Buy and Sell Shares & Stock

When you buy and sell shares for the first time you want to be able to say ‘I bought 50000 shares’ in a company because this is a respectable amount even though you only had $1000 to invest. It is much more plausible than saying ‘I have bought 20 shares’ which seem to be a paltry amount altogether. You should just consider the amount of money you have to invest ($1000) rather than the number of shares that it can purchase. 20 shares at $50 each might be more secure (and more likely) that 50,000 shares at 2 cents each.

How much money to invest

Think about how much you can invest and then if it were halved overnight. Shares can go from $20 to $10 in less than a minute so you could wake up some morning to discover that you are broke. If a share has gone down it is usually because there's been bad news or a profits warning. Some investors will buy this stock when it is low like this, rather than a stock that is increasing.

Some new investors hope that if they buy shares at 2 cents and they goes to 4 cents that they have doubled their money and if they continue in this manner they will be millionaires in no time. There is a reason for these shares being at that low price because generally they're poor and all you are doing is buying a lot of old rubbish. Rarely do they pay off to the extent that they become doubled or trebled in value, and more often than not, what happens is that they just go downhill. They are known as penny shares and an investor can't imagine that they have got something wrong so they hold on and hold on, until inevitably the company goes bust altogether.

Penny stocks

Penny shares can make you money but work best as a small part of an overall portfolio. My advice is not to have penny shares as 100% of your portfolio. People who gamble with penny shares are usually experienced and can make a good living from them. Many experienced professionals also make a career from tipping penny shares. Unfortunately, for a beginner, it is difficult to decide between one penny share and another. For the share beginner to notice subtle changes is difficult so, If there is a profits warning that somehow gets missed, it can be quite difficult to sell them afterwards.

A bit of forethought on the shares to buy

If a share with a good performance is going up, perhaps it’s at $1 having risen from 50 cents previously then it may be worthwhile buying it. A line of thinking on this is that the share has doubled and now it's gone too high to buy. ‘I can’t touch this one' is the cry. In actual fact, these very shares are the ones that can just carry on in an upward trend and make you your fortune.

Long-term investor

How much time do you have for trading shares? If you have a lot of time and can check your laptop all day long for the best shares to buy and you can speculate while you are watching for the market movers. Don't be tempted by fly-by-night operatives who offer great share tips and unmissable opportunities. You will find it easier to live with yourself if you make your 'own' mistakes. More realistically, if you hold down a nine to five job and can't access the internet every minute of the day then the best option is to buy investment shares and trade as a long-term investor.

Research and working hard

However, you will not make money without doing the hard work and researching shares properly and I’m a firm believer that you've got to do your research thoroughly and not rely on others for tips on which shares to buy. Long-term investors, once they'd bought their shares, will now hold onto them for months at a time but the money will come in due course because they have done the critical research first.

Charts and other things worth checking

The chart only gives you the history of what's happened to the shares in the past and is no guarantee of what’s to happen next. You will need the current situation, P/E ratio (price to earnings ratio), size of the company, dividends, rising profits, low debt level, high trading shares and so forth. Check the Dow Jones, FTSE 100 and FTSE 250 listings too and official websites like NYSE.

Have fun, but whatever you do when you buy and sell shares don’t jeopardize your own livelihood or that of others close to you who may depend on you for support.