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Online Stock Trading Firms Question

Discussion in 'Questions and Answers' started by UCFinfan86, May 22, 2009.

  1. UCFinfan86

    UCFinfan86 Season Ticket Holder

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    Mar 23, 2008
    I am looking to start buying a few stocks. I am looking for the best (cheapest) one that you guys use. I am only looking to start off with like a 300$. I found a few that had good prices (scottrade i think?) but you needed 500$ to open an account.
     
  2. Phinperor

    Phinperor formerly In_Flames Luxury Box

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    moved your thread here, thought you might get a better response :wink2:
     
  3. TokyoFishFan

    TokyoFishFan New Member

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    Tokyo!
    Funny timing. I just started doing the Stock Market thing about 2 weeks ago. Every one of them has their quirks.

    I was up and running on Sharebuilder in about an hour once I had my info ready (including a bank account to transfer money from) and had my first trade done. Like all of the services, you really need to learn about all their hidden costs.

    https://www.sharebuilder.com/sharebuilder/Fees/Default.aspx

    For example: With Sharebuilder it's $9.95 a trade. However, if you trade more than 1,000 shares at a time it costs you more:

    They fail to advertise this. It's in the fine print.

    If you're dealing in penny stocks, which I started out in, you can get to 1,000 shares pretty easily. I'm only in for $410 and made 3 trades thus far. I have 600 shares of stock already because I'm dealing in penny stocks. If I make a little more money, I can hit that 1,000 number pretty quickly.

    Of course, there are other things I like about them--the trade interface is pretty simple and I was able to pull funds directly from my bank account for my first trade in the first hour I was online for a $5 fee. The trade took a couple of days to clear, but I was in quickly and thus far I'm happy with them.
    ================
    Some of my friends (who got me interested in investing) are using USAA and ScottTrade. Each likes their respective tool. It's mostly a matter of shopping around and looking for the best rates you can get.

    I looked at Zecco and decided it wasn't for me. First, their system didn't understand APO/FPO addresses--which was the first thing that halted me in my registration process, and there was a second thing that I wasn't thrilled with. It's worth a look for you though.

    ***********************
    Now, here my WARNING for you as this happened to one of my friends recently and also to someone else who posts on the Google boards. Each case was a little different in outcome, but the lesson is the same. It happened on the same stock as well. OK, what happened?

    In my investors group, we were talking about investing in a penny stock, TTNP.PK. It listed at 5 cents a share so a bunch of us decided to buy in as the background reports looked good (they still do). So, since we're in a different time zone folks put in buy orders while the market was closed. An open-market trade order. One of my friends did this.

    Key point: The orders were put in for X amount of Shares, not X amount of dollars.

    Well, apparently this particular stock was being pumped elsewhere, and a ton of other folks were doing the SAME thing.

    So when the market opened, the demand caused the price of the stock to shoot up from 5 cents to $1.70.
    My friend and this other person has requests in to buy about 20,000 shares of the stock.

    Here's the math:
    20,000 Shares x $.05 = $1,000.00 (what he thought he was buying at)
    20,000 shares x $1.70 = $34,000 (what it actually cost him)
    20,000 shares x $1.65 = $33,000 (what it cost the other guy) EDIT: Actually more than this--see link

    EDIT: http://finance.google.com/group/goo...23c218c1297d3a62?hl=en&q=Sharebuilder&lnk=ol&

    They meant to spend about $1K, but it wound up costing them over $30K.

    The stock then DROPPED in price immediately as all the folks who had a ton of shares previously purchased at $.05 started selling to make an immediate profit.

    By the end of the day, the stock price settled at $.80, meaning that the two guys who both bought high, had just lost $16K to $18K each with 3 days to come up with the money to pay for their trades (time to settle).

    My friend had the money to cover it and learned the hard lesson.
    The other guy didn't. 3 days after the trade, his trading firm sold everything in his account, cleaned out his bank account, and is billing him for the rest. He's stuck in a hard way because he couldn't cover his purchase price.
    My friend isn't happy, but he helped all of the investors group I'm in see how dangerous the market can be if you don't do your "Due Diligence" and read up on how to do everything.

    Me? That was my first trade ever. I got lucky. How?
    1) I started to open my account with Zecco and changed my mind, which slowed me down.
    2) When I opened my Sharebuilder account, it took me about an hour to get set up. In that time, I was LUCKY to miss the opening bell.
    3) When I did my calculations--expecting to spend about $500 initially 'cause it's all I had to play with--I was going to put in an order for about 10,000 shares based on the $.05 price. Sharebuilder came up with a warning that my purchase was going to cost me $12K+ and that exceeded the $5,000 limit on a bank trasnfer purchase. Confused, I checked the current stock price and realized that it had shot up. I resubmitted it for only 250 shares and got in at $.80. I could've been in MAJOR trouble if that warning had not come up. If the purchase price had come out to less than $5K, my bank account would've been emptied and I'd be hurting in a major way right now. I GOT LUCKY.

    That said, this stock is now sitting at $1.30 a share. I bought 150 more shares when the stock dropped to $.65 a share and am now up about $100+.

    Lessons:
    1) Use limit orders, not open market orders where possible
    2) Don't trade at the opening bell unless you've managed a locked in price somehow
    3) Research, research, research
    4) Only play with money you can afford to lose, and make SURE that's all you're playing with!

    By the way, I believe TTNP.PK has a good future ahead. Read for yourself on Google and Yahoo.

    Disclaimer: I am not a financial planner. I am just a beginner. Any investment action that you take is at your own personal risk.

    EDIT: I didn't need any set amount of money to open an account. I started with $410 based on the anticipated price of my first trade.
     
    UCFinfan86 and FinsPensFan like this.

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