I’m going into my second year of college as a business student. Each year I’m becoming more and more interested in the stock market and trading but where do I start. Of course, I’m your typical broke college student. I have absolutely no money right now but I will have a job and will continue to have a job in the future. I research a lot on the subject of trading and I am also involved in a virtual trading contest online to learn the terms and trends but now I want it to be reality. Where do I start? Find a broker they say, but with little money how do I do that, I understand I need to save but is there no other way to start from scratch? Are the online trades really a good start? I need a mentor! Short-term trading or Long-term trading … maybe both? Are there any other alternatives I should research besides Yahoo finance or MSN money? Anything else you think I should know, feel free to let me know!
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If you do not have much money, your best bet is to find an online discount brokerage because that would be cheaper. However, many of these brokers require minimum deposits. For example, ETrade requires at least $1,000 of minimum deposits. If you don’t have that kind of money, you should find a broker that does not have this minimum requirement. Yes, Sharebuilder does not have any minimums. However, their commission rate is not $4 per trade. It’s $4 per trade for automatic investments. For real time trades, it’s actually $9.95 per transaction. As for Zecco, yes, there are no minimums. However, you must deposit $2,500 to get 10 free trades per month. In addition, I would not recommend Zecco for beginners, especially since they have a hard to use website and because they were rated for having the worst customer service.
So which discount brokerage do I recommend? I currently use Firstrade http://www.firstrade.com/. They are $6.95 per trade and do not require any minimums. I don’t know if you would want to do short-term or long-term trading. If you want less risk, I’d say you should just go with long-term. If you do choose to go with long-term, I would also consider dividend reinvestment, which would work perfectly with Firstrade because they offer free DRIPs. As for learning and research, there are plenty of great books and great websites out there. My favorite website is http://www.investopedia.com/. So be sure to check out Firstrade and check out Investopedia.
One of the best for a starter with very little money is Sharebuilder.com you can buy shares for a $4.00 commison and their is no minimums.
Yahoo finance is good to learn about the market
the motley fool is another good site to learn about the markets.
Investopedia.com and the library is the only place to start. I am 18 and entering college, so I know the deal. I do have about $1,500 to start trading options with though, and there really isn’t a way to start with much less than that, unless you get lucky and end up with that much. I’d say $800 is the bare minimum, and you have to be both lucky and good to protect that much. That being said, you have to be good to break even with any amount consistently.
Even if you have $1,000, stocks are likely not an option to actively trade. Even $5 enter/exit will be 1%, so you have to be really, really good. On the other hand, a 3% move in a stock price can be worth 30% with options
Good luck, and be careful.