We have lots of experienced traders on MoneyAM who would be glad to help if you have any trading questions.

Could someome please explain the basic concept of 'trading'?
In other words is it spread betting or actually trading shares through a broker. If so which brokers' trade shares. Do you still pay the 10 - 15 cost of each buy and sell as well as stamp duty?
Sorry if this seems a basic question but it would help if someone put me out of my confused misery about this subject. I had hoped to go the NW Traders Day but my transport let me down at the last moment as I am unable to drive any more (a medical condition not drink driving!!)
Regards

A question from another newcomer to trading.

Trading 'long' and 'short' - while I think that I understand what these terms mean, am I right to assume that these terms are used when trading CFD's?

When you are taking a 'long' position but are not trading CFD's, is 'long' the correct term or are you just trading shares and hoping for a move in the upwards direction?

This is a really useful thread for people like myself - thanks to all of those experienced traders who take the time to educate the less well informed. It IS appreciated.

Thanks in advance

Rich

Here's another question

When you hold shares that go ex-dividend, what are the rules about who gets paid the dividend?
Do you just have to hold the shares on that date or do you need to hold them until the payment date? - or is there some other formula?

Thanks again.

OK

Harlosh:
Trading is, in a sense, whatever you want it to be, but the essence of a trader is that you are not into buy and hold, you're looking to scalp a quick profit, either in minutes, hours, days or weeks and long or short, if long either by buying shares or long or short using a derivative method i.e spreadbetting or CFDs.

Richstuch:

Most of your answer is above,
long - you have bought in any of the above hoping they will go up
short - you have sold stock you don't own - usually by a derivative method, hoping they will go down and you will buy them back later

When shares go ex div, you need to be hjolding them on the ex div date, i.e. own them from any point up to the night before so that at the open on ex div date you own them. It doesn't matter whether you own them on the payment date. However, most stocks will drop by the dividend amount on ex div date but make it up again in the days / weeks following.

Hope this helps.

Hamsa

Get yourself on a 'money management' course.

When you enter a trade you should have a clear picture of your exit strategy - ideally a target price and a stop loss. You should have a feel for the risk/reward that you have exposed yourself to, and have a plan for the trade.

After you've planned the trade, all you have to do is trade the plan.

This isnt a lot of help to you now, because you're drifting rather than following a charted course. What you could do to exit is to retrospectively set your stop loss and target (and possibly your escalation/sizing policy) - and stick to them. In other words, treat it as a new trade.

I do, of course, agree with all the other advice you've been offered above. The message that's coming from all of them is: "Set a stop loss and stick to it"

richstuch

Also consider that if you're short when the market opens on the day the share goes ex, then you have to PAY the dividend! Ouch!

Gausie

richstuch
Ex Dividend
Use Legal & General's as an example. The share price was 74p paying a 3.25p dividend. Now that was approximately 5% so how can we take advantage of it?
Well the plan is to BUY them before market close on Tuesday and hold them overnight. If you do this through a conventional broker you will get the dividend paid into your account. If you do this on CFD you wil have to check what percentage of the dividend they pay. Usually about 95%
Now as that dividend is paid from LGEN the opening price on Wednesday morning should be 70.75p (74p - 3.25p) to reflect the dividend paid out and consequently the reduction in value of the company.
However often you can get out at a better price next morning as many people have not got a clue they are ex divi. Also it is in the interests of certain organisations with large holdings to try and keep the share price from falling as much as possible.
So if you can close next morning near to the previous nights closing value you keep the 5%. As long as the market itself is not to strong you can alternatively reverse your position and go short knowing they should be 5% lower,

Note: If you are short on the stock on Tuesday night as Gausie says above you pay the dividend! So you should always check this if you keep positions open overnight.

Another interesting point is that the dividend payout affects the technical analysis & sentiment on that share and a 5% drop can often trigger a sell signal. Perhaps dropping it through a support or completing a 123 sell pattern.

Croc

I'm suprised to hear that some CFD firms pay less than 100% of the dividend.
If they only pay say 95% then do you know if they only charge you 95% if you are short at the ex-div date?

If that is true then there is a potential arbitrage opportunity by going long with a 100% broker and short with a 95% broker as the share goes exdiv. :-)

thanks to Croc, Gausie and Seymour for that information

Hamsa, you are making the same mistakes all new traders do, you must learn correct position size , discipline, and always stop loss when you are wrong, (easyer said than done )

a couple of good books that will help you are,

1/ alexander elder - trading for a living & come into my trading room

2/ tony oz - how i take money from wall street & stock market wizard ( if you can find it )

both of the above authors are actual day traders, the books are easy to follow and understand, they cover the importance of correct money management, discipline, trading rules,

you might have to go to www.tonyoz.com for his books or you see them regularly on ebay just type in the authors name in search,

ttt

I've just read the post about the witching hour tommorrow and was considering setting a buy limit on a FTSE 100 share. For example setting a buy limit at 5% below the current bid price for, say, TESCO or SHEL or BP or LLOY.
I was wondering what people think is the best one to go for.

M5Martin
I go for AZN, Logica, Barclays, Diageo, Cadbury, III
A nice mix

M5-SGE and AVZ imho!

buy : jarvis hotels at 150p or below
epic code: jvh
bid/offer: 138/142
stop loss: 120
target price: 181
limit buy at: 150
sector: leisure
market cap:147million

I hope this helps and give me some feedback and idea trades aswell:
rgds
zarif

Many thanks to all for the advice. Closed deal and took losses. Should have bought some as they have risen really well. Perhaps will try in double witching tomorrow. 5% below market price? Closed all my positions today and shall try again tomorrow. Once again thank you very much.

Hamsa
Best of luck tomorrow!

This again is an excellent thread..many thanks to Croc, Seymore Clearly, Gausie and others...

Keep up the good work, when I subscribed to this site, wasn't sure if it was worth the money, now I realise have recouped 100x over by learning from each others...

Ta..
Jules99.

Zarif,

I'm not the right person to ask. I'm not a chartist, more of a fundamentalist!

I buy shares as they drop, not as they go up! (My attitude is I've missed the boat, so move onto a share that I haven't!) Also I only use stop loss to lock in profits! If a share is making losses, I normally just stick it out and collect the dividend!

JVH has generally been a pretty boring share. Until this week it rarely did anything! I bought them because I met the Chairman a couple of times when I was doing some voluntary work for The Princes Trust and had some spare cash and thought why not! Not a reason I'd use today!

little woman:
I am a newbie and more often than not take the short position-same as you, Can you give me any links and tips for sites where can get fundamental and chartist advise, I use spreadbetting at present at trade mainly the indexex with occasional shares
good luck for your trading
rgds
zarif