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Learning to trade shares and stocks

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Good Afternoon,

I am interested in learning how to invest in the shares and stock market. I am a complete beginner but would like to build my knowledge before I invest. Where is the best place to begin acquiring knowledge in order for me to become a successful trader in the future.

Thank you for your time,

Tom

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@tomcagsey,

Your first sentence states how you want to learn to 'invest' in the shares and stock market. You second sentence states you want to build your knowledge before you 'invest'. By the time you get to your third sentence you are stating you wish to acquire knowledge to become a successful 'trader'

First of all, investing and trading are different. For me investing is more about long term wealth creation whether that be for capital growth or for income. Trading for me would be a shorter time period and more speculative in nature betting on price movements in a certain direction. 

What you ask is a very simple question but very difficult to answer. If successful investing and trading was just about acquiring knowledge then there would be a lot of people who could merely acquire and retain knowledge and become profitable traders but it does not work like that. 

It is all about how much time, effort, dedication, discipline and capital (money) you want to put into this. 

There will be plenty of material on the Internet which you can read. There will be plenty of books you can read. Reading will be a good starting point. Acquiring knowledge is only the first step and no one can do this for you. You must read and learn yourself first.

You are not a guest member so therefore one would assume that you have an account with IG and must use them to either invest or trade. You may like to begin with material on IG's website first which could be as good a starting point as any. I would not suggest you invest or trade until you really are ready and only you will decide when this is. 

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@tomcagsey,

Also another difference in my personal opinion between investing and trading is that investing in generally 'long only' where as trading can be 'long and short'.

So investing in unlikely to include shorting where as trading is far more likely to include shorting. 

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Guest Tomcagsey
On 19/12/2018 at 17:04, TrendFollower said:

@tomcagsey,

Your first sentence states how you want to learn to 'invest' in the shares and stock market. You second sentence states you want to build your knowledge before you 'invest'. By the time you get to your third sentence you are stating you wish to acquire knowledge to become a successful 'trader'

First of all, investing and trading are different. For me investing is more about long term wealth creation whether that be for capital growth or for income. Trading for me would be a shorter time period and more speculative in nature betting on price movements in a certain direction. 

What you ask is a very simple question but very difficult to answer. If successful investing and trading was just about acquiring knowledge then there would be a lot of people who could merely acquire and retain knowledge and become profitable traders but it does not work like that. 

It is all about how much time, effort, dedication, discipline and capital (money) you want to put into this. 

There will be plenty of material on the Internet which you can read. There will be plenty of books you can read. Reading will be a good starting point. Acquiring knowledge is only the first step and no one can do this for you. You must read and learn yourself first.

You are not a guest member so therefore one would assume that you have an account with IG and must use them to either invest or trade. You may like to begin with material on IG's website first which could be as good a starting point as any. I would not suggest you invest or trade until you really are ready and only you will decide when this is. 

Thank you very much for taking the time to reply to this. My mistake, i am interested in investing only. Creating long term wealth with  the aim of possibly retiring a few years early. I have created an account with IG to allow me to start investing once I am ready. I will start with the material on IG in the first instance on go on from there.

When you are looking at possible stocks/shares to invest in, which area of research do you focus mostly on?

Thank you

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(side note @tomcagsey - please note you need to make sure you login before you post - this way it links all the content together and notifies you of any replies. Thanks!)

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@JamesIG, thanks for that.

Tom's first post indicates he is a member hence he must have signed in. Tom's second post indicates he has not signed in as it is showing him as a guest.

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@tomcagsey,

No problem. Ok at least we are clear that you are looking at investing to create long term wealth. This forms the 'foundation' of my own personal investment portfolio.

I will talk about what I do personally and then you can decide how you wish to proceed. That will be your decision. First of all one must have an investment plan with a clear strategy they intend to execute to fulfil their aims and objectives. 

I invest in 20 different investment funds every month via direct debit. I am using a 'Cost-Pound Averaging' strategy. However, when there are any major dips, corrections, reversals, etc. I invest lump sums into these funds to assist in producing better returns for me when the funds begin to recover. I will never invest lump sums unless there is a major drop otherwise I will merely continue investing every month. I have being using this strategy for many years now and it has worked a treat and nearly every year I am in double digit annualised returns. My investment fund portfolio has never overall been in a loss since inception. It has always been in profit by using this strategy. 

Now that is not to say that you must follow my strategy. I am merely presenting what I actually do. I always think one must learn to walk before they can run. If you are new to investing then investing in funds, OEICS and investment trusts is going to be better than starting to invest in individual shares. That will come later. Start to build an investment portfolio. If you are young then you can invest in 'capital growth' funds. If you are approaching retirement then you may want to consider 'income' funds. I intend to switch from capital growth funds to income funds when I am more nearer to retirement. I am no anywhere near that stage yet!

In terms of research this is down to what 'themes' and 'countries' you think will be successful. So for example, I am investing in Artificial Intelligence, Automation and Robotics funds. That is a theme. I am also investing in Frontier Market, Emerging Market, Micro Cap, Small Cap and various other funds. I am a high risk capital growth investor so the choice of my funds reflect my risk profile and tolerance as an investor. 

If you wish to build an income fund portfolio or create your own income portfolio by investing in stocks directly based on yield and income generated then that would be different to what I do. 

Having an interest and awareness of 'Economics' I find helps. Conducting research, reading material that can give you the knowledge to make effective investment decisions is very important. I believe in the long term 'India' growth story. Therefore, I invest in a India fund. Now there will be many funds that invest in India and you have to pick the one that you think based on costs and performance to date will perform the best going forwards. What is their asset allocation? Which companies is the fund investing in? Why have other funds outperformed a particular one you are looking at? What are the economic conditions in the country you are looking at investing in? This is just an example. 

You will need to carry out plenty of reading and conduct lots of research on the different types of funds available. Which investment themes do you understand more? Do you have any expertise in a particular theme? What are you views on the US economy? How do you think the UK economy will do after Brexit? What is your understanding of the potential of Asia? Do you understand the difference between investing in large cap funds over mid cap and small cap funds? What about micro cap funds? 

It will be a long journey with plenty of hard work but it will be worth it if you begin to create long term wealth for yourself and your family of course.

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Thank you so much for your response. I really appreciate your time. I was away over Christmas, hence my delayed response. 

Your advice has given me a lot to think about and digest. Once I have begun my journey, I am sure I will have plenty more questions.

Thank you again.

Happy New Year!!!

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