Some advice greatly appreciated?

4th Apr '20 by The_Beat

19 comments 898 reads

Good evening,

I'm 42 year old guy married with 3 beautiful kids and live in Northern Ireland. Up until 4 years ago I ran the family business which employed 100 plus staff.

Unfortunately my health started to deteriate and I was diagnosed with a very rare progressive neurological disease which has left me wheelchair bound. Because of this I no longer can work. I began getting into Sports trading and have done reasonably well with it. Unfortunately because of further issues with my health I'm finding it difficult to spend the time required to keep up with the sports trading which can be 10 plus hours a day.

The above is what brings me to writing on this forum and hoping I can get some help advice on investing in the financial trading side of things. I have played about over the years but to be honest I would class myself as a complete beginner. However I do have good discipline and would be eager to learn as much as possible with a view to investing and taking it more seriously. I initially would like to invest £2- £3 k to get a feel for things first and this is where I would appreciate any help going forward. So really if anyone was or has been in my position where should I begin in terms of entering the market? Should I buy several shares after researching, trade forex or get involved in other areas of the market.? Thankfully going forward I could invest £50k however I'm obviously nervous and would like to dip my toe in initially.

I look forward to hearing from you and appreciate you taking the time to read my post.

Tony

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dustyie

5th Apr '20

Hi ,
You right to be nervous , there is a lot out there on the internet to learn from .
What ever path you chose to go down , three points i would like to make
risk management is number one it critical ....
the second is, the longer the time fame, the less risk to capital .. day trading to long term holding in funds or shares ,
the third is start small and follow the one you enjoy the most and not the one that keeps you awake at night .
Small caps are my favourites . good luck .. you starting on good web site here for stock market .

The_Beat

Thank you for the helpful reply. I was going to open an account with trading 212 as I'm just going to focus on the UK stock market for now. Have you any experience with this company either positive or negative?

Thanks again

xcity

Why do you need to invest actual money to get a feel for things?
Why not set up a virtual portfolio with £50,000? Trade with that until you think you have a strategy and a method. Then start cautiously with real money.
Or, even more cautiously, start another virtual portfolio at that point to make sure your system is working, checking how well it's done after three months.
Including all trading costs (spread, commission, tax), and comparing your performance with money at the best interest rate available and also against a few relevant statistics.

Certainly better starting now than a year ago, but who knows whether now will be better or worse than 12 months in the future?

William K

The advice from xcity to practice on a virtual portfolio is excellent and the practice needs to last (in my opinion) at least 6 months to get a proper feel of just how tricky trading can be.

I'm sure you've been smart enough to read at least a few books on trading and investing (if you want to know which additional books to read there's an excellent series of book reviews on Youtube by Financial Wisdom which summarises some of the most popular ones).

This is probably a good time to enter the markets as the share prices are much lower than they were 3 months ago, although they could, of course, fall lower.

Reward is proportional to risk. If you're happy with a 5-10% pa return over 5 years, Vanguard do some attractive low risk funds including a 60:40 equity: bond ratio fund and some others based on your age and life plan. If you want more than 10% the safest option (in my opinion) is a US tracker fund such as £VUSA or £EQQQ (the latter has a currency hedged fund option if you're worried about fluctuations in the GBP:USD forex rates).

Thanks everyone I'm started to see this is a slow burner type of investment route. Would I be right in saying that the closest to betfair trading would be forex? I suppose A is the safest option however as I'm more of a risk type person and after a short length of investment or indeed similar to what I currently do something which is based on day trading. Would there be any other options like forex which I could look into for that type of risk vs investment.?

Thank you all again for the fantastic advice.

videoman

For share trading have a look at shiftingshares.com, Michael Taylor who is the founder writes articles for this site and any others and has some excellent free ebooks available from his website. I have just spent the last few days reading two of them and have two more to go and have found them excellent from a learning prospective. Good luck!

If you're going for day trading, it's worth bearing in mind that 90% of day traders lose money - and they lose it fast. It's harder than it looks! If it were easy, we'd all be doing it.

Forex trading is something - in my opinion - probably best left to professionals for the same reason, although if you believe the GBP will weaken - in the long term - against the USD it's worth investing in good quality US stocks or indices. (As the pound weakens, the value of US investments tends to rise in proportion to the fall in the value of the GBP.)

If you like the idea of high risk - high return, then day trading and forex might be perfect for you, but remember that high return can also mean high negative return.

In general, investing is a way of getting very rich very slowly, and not for getting rich quickly unless one is very lucky.

Ken Lowes

I built and advisory and investment business from 1971 until 2003 when I handed it over to my family . Based upon the information you have presented I would strongly advise you not to invest, especially in the current market. I would also recommend a virtual portfolio and a lot of reading and record keeping. if you don't keep records of your thoughts and actions you will continue to repeat the mistakes and when your decsions work out you won't know why it happened. Emotion is the biggest problem with investing which is why most investors do not allow thier profits to run and that is missing from investing virtually. Even when you think you have the skills it is different in the real world. Do not get involved with spread betting until you are fully conversant with the high risks of the market ,as 90% of people lose everything. Invest in yourself first- buy the following books The Naked Trader, Trade like a Stock Market Wizzard and The Art of Execution. Develop a plan of action subscribe to Stockopedia for information and Sharescope Gold for charts which will allow you to back test your plan. Give yourself two years to train and develop your thinking by that time these markets will be ready for you to invest but only use money you can afford to lose. Patience and knowing when to invest and when to sit out will reward you well, it's not how much you win that counts it's how much you lose. Once your capital is lost you have no future in the investment business so plan to lose so you can control your investing future. Good luck and remember this, luck was on your side if you had come into the market last year you would probably be broke now.

dmjram

Good advice above - don't risk cash until you're comfortable with the platform and have determined what style works for you. You must find one that you are comfortable with, whether it is buy and hold Buffett style, diversified factor exposure or shorter term trading per O'Neill/Minervini. Flipping from style to style is the bane of many traders/investors. Woodford's demise resulted from him thinking he could pick small cap growth stocks just because he'd done well in big cap dividend payers - totally different skill set he didn't have. Master one and stick to it.

You need to ask yourself questions such as how much time do I want to spend on this? Can I sit through big losses if I decide to follow a buy and hold approach? Do I want the constant attention required with a shorter term trading system?

I'd recommend having a look here:
https://www.stockopedia.com/content/trading-amp-investing-animated-videos-financial-wisdom-536066/

Excellent coverage of several "gurus" who've established their own systems - see which one you'd like to apply with your trial account. Given your sports trading, you may find the shorter term Minervini approach (swing trading) more to your liking.

Finally, you'll find the advice on here will be pretty much all on how to select stocks to trade/invest in for the short/long term - FX, commodities and day trading isn't generally in the scope of stockopedia users.

Snoo

Can you elaborate on what markets you trade in sports?

As a failed sports trader myself I think there is a vast difference in mentality. If you're buying individual shares, then you may be waiting a long time before anything happens, that's the opposite of sports trading. If you're researching you may need some better knowledge to interpret figures if you do not want to be reliant on what you read here. This can be time consuming and I'd imagine the best people at this spend a huge amount of time reading.

Day trading would be a better proxy, but (in my opinion) the markets are more perfect than the sports markets: there are more pros and algos against you. Further, they can be extremely volatile which can lead to huge swings in profit and loss.

Against both of these is social media which makes things seem a lot easier than it seems. After-timing is very common. The tip sheets like the Investors Chronicle make it look easy as anything they tip gets a massive mark-up in price due to lots of people buying, as a result it is quite difficult to replicate their results as you will be unlikely to get the same prices. IMO that is much the same as the pro sports tipsters on Betfair, a lot of them massage the figures and ignore commission.

If you're making decent money sports trading I'd say you have quite a rare gift and it might be better to exploit what you are good at instead of learning something new. Would there be a way of simply trading less markets to cut down the time required?

ken mitchell

Rather than invest in individual shares with that first £3k consider putting in in to 3 different Investment Trusts. These can be bought and sold on the stock market exactly the same as shares. Investment Trusts can be used to invest all round the world.

One site with plenty of information on them is www.trustnet.com

Just key in Investment Trusts and you can find all of them including performance figures.

Money Obsever magazine also cover all of them, and every 3 months include a good separate Investment Trust Magazine supplement with the main magazine. The next one is due with May edition.

Investment Trusts have big plus points compared with Unit Trusts/Investment funds.

One big advantage right now is that Unit Trusts always trade at Net Asset Value. So if the investments held by that Trust are worth £1 a share, investors will have to pay £1 a share to buy it.

But Investment Trusts can trade at big discounts to NAV. I.e an Investment Trust share worth £1 might be just 60p to buy. Discounts widen in bear markets so some excellent Trusts are trading at big discounts now.

But even then be fully aware that this current bear market could get a lot worse before it recovers. If there are further worldwide market falls ahead a great time to start investing will be there for you.

And once you’ve got profits from those initial Investment Trust buys might be a good time to start going for shares too. Stockpedia figures are usually very helpful, though less so for now as figures are historic and a lot has happened in recent weeks!

Also Paul Scott’s and Graham Neary’s Daily. small company updates here, and the subsequent comments can be a huge help.

Good luck.

Thank you so much for taking the time to reply to me. Having read through all the replies several times I'm definitely going to take the advice and play around with virtual money for the time being. I suppose in hindsight I was looking something to put a few pound into for an interest and something to keep my mind active.I had thought whilst this virus is a terrible thing it would also be a good time to take a punt on several shares which may never be as cheap again. Also I hadn't asked is there any mileage in looking into penny stocks.?

To summarise I'm a gambler at heart and enjoy the thrill of backing a winner however I know that we don't always have winners.!! I still have the urge to chuck a few pounds in the markets for the above reasons, however I will definitely be very careful and treat it as a bit of fun. And for that I truly thank everyone for their input.

Silver Moon

Maybe I'm as wrong about this as I am about most things but isn't it a bit late to do this now? I keep 4 virtual portfolios, namely Researches, My Slackers, Software Companies and Gold Rush. These speak for themselves but I have no funds to use the trends recognised! Of course I can sell now but for what reason? What I should have done is sold everything before the New Year, constructed one virtual Stocko portfolio containing the details of everything I sold, maintained a weekly spreadsheet recording all the shares current status and I would be laughing now from a pile of cash. And looking forward to making hay.

Gromley

Hi Tony,

It's not totally apparent to me whether your objective is (1) just fun or (2) fun and making some money.

If the latter , the do you have specific objectives or amount you want to make? Would you be reliant on any profits you make as income? Or would it just be a bit of bonus on the side?

For purposes of answering further,I'm going to assume that it's just fun money, but if it is different that my suggestions would be too.

You mention trading rather than investing , so again I'm going to assume that is what you mean.

Traders by my interpretation of the term generally try to scalp fairly small returns (possibly single digit percentages) in a relatively short timescale and therefore also need to exercise rigorous loss minimization policies.

I don't know whether you are looking a "day-trading" (opening & closing positions in the same day) or slightly long term trading, with potential holding periods of days or weeks (or sometimes even months).

If the latter, then I would certainly echo the mention above of Michael Taylor (shifting shares) and also the likes of Mark Minervini, for day trading I can't really offer any suggestions.

I'm not sure what kind of sports trading you were doing (not too many opportunities at the moment anyway), so I'm not sure why you think financial trading would be any less time intensive. It could be, but you'll need to align your approach to the amount of time you can put in.

I do think the decision to learn through a virtual portfolio before risking money on the table is a good one, if you are the kind of person that can make that work - personally I have learned over time that I make different decisions when I have money at risk than I do when I am just playing. Nevertheless, learning what works and what doesn't through simulation is still worthwhile.

I don't really think that the portfolio or fantasy fund features here on Stockopedia are particularly useful for traders, so one suggestion I can make is to have a look at the demo account option offered by IG.com. Other spread-bet companies may offer similar and to be honest I haven't used IG's demo account for a couple of decades - but I am still a 'live' client of theirs so obviously they have kept me reasonably happy.

Obviously if using a spreadbet company you do have to seriously consider the risks of leverage, but I would just say that whilst SB companies allow you leverage your capital (ie bet with more than you have), the do not force you to - so if you have the discipline they do not have to as risky as many would suggest.

Anyway I hope that is helpful, happy to elaborate further if anything I have said is of interest.

Good luck,

Another Tony

AKAGromley.

Penny shares? Spreads of 10-20%. Ultra-high risk. Low liquidity. Avoid.

helalali2020

18th Apr '20

Hi mate. I am fairly new to stockopedia but have held shares on/off for 10 years. Only now do I treat it seriously and have invested in alto of books/YouTube videos.

Trading212 is superb. I use it and it also has a 50k virtual portfolio. Try and get a referral as that will give you and the refer a random free share.

The interface is easy to use both on pc and mobile phones and they have lots useful videos on YouTube/within the app.

21st Apr '20

Hi guy's just to restart this thread I feel I didn't get the right grasp of what I'm hoping to do. Since chatting last I've read lots of books watched videos and spent a lot of time on here reading and taking as much in as possible. I would like to begin investing with a long term approach 5 years plus. Out of all the comments the one that stood out to me was the recommendation of investing the 3k into 3 individual investment trusts. I would like to take a long-term view of my commitment and at some stage would really love to start picking shares myself, whether that be now or further down the road. One question I didn't ask was in terms of a trading bank how do you approach dividing the bank up.? For example if you had 10k are you better to invest £1000 in 10 individual companies? Also what do you feel is the minimum amount you would consider when investing in shares. I had thought £500 per company would be the absolute minimum.? I'm going to continue learning as much as I can for now and will let you know how I get on. God bless to you all and your families during this difficult period and stay safe..

Hi Tony.

Regarding the minimum amount to invest in a company, I'd agree that £500 is the absolute minimum otherwise the dealing costs (say £12 commission) take up a significant proportion of your profits. If you want to deal in small sums, the most cost effective way is to buy funds. Some brokers, such as Hargreaves Lansdown, make no charge for dealing in funds and you can invest as little as £100 in a fund, and most of the funds on offer have no spread. (There are management charges, usually around 0.5-1% per annum, but these are taken from your investment so they are not noticeable.)

William

bryans1311

I suppose how heavily diversified you are comes down to two factors, your tolerance of volatility and time available to research and monitor. If you are going to split your notional £10k into £500 lots, that’s 20 companies. Do you have the time to learn enough about, and follow 20 stocks? Also, if say one of your companies doubles overnight, that “only” translates to a 5% portfolio gain. Personally, I would be hold about 6 companies of about 3/3.5k each, but I appreciate you may a have lower risk tolerance. You don’t have to buy everything at once and can drip into the market as you gain experience and “feel”.

Ps. There’s quite a few on here from NI. I believe there have been a few meet-ups which I haven’t yet joined, but may well do so once we’re all released from captivity!

Some advice greatly appreciated?

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The_Beat

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