price of 50 pesos.

So did money disappear magically?! No money actually disappears as the total money is 1,500 pesos throughout the whole story. It just moves from one person to another as we buy and sell stocks.

Hope this clears things up ^_^.

If you want to know if they are still friends after Joy gained money whereas Juan and Jose lost money, well in the end they realize that their friendship is more important (haha alright this is a corny ending I admit).

Newbies who read this post also read:

1. Famous Investors: We already told you but you totally ignored us
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1. Short selling is still not allowed in the Philippines, but it may be in the near future. It is selling of a stock that:

    a. the seller does not own
    b. has a very low value
    c. was bought at a higher price

2. Complete the sentence. A stock is not a:

    a. equity
    b. form of ownership of a company
    c. share
    d. note
    e. security

3. One of the large cap stocks of the Philippine Stock Exchange is PLDT (TEL). This is referring to its:

    a. Capital asset
    b. Market capitalization
    c. Fixed capital

4. A stock whose value increases ten times over its purchase price:

    a. Star stock
    b. Ten bagger
    c. Bubble

5. I want to purchase San Miguel Corporation “A” (SMC) stocks at a certain price and quantity. I will do a:

    a. bid
    b. call
    c. ask
    d. put

6. There are times that the price of a stock sharply moves up or down where there was no trade between them. This is called a:

    a. hop or step
    b. break
    c. gap

7. The most solid and financially sound companies on the market are called:

    a. blue-chip stocks
    b. large caps
    c. benchmarks

8. My friend was asking me “Is the market a bear or a bull”. My friend wants to know if:

    a. the market is signaling a buy or a sell
    b. the general trend of the market is rising or falling
    c. the stock market is opened or closed

9. If I evaluate the stocks considering its price trends, indicators, and volume, I am doing what kind of analysis:

    a. fundamental
    b. technical
    c. speculative

10. The index used to track the performance of the Philippine stock market:

    a. NASDAQ
    b. PSEi
    c. Hang Seng
    d. Nikkei
    e. DJIA

And here are the answers.

    1. a. the seller does not own
    2. d. note
    3. b. Market capitalization
    4. b. Ten bagger
    5. a. bid
    6. c. gap
    7. a. blue-chip stocks
    8. b. the general trend of the market is rising or falling
    9. b. technical
    10. b. PSEi

How many correct answers did you make? I got a perfect 10 hehe

Don’t forget to post your results below in the comments section. We will be posting another quiz in our succeeding articles so wait for that one.

10: Simply genius! Laban ka?! hehe
7-9: Aba aba, nag-aral siya.
4-6: Needs improvement. Basa basa pa ng articles.
1-3: Oops! Semplang. Akala ko pababaan hehe.

Newbies who read this post also read:

1. Philippine Stock Exchange (PSEi) follows DJIA? Truth or Myth?
   Did you happen to notice that if DJIA goes up or down tremendously, the PSEi follows with it? Is this assumption correct? Is this a stock...


2. My Newbie Experience: Stock Market for Beginners
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3. Philippine Stock Broker Codes Listing
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4. Why Filipinos should take risks trading in Philippine Stock Market
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5. Investing in the Philippine Stock Market
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