Hefty Brokerage Charges
Brokerage Charges are so hefty for small time investors! My first trades were conducted last week, and due to my small investment, I had to pay a minimum sum of $25 per trade, instead of a small percentage. I bought two stocks, which meant that I had to pay $50. As one of the stocks fell more than 10%, I had to cut loss and sell it. However, with the stock hovering around 9% and 12.5%, I decided to sell half of my lots.
That was a bad move. Realisation sank in when I saw that I had to pay $25 to sell my stock. I just bought new stocks, so I had to pay another $25. All in all, I had incurred $100 expenses when I still had not made any money from the stocks.
To counter this problem, a new investor should have enough capital to buy more stocks. A simple calculation for Poems shows that it is worth it when you purchase about $9000 per stock. Usually, people buy more than 2 stocks, so to have a decent portfolio, you need about $30000. Another way is to concentrate on just a few stocks when just starting out.
The other thing to note is to sell everything at one go instead of thinking of holding out. I’m now stuck with half of the shares I bought, and if I sell it again at a loss, I will lose even more money. However, an astute investor should know when to cut loss. Since different people have different limits for cutting loss, from 10% to 20%, I will just continue to monitor my shares.
My first goal is to make enough money to cover my fees at a course I’m currently attending, and the next goal is to buy a pda 3G phone for monitoring the stocks on the move and blogging at any time I want. Timeframe - 1 month
Sarah Tan - SingaporeProfit.com
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[…] learnt my lesson on cutting losses, because the first time I tried for my first stock, I did not do that completely. It was just like having a gangrenous toe and not amputating it, then […]