Help a beginner - trading stocks

i wouldn't recommend stocks. you won't be diversified.

if you want a brokerage account you'll want to look for one with low to no commisions/fees since you don't have a lot of money.

if you are employed i'd say open a roth IRA so you don't pay taxes on the earnings till you retire.

I played with penny stocks on sharebuilder. I liked the bonus money signing up and made about 400 from my initial investment of $5. I paid $5 then got my bonus $50 and put it into HEB and made some good money when I sold!

I had also gotten a few free trades so my selling was free along with my buying.

YMMV always but I had fun, and if I had 1k right now I'd do it.

Someone asked me this the other day and I told them what I'll tell you; either stick that $1000 in your sock drawer and wait till July, or buy a leveraged ETF and short the S&P with all the ammo you got. The market is running on vapors and could topple at any time. Not trying to scare you, but it's like you're entering at near 3 year highs on the market indicies and the fundamentals are terrible.

Of course I take you at your word when you say "play money," meaning it's an amount of money you could just as easily put in a pile and start on fire.

Quote from Scubastevie : I played with penny stocks on sharebuilder. I liked the bonus money signing up and made about 400 from my initial investment of $5. I paid $5 then got my bonus $50 and put it into HEB and made some good money when I sold! I had also gotten a few free trades so my selling was free along with my buying. YMMV always but I had fun, and if I had 1k right now I'd do it.

That sounds perfect for me. I don't see a problem throwing $100-200 in a sharebuilder account to play with. This is all just practice until I can afford to really play the game.

Quote from MrLennon : That sounds perfect for me. I don't see a problem throwing $100-200 in a sharebuilder account to play with. This is all just practice until I can afford to really play the game.

Have you taken any finance classes yet? I'm just asking because I'm a third-year econ major and just took my first finance class last semester. Just taking an introductory finance class with a good professor taught me quite a bit.

For instance by not diversifying, you're adding a huge amount of unsystemic risk to your investment for which you won't be compensated. If I recall correctly this risk is as high as 30-40% for a single security and doesn't level off until you investment in several hundred stocks.

You have to do quite a bit of research into every stock if you really want to get ahead (a finance class will help with this as well). For me I discovered the time in addition to the risk wasn't worth it. I have quite a bit of extra cash and have it in a high-yield checking account earning 3.30% EAR.

That being said it looks like you're really interesting in investing and you have to get your feet wet some time. It just might be worthwhile to wait a few months and take a finance class if you haven't already.

Quote from sleepysentry : Have you taken any finance classes yet? I'm just asking because I'm a third-year econ major and just took my first finance class last semester. Just taking an introductory finance class with a good professor taught me quite a bit. For instance by not diversifying, you're adding a huge amount of unsystemic risk to your investment for which you won't be compensated. If I recall correctly this risk is as high as 30-40% for a single security and doesn't level off until you investment in several hundred stocks. You have to do quite a bit of research into every stock if you really want to get ahead (a finance class will help with this as well). For me I discovered the time in addition to the risk wasn't worth it. I have quite a bit of extra cash and have it in a high-yield checking account earning 3.30% EAR. That being said it looks like you're really interesting in investing and you have to get your feet wet some time. It just might be worthwhile to wait a few months and take a finance class if you haven't already.

I think what you said and did is extremely wise. You didn't go into trading stocks with the attitude of "I'm going to do this no matter what." You went into to it with the attitude of "Let me see what it takes to successfully trade stocks.". Then, once you realized that it took more than you were willing to put into it and it involved more risk than you were wanting to expose yourself to, you made, what I think, is a very wise decision. I really admire that wise, long-term, researchful thought process.

Quote from sleepysentry : Have you taken any finance classes yet? I'm just asking because I'm a third-year econ major and just took my first finance class last semester. Just taking an introductory finance class with a good professor taught me quite a bit. For instance by not diversifying, you're adding a huge amount of unsystemic risk to your investment for which you won't be compensated. If I recall correctly this risk is as high as 30-40% for a single security and doesn't level off until you investment in several hundred stocks. You have to do quite a bit of research into every stock if you really want to get ahead (a finance class will help with this as well). For me I discovered the time in addition to the risk wasn't worth it. I have quite a bit of extra cash and have it in a high-yield checking account earning 3.30% EAR. That being said it looks like you're really interesting in investing and you have to get your feet wet some time. It just might be worthwhile to wait a few months and take a finance class if you haven't already.

Thanks for a great suggestion. Unfortunately I'm going into my senior year, so I don't have any room to fit in a finance class. I was young and stupid when I selected classes for my general ed, so of course I avoided anything challenging. I'll definitely continue to educate myself and pick the brains of people that I know who have been successful investors.