Viewing 28 posts - 1 through 28 (of 28 total)
  • Shares Gurus: what’s the flaw?
  • Be gentle with me, I have no clue…

    I finally got round to getting a shares ISA last week and have been watching some share prices avidly ever since. mainly Barclays and BP.
    Barc is currently around 100 and BP around 330.
    They’ve been going up and down like the proverbial these last days and (like any naïve newby) wondering where the flaw is in the following:

    I put in a buy limit order to buy a chunk of barc at 90p. At some point in the next days it will hit that value. I then put in a sell order at 1.10. when it does so I then repeat the process.

    As I see it, the trick is getting the prices far enough apart to make a worthwhile profit on the deal, whilst still having limit prices that you ‘know’ will be reached.

    Apart from those two, am I missing something here?
    Is that basically how people make money on this?

    hols2
    Member

    The only thing I know about gambling is, don’t gamble with money you can’t afford to lose.

    toby1
    Member

    I have no wisdom to add aside from mentioning the Moneysavingexpert site as I was reading about shares ISAs and tools on there earlier today, their forums may have some opinion that helps.

    Essentially markets have tanked, whether the share prices have hit rick bottom is the risk you take by investing in them. But something like ASOS usually sits at around £30 a share and is presently at about £12. If you believe the economy will recover that’s your gamble!

    Premier Icon cookeaa
    Subscriber

    I’m certainly no expert but I would look at how their current value compares to the preceding 12 months (or longer if you like) to get an idea of just how low it really is…

    Don’t look so much at the peaks, look instead to estimate a reasonable average value for a given share i.e. what it could reasonably rise to after the current crash… is that value high enough above current value to make purchasing some worth it?

    Also consider if there’s a dividend (if you’re maybe going to be holding on to these shares for a while waiting for their value to rise…

    The other thing to consider is how healthy a company might be now and in the coming months, will they be able to generate revenue during/soon after CV19? How much capital they have to allow them to operate over the next few months? what is the demand likely to be for their products/services? could they be closer to the front of the line for bailouts and assistance than others?
    All quite mercenary I know, but if you’re going to gamble on stocks and shares you need to think in those sort of terms.

    Oh and This x100:

    The only thing I know about gambling is, don’t gamble with money you can’t afford to lose.

    No Deal is “too good to miss”, never risk money you don’t really have…

    lustyd
    Member

    The CGT implications from this need to be fully understood since you’ll be selling and buying the same stock within a month. That will get complex quickly. In theory you’re fine inside an ISA, but the system will find a way to spank you, don’t worry!

    Don’t forget to include fees in your calculation. You may need to invest thousands to make it worthwhile. If buying on a foreign exchange also budget for currency exchange costs which can be especially bad within an ISA.

    You have no guarantee that the price will hit either of those targets in the time allotted.

    It’s entirely possible that you buy at 90 and prices plummet to 60 for the next two to three years. Can you wait that long to get your money back?

    It’s possible, if not very probable, that the business goes bankrupt. You would then have zero money and a potential CGT offset

    Personally I just bought into Delta Airlines who have utterly tanked. I expect them to either go bust or return to normal in two years or so, at which point dividends should pay for the share price I paid and the stock would triple in value. I also plan to buy more Disney when I can. They’ve been hit hard but will recover. The main concern there is a buyout, but they’re pretty big so that would be unlikely. With buyout premium I probably wouldn’t lose money there.

    Last but not least, remember that stock price has NOTHING to do with news good or bad about the company. Fundamentally it’s based on PE ratio but in reality the stock moves when players bigger than you do something. They do these things to make money from people just like you. You’ll see in the news right now that buying gold/silver is good. It was 6 months ago. Right now is the time to go long on shares and wait. Once the shares rise to 20% below the previous high sell them and buy property which will be cheap by then. When your taxi driver tells you to buy something, it’s time to move to the next thing, the cycle is shares, property, gold, and the rich are generally one step ahead.

    Premier Icon cookeaa
    Subscriber

    Example: Vodafone dipped under a 100 yesterday, I took a speculative punt as their average value looks to be a good 50% up on that and I think they’re reasonably CV19 proof as a Telecoms business (when everyone is trapped at home)…

    That is sort of intended to offset my other riskier adventures with airlines lately (Easyjet and IAG)…

    Ro5ey
    Member

    No flaw there … that’s called Jobbing !!

    The theory is simple no ?

    Buy low, sell high odvs

    But what happens when your stock at 0.90 goes lower to 0.65 ? Or you look back on that sale at 1.10 when the stocks now trading at 1.45.

    Good luck

    Premier Icon eskay
    Subscriber

    I don’t know about share ISAs but if you have a normal share account it is day trader’s heaven. The markets are very volatile.
    If you are looking long term then the stock market is not a bad place to put some money into good solid companies.

    poolman
    Member

    Bp market cap is 65 bn gbp, debt of 54 bn gbp. Share price tracks crude so will be all over the place. Worth a punt if you have a spare 5k.

    Tbh rather than stress yourself out just put 5k into a fund, reinvest divi and wait till the market picks up.

    Even outside an isa you have 12.5k cgt allowance, divis within the is a tax free tho.

    Good luck, post up your results

    You’re day trading, which unless you have some edge over the market (which I’m going to assume you don’t because you’re posting here) is gambling.

    If you’re down with that, don’t let me stop you (I’ve done it myself but don’t bother anymore)

    But don’t confuse it with investing. Which is subtly different.

    Good luck whatever tut decide to do! It’s certainly volatile atm

    Premier Icon tomd
    Subscriber

    If you’re trading relatively small values of shares the trading fees can eat into any profits.

    Say you buy £100 worth, that might cost you £10 to buy and £10 to sell. So you need a >20% increase just to break even. Obviously less of an issue if you’re dealing £1000s

    You’re day trading,

    Just googled that. Yes agreed that’s pretty much what I’m (thinking of) doing. And yes, I’m clear that it is just gambling with the pretence of cleverness having an impact.

    But don’t confuse it with investing. Which is subtly different.

    Agreed. That was my original an when I opened the ISA to buy BP. But watching the graphs becomes addictive and it’s too easy to fall into the trap of thinking “if only I had bought that one yesterday as I planned to”

    If you’re trading relatively small values of shares the trading fees can eat into any profits.

    Yup agreed. The charges so far have been around 30 quid per transaction, so only about 1% so far.

    poolman
    Member

    Yes the best price was always yesterday, it’s called a hindsight trade

    Assuming your stock just went to £1.10, what’s the next step? Keep the money? Reinvest in something else? Because that ‘something else’ will be subject to the same guesswork and fluctuations of your original stock (which could similarly go up or down +/-10% again).

    Put it this way: You haven’t stumbled upon a magic formula to make money that no one else has thought of.

    andrewh
    Member

    The only thing I know about gambling is, don’t gamble with money you can’t afford to lose.

    Or do it with someone else’s money. I’ve got two maxed-out credit cards in their interest-free periods with the money in premium bonds. Probably low return but as close to zero risk as you can get. Expected return of about 1.5%, I’ve got a 1% chance of a 50% return. Twice as likely to get nothing as I am to get £1m but both are negligable chances

    Premier Icon cookeaa
    Subscriber

    The Trading 212 ISA is worth using actually.

    You apparently get any dividends paid straight into the ISA balance (no CGT?) and there are no trading fees for your first eight trades each month. Of course once you exceed eight trades its 40quid a pop irrespective of value.

    So it doesn’t suit armchair day traders, more medium to long-term speculators.

    Superficial..

    Assuming your stock just went to £1.10, what’s the next step? Keep the money? Reinvest in something else? Because that ‘something else’ will be subject to the same guesswork and fluctuations of your original stock (which could similarly go up or down +/-10% again).

    Spot on. Totally concur. That’s part of the reasons I haven’t done more than one trade so far.
    The BP has gone up by £2.5k since Monday, which is a huge chunk, but only if I sell. But if I sell them what do i do with the cash…..
    Buy more BP at the higher price…

    What I’m planning to do is leave it in and hopefully net the 13% dividend for the next fifteen years.

    Though of course the problem they will have in six months time apparently is that all the storage will be full and there’ll be nowhere to store any more oil. So the price will tank.

    Fudd
    Member

    I put in a buy limit order to buy a chunk of barc at 90p. At some point in the next days it will hit that value. I then put in a sell order at 1.10. when it does so I then repeat the process.

    Apart from those two, am I missing something here?

    Yes, it’s called a stop loss and that’s the price you sell at when the market drops further.

    Prices go down as well as up so you’re currently missing half of your exit plan.

    What you’re doing is day trading and a simple strategy would be limit sell at +20p and a stop loss at -10p. If half of your trades are successful you’ll be a millionaire in no time!

    poolman
    Member

    So did u sell out on the spike? A profits not a profit till its in the pocket. I m waiting for another dip to top up, not bp but their sector peer. Good luck, don’t go spending your paper profit.

    Premier Icon boxelder
    Subscriber

    But if I sell them what do i do with the cash…..
    Buy more BP at the higher price…

    Sit on the cash until the price drops again. Gamble on something else. I’d have thought that longer term, investing in trusts will pay well i.e. backing those who presumably know what they’re doing. I had Stobart, BP and Royal Dutch Shell that I sold in January as I didn’t want to back oil and/or air travel. I could buy them back now at 50% or under, or put another way I’ve currently saved 50% of those savings. I’m sitting on that for now.

    Premier Icon jimdubleyou
    Subscriber

    If you want to day trade, you might find spread betting to be easier to work out your positions. It’s also tax free as long as it isn’t your trade.

    As a novice, you should only hold long positions, never short.

    A long position is equivalent to holding the shares (without the dividends).

    Do some reading and learning before you spend any money on anything!

    Spot on. Totally concur. That’s part of the reasons I haven’t done more than one trade so far.
    The BP has gone up by £2.5k since Monday, which is a huge chunk, but only if I sell. But if I sell them what do i do with the cash…..
    Buy more BP at the higher price…

    What I’m planning to do is leave it in and hopefully net the 13% dividend for the next fifteen years.

    Right, I’ve decided to go with the ‘betting option’ and see how it goes. So BP was up again to near its recent 340 peak, so I’ve sold 7/8 of them and netted about £2.3k. The plan is to wait till it goes back under 280/300 and buy them back again.
    🙂
    The other part of the plan isn’t going too well. I missed BARC at ~90p last week, and stupidly got the jitters and bought at 102p, then it went down so I bought some more, then again.
    Today it finally went down close to 92p so of course I bought some more. So now I have a whole load of BARC that need to go above 100 to make any profit.

    So BP needs to go down, and Barclays way up……

    WCPGW?

    Premier Icon Greybeard
    Subscriber

    So BP needs to go down

    [BP] Share price tracks crude

    https://www.thetimes.co.uk/edition/business/plunging-oil-price-could-go-negative-v2vjd0jjb
    (paywalled but the headline is the message)
    You might get your wish… but how low will you let them go before you buy?

    Premier Icon mactheknife
    Subscriber

    Mate, good luck with your trading strategy. Hope it works out for you. Most people I know who Invest / trade have been burned royally the last couple of years. Develop a strategy that works for you and stick to it.

    Mine is all about passive investing in tracker funds along with 2 or 3 select dividend stocks.

    The year I lost 6 grand I realised I wasn’t cut out for the trading game. I genuinely don’t have what it takes to do that.

    You might get your wish

    Mate, good luck with your trading strategy. Hope it works out for you

    ah ha ha.
    So I sold most of my BP at 334, some at 336 and then the final quarter at 338.

    They were 345 at close!

    Piss 🙂

    But then I’m telling myself that it’s impossible to hit the exact high point. 260 up to 336 is pretty ok.

    https://www.thetimes.co.uk/edition/business/plunging-oil-price-could-go-negative-v2vjd0jjb
    (paywalled but the headline is the message)
    You might get your wish… but how low will you let them go before you buy?

    todally. I saw that this morning and couldn’t understand how the price subsequently went up by 20 pence. Don’t make no sense.

    aha ha Ha HA

    “The announcement that banks will be suspending existing and future dividends and share buybacks ticks the boxes of moral duty and an additional capacity to lend, but from an investment perspective it removes a core plank of the case for buying bank shares.

    The current yield of the UK banks, soon to evaporate, is testament to the fact that some are core portfolio holdings. Lloyds Banking has a dividend yield at present of 10.5%, Barclays 9.6%

    I should rename this the TheGeneralist Schadenfreude thread. Well at least I know the answer to my question now.

    Bums

    That was my backup position all till now…. even if the shares don’t go up, at least I’ll have the dividend

    Arses

    Premier Icon Greybeard
    Subscriber

    I think the problem is … you need to be a Specialist !

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