# Investing Newb Scared of Getting Started



## rofl (Apr 16, 2011)

I'm in my early 20s and just opened a Questrade account to get started with investing. However, I've been checking the stock market over the last week and it's not pretty. All the companies I'm interested in investing in have been bleeding red. Any tips for a newbie that's scared of getting in on the action?


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## ddkay (Nov 20, 2010)

Stay out for now, watch and learn from others mistakes, this is not an investor friendly time period.


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## londoncalling (Sep 17, 2011)

rofl said:


> I'm in my early 20s and just opened a Questrade account to get started with investing. However, I've been checking the stock market over the last week and it's not pretty. All the companies I'm interested in investing in have been bleeding red. Any tips for a newbie that's scared of getting in on the action?


Welcome to the forum and the wonderful world of investing. I wish I had the brains/nerve to start investing on my own when I was your age. Unfortunately I gave my money to someone who had less interest in my $ than me and it took until the 2008 downturn to take responsibility for my own investment decisions. You are blessed to be entering the market at such a time as prices are depressed and their are many opportunities to make some serious $$$. The first thing we need to assess is your knowledge and understanding of the market. How long have you been studying stocks? What made you decide to go DIY? Are you investing? trading? don't know the difference?

That being said let's get down to business.

Markets will rise and fall continuously. I rarely purchase a stock at its absolute bottom and have it sky rocket the next hour, day, week or month.
A wise investor does their homework and sets an entry and exit price even if it is a long term hold. If you are confident in your selection and the process for selecting both stock and price there is no reason to wait for the market to bottom. If you aren't confident in your stock selection and price point then you probably are either not ready to DIY or you have not assessed your level of risk correctly. 


Last piece of advice for you. READ READ READ everything you can on finance investing and economics and learn all you can from the wise people that are on this forum.

Cheers!


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## webber22 (Mar 6, 2011)

I smell something fishy about this thread ...... can someone check the IP of RollingOnFloorLaughing to make sure it's not Belguy


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## HaroldCrump (Jun 10, 2009)

webber22 said:


> I smell something fishy about this thread ...... can someone check the IP of RollingOnFloorLaughing to make sure it's not Belguy


Not possible. It's missing the usual  and the multiple


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## Belguy (May 24, 2010)

I am mostly hanging out on my own thread these days!!


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## Sherlock (Apr 18, 2010)

ddkay said:


> Stay out for now, watch and learn from others mistakes, this is not an investor friendly time period.


Someone will ALWAYS say that the markets are bad and it's not the right time to invest. If you listen to such advice you'll never invest.


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## Cal (Jun 17, 2009)

As a newbie you should probably do the opposite of your instincts.....buy on fear.


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## Belguy (May 24, 2010)

I would concur that I would wait a few more weeks. If you miss the bottom, then so be it.

Under any kind of normal circumstances, my advice would be not to try to time the markets but the circumstances are hardly normal right now.

I really feel that there is a 50/50 chance now of all hell breaking loose in Europe leading to a severe recession with some of the contagion spreading to North America in due time.

The next few weeks should tell us a lot. Maybe it will lead to the buying opportunity of a lifetime!!!

There is always a silver lining to every situation.


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## ddkay (Nov 20, 2010)

Sherlock said:


> Someone will ALWAYS say that the markets are bad and it's not the right time to invest. If you listen to such advice you'll never invest.


-1 for complacency, it can't ALWAYS be the right time to invest, either. You have to do your research and use common sense.


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## ddkay (Nov 20, 2010)

If your "investment" timeline is 3 weeks, what do you want me to tell you? Pile in, there is a decent chance for a mini rally into mid December, but the market could break any second, so don't get overconfident with a few % gain.

Fact if you are cash this year you are outperforming the TSX by 12% and the S&P500 by 5%, good job! That's what I call putting your money to work for you.


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## rofl (Apr 16, 2011)

Thanks for the suggestions guys. londoncalling, to answer your question I am interested in short term investing. Although, I've only been seriously studying this stuff the last couple weeks. I think I'm gonna fund my account with $1000 and start investing just to get my feet wet. Does anyone have some suggestions for some good divident paying stocks?


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## Causalien (Apr 4, 2009)

I would suggest for someone starting out at early 20 to go full on risk. As long as you don't use margins, this is the best time to play and be a cowboy. Whatever you lose now will be peanuts compared to what you will be making in the future. 

The gains you make now will be magnitudes more important than say if you make it in 20 years. Most people blow their money away in the 20s in something. Safe investments gets wipe out over time as much as risky investment (look at US real estate). So you might as well blow it learning how to make more. 

However, strongly advice against debt and margin as piling on debt early on is more destructive in life due to compound interest.


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## rofl (Apr 16, 2011)

Thanks for the advice Causalian. Could you explain what you mean by margins?


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## Oldroe (Sep 18, 2009)

I and everybody else took huge chances to make money in stocks. Then we will do something smart and but the profits in good div. stocks.

GUESS WHAT we all went broke. I personally turned 50k real dollars into 6k.

So do something smart get a real nice portfolio of good div. stocks/etf. Get use to the ups and downs in the market. Learn to take profits and losses. Then add 10% high fliers and have some fun.


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## Cal (Jun 17, 2009)

First of all you will find that dividend stocks generally don't have a high beta, or flucuate much, so that may not be the most aggressive way to go with a short term portfolio.

Second, your post says you are scared. Are you prepared to loose the $1000 investment, or would you rather attempt to keep it with a more conservative etf or something.

Third, I think this is a great time to buy.


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## Causalien (Apr 4, 2009)

rofl said:


> Thanks for the advice Causalian. Could you explain what you mean by margins?


There's a movie named "Margin Call" out right now. Watch it, it might explain it better than me.


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## tinypotato (Jul 27, 2010)

*Just do it!*

Hello,

Since you're relatively young and new to this. I say just go ahead and invest it. As others have said, the amount you gain/lose now will be peanuts compared to what you will earn / invest later.

The most important thing is to invest it and pay close attention to how you FEEL. How do you react when it goes up or down? Learn about your own risk tolerance, this will make you much better prepared down the road.

Margin - at the simplest level, it's buying using borrowed money. If you're just starting out, don't bother with it yet.


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## Soils4Peace (Mar 14, 2010)

rofl said:


> However, I've been checking the stock market over the last week and it's not pretty. All the companies I'm interested in investing in have been bleeding red. Any tips for a newbie that's scared of getting in on the action?


Are the companies bleeding red, or are you talkng about stock prices? The stock market won't tell you much about how the companies are doing.


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## buhhy (Nov 23, 2011)

Hey guys, I'm also a newb looking to invest. I'm 20 and am looking to invest for long term. I'll have around 10k or so available. Should I allocate 20% or so to bonds, and the rest to a mix of dividend and speculative stocks? What about REITs? Gold?

How's the market right now for stocks? What about for bonds? It seems like the European crisis could quickly escalate, killing stocks but interest rates are low too and seem like they could rise, which would devalue bonds. Not to mention low interest rates result in lower returns as well.

Thanks guys!


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## Causalien (Apr 4, 2009)

I think new comers nowadays have it easy. You will probably not have to deal with margins in the future. It used to determine how much you can short and leverage. Now that there are all these ETF with 3x bear 3x bull out there, there is really no need to employ margin and risk a call. 

Correlation is going to 1 so most stocks move together. The need to individually pick a stock is fading. Picking stocks is only important during wild and bad times like now. When the market is safe again (VIX close to 20), just use the ETFs. 

Focus on understanding what I just said first, I know it may sound like gibberish, but these are very fundamental concepts.


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## ddkay (Nov 20, 2010)

US interest rates will not rise until the economy improves, if things keep getting worse, a downgrade of US credit means everything else that is a higher risk than Treasuries becomes and even higher risk than it previously was. People will chase US Treasuries into negative yield.


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## Causalien (Apr 4, 2009)

What you just said is a mathematical oddity ddkay. I wonder when the perception will change. Conventional wisdom says downgrade = rise in treasuries yields.

It'll make for some nice debates to explore what needs to change for this fundamental perception to change.


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## balk (Dec 6, 2010)

Why don't you just start very conservatively? Like 50% equities max. You could divide your $1000 into half short term bonds (XSB or the new Vanguard ETF) and half Canadian equities (XIU). That way you could get used to seeing your account fluctuate up and down and figure out your risk tolerance. You do not have enough money to diversify with individual stocks, plus buying an index fund should yield better results in the long run. The other option is to make an imaginary account with google finance and just see how it does over a period to measure your daily gains and losses. 

Also is this money in a registered account?

As a somewhat newb myself, investing for three years, I would strongly suggest to go with a couch potato portfolio (www.canadiancouchpotato.com) to ensure that you do not make huge mistakes and to get used to investing.


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## Eclectic12 (Oct 20, 2010)

rofl said:


> I'm in my early 20s and just opened a Questrade account to get started with investing. However, I've been checking the stock market over the last week and it's not pretty. All the companies I'm interested in investing in have been bleeding red. Any tips for a newbie that's scared of getting in on the action?


If you are that concerned about the losing the money, then GICs or a HISA or something like MIP510 or RBF2001 (which is a MF that paying interest) will maintain your cash.

You can track in a spreadsheet what you were thinking of buying and continue with building your investing knowledge until you are comfortable.


Or you can decide how much you are willing to lose and invest that much, holding the rest for the future.


Another thing to make sure of if whether the company is bleeding red in their business or whether investors are spooked so that the company share price is in the red. 

There is a *big* difference.

A company that is losing money in their business, may be on the fast track to being bankrupt (ex. Nortel). A company that is making money can have their shares prices in the red because no one in the market is willing buy.

The key is to remember the stock market is a *market*. 


An example from years ago was when the news reports for a company I was watching compared the current quarter to the last year's numbers. The headline was "profits down 80%". Naturally, the share price dropped as some investors paid attention to the news report only.

Looking deeper - the previous year the company had sold assets to pay off bank loans because they could see increased fuel costs down the road. So profits from the previous year were higher than normal. After removing the assets sales, the profits were up 12%, even though fuel costs were higher.

The end result was buying a stock that was at $22 before the news report at $16 where the stock hit $30 in a couple of years.


Another way to think about it is a garage sale.

It's like putting a bike out for sale at a garage sale for $25 - the bike may be a two year old $400 bike in great shape but if not many people stop to view it and only one person offers $20, it may sell for $20. 

Or it may be a $400 bike with a cracked frame that's ready for the scrap yard which is only worth $5. A lot people could stop by, view it and two people off $3.



Cheers


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## ddkay (Nov 20, 2010)

You guys are studying the wrong fundamentals. It's not just about one company, it's about their access to credit and their customers access to credit so they make a transaction and buy products.


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## Cal (Jun 17, 2009)

buhhy, just search canadian couch potato portfolio. Tweak it to your liking. Until you gain better knowledge this is a relatively basic to understand, yet diversified portfolio.

Stay around the forum you will learn lots here.


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## rofl (Apr 16, 2011)

The $1000 is just to get a hang of investing. Since I will be using a TFSA Investing account, should I concentrate on capital gains instead of a high divident paying stock?


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## Argonaut (Dec 7, 2010)

Just curious, how much besides that $1000 do you have available if you don't mind me asking? My biggest mistake when I first started was investing in small amounts with big commissions at a bank brokerage. Obviously with Questrade you've taken care of that second problem. 

Experience is indeed valuable, but I would avoid doing it in the TFSA. Maybe open a non-registered cash account and make a couple trades in there. The TFSA is so awesome as an empire building tool for people our age, so I would save it until you can contribute the full amount and split it between some solid dividend payers once you have more knowledge.

There is a bit of voice telling me to say stay in cash until you build up a decent amount to invest, but I know that the younger version of myself wouldn't and shouldn't have listened to that advice so I won't bother.


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## KaeJS (Sep 28, 2010)

My honest is opinion would be to buy 40 shares of REI.UN (RioCan), which is about as much as you would be able to buy for $1000.

Its a low beta stock, which means it does not fluctuate as much as the market does. If you look at a chart of this stock, as shown below, it is relatively stable.

This chart is for 1 Year:










Each share will pay out $0.115 per month.

So, if you have 40 shares, you will receive $4.60/month, guaranteed in dividends.

This is a real estate investment trust. They own/rent out shopping malls and buildings.

The idea is that your dividends of $4.60/month come from cash flow RioCan gets from renters of the buildings/property, while the capital appreciation of the share price comes from re-invested dollars, more assets, and the appreciation of the value in the land/buildings they own.

I own 100 shares of RioCan at $24.27. So, as you can see, I have made about a $70 profit in capital appreciation, excluding the $11.50/month I receive, every month, for owning 100 shares. I believe I have owned this company since March of 2011.

If you own this in a TFSA, you wouldn't have to claim any gains or dividends.

What's the worst scenario that could happen?

Well, you buy 40 shares at $25.00. Over 6 months, the share price drops to $22.00. You lose $120, but you gain $27.60 in dividends, so your loss is $92.40.

I don't think that's likely to happen, but if it does happen... Big Deal. It's only $92.40, and you'll get it back if you just keep holding the stock.

The most likely scenario is you buy 40 shares at $25.00, sell out for $25.10, and claim $27.60 in dividends for a total of $31.60 profit.

But who knows..... that's only my opinion.


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## Mike59 (May 22, 2010)

KaeJS said:


> What's the worst scenario that could happen?


I like riocan, it's a great company and i've owned it before. Worst case scenario is more like a 50% drop, look back beyond 1 year to 2008-09 crash when it traded in the 9-10$ range , that's awful hard to recover back to $25 while collecting a measly dividend.

I was in reits via xre until last week but have sold out of it, seems to be hitting a resistance top...i'd buy riocan again around $15 after a dip and rebound .


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## rofl (Apr 16, 2011)

I think I'm just gonna use all $1000 to buy 1 set of shares from one company. Thinking of investing in an oil company. Any suggestions for a company with a big risk/reward factor?


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## Assetologist (Apr 19, 2009)

Mike59 said:


> I like riocan, it's a great company and i've owned it before. Worst case scenario is more like a 50% drop, look back beyond 1 year to 2008-09 crash when it traded in the 9-10$ range , that's awful hard to recover back to $25 while collecting a measly dividend.
> 
> I was in reits via xre until last week but have sold out of it, seems to be hitting a resistance top...i'd buy riocan again around $15 after a dip and rebound .


I know you like it but one's strategy depends on their perception; the drop allows more shares to be purchased in one's DRIP. The long term viability of REI.un certainly seems solid?!?
I will Both drip & buy more if it's share price drops into the mid-teens.
There just aren't that many strong Canadian companies with a substantial dividend.


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## Oldroe (Sep 18, 2009)

I have a few drips. They are a pain. You need to recalculate avg. cost monthly. And selling if just awful, 2 week process, no control on price you get.

For me the savings is not worth my time.

REI doesn't pay a div. it pays a distribution. For the op I think you should stay away from drips for now, pay a few fees watch the markets with your money in rei, or a bank.

When you 10k in solid div. stocks then look at some more growth/cheaper stocks $10-$25 dollar prices range. Then look at option and margin, etf, all this stuff takes time every week. Keep it fun.


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## 50invester (Feb 10, 2010)

*Advice from Newbie*



rofl said:


> I'm in my early 20s and just opened a Questrade account to get started with investing. However, I've been checking the stock market over the last week and it's not pretty. All the companies I'm interested in investing in have been bleeding red. Any tips for a newbie that's scared of getting in on the action?


After two years of conistently 'losing' money, I am probably the best person to offer some advice ... and I have alot of it. They say that 'screwing up' is the best way to learn, but the hardest way to learn. Where to begin? Some a few tips to begin with.

- Enter slowly. Don't go buy $10K worth of some stock right off the bat.
- This is a good blog, but like anything else, don't believe everything you read. Read other financial blogs. 
- DON'T listen to Analysts. I can't begin to tell you how much money I have lost listening to these Doorknobs.
- Diversify. Never, Ever, Ever buy all stocks. On the days they tank you will be really happy that you own some bond funds.
- Read some financial books. Rob Carrick, John Reynolds Lawrence, Garth Turner, David Chilton are good to start with. If you want to read some deeper stuff then try the 'Four Pillars of Investing' (not easy reading).
- Patience ... the most important word in Investing. My biggest mistakes have been selling way too early, when a stock begins to move down. If you have no patience, then go buy GIC's.
- DON'T Day Trade (This is gambling and anybody who says it isn't, is an idiot).
- Don't fall in Love with any one stock. 
- Most Impotantly ... Plan on losing some money for a while.

In my personal opinion (for whatever its worth), the world is going to get very nasty, very soon, so if you really, really need to buy stocks now, then buy something rock solid like BCE where it will at least pay you a dividend.

I personally own right now alot of bond ETF's (Ishares, Claymore, BMO) and Preferred Shares ETF, a little BCE, T and Suncor ... and also way to much Gold Mining stock.

That was fun, Good luck.


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## balk (Dec 6, 2010)

KaeJS said:


> My honest is opinion would be to buy 40 shares of REI.UN (RioCan), which is about as much as you would be able to buy for $1000.
> 
> Its a low beta stock, which means it does not fluctuate as much as the market does. If you look at a chart of this stock, as shown below, it is relatively stable.
> 
> ...


Even though RioCan is stable and a well run company, I don't see why you would recommend that he buy a single stock over an ETF. It is just too risky. 

I would suggest he buy XIU, VT, or a combo of XIU, VT, XBB. I know that commissions will be high on 3 purchases but the long run benefit of having a diversified portfolio for your first investment should outweigh the small increase in commissions. 

To OP, I hope you realize that you are taking on a lot of risk by buying a single stock. This is risk you do not need to take on and risk that won't necessarily improve your returns.


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## freshjiive (Jul 26, 2011)

I am in the same boat. I'm in my 20's and decided to start investing in some stocks. I bought $1000 shares of jaguar mining in October and sold them a week before they sky rocketed due to an unsolicited offer to buy out the company so that kind of hurt even though I couldn't of known that was going to happen. Then I bought some shares of BBD-B early Nov and sold Monday of last week when I started hearing all the bad news of the markets. So far I'm down to $900 and i've spent $120 on just the brokerage Fees :| I'm thinking of switching out of TDWH to something less costly.


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## kcowan (Jul 1, 2010)

Congratulations freshjive! You have started the learning process. And you hve already learned the most important lesson: Fees matter!

rofl, you have said you are afraid. That means that you will take any losses personally. Until you develop a tolerance for losses, you should avoid the markets.

buhhy, the amount you have is not as important as the source of those funds. Is this savings of some windfall. If savings, how long did it take you?

50investor, good list and I hope everyone listens.

I am reluctant to offer advice because one size does not fit all. I am retired and have been DIY for over 8 years. I rely on investments for 60% of my annual budget. What I am doing is not relevant to anyone else.


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## freshjiive (Jul 26, 2011)

kcowan said:


> Congratulations freshjive! You have started the learning process. And you hve already learned the most important lesson: Fees matter!


Do you have a brokerage you can suggest that is reliable but less costly on the fees?

Thanks


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## 50invester (Feb 10, 2010)

freshjiive said:


> I am in the same boat. I'm in my 20's and decided to start investing in some stocks. I bought $1000 shares of jaguar mining in October and sold them a week before they sky rocketed due to an unsolicited offer to buy out the company so that kind of hurt even though I couldn't of known that was going to happen. Then I bought some shares of BBD-B early Nov and sold Monday of last week when I started hearing all the bad news of the markets. So far I'm down to $900 and i've spent $120 on just the brokerage Fees :| I'm thinking of switching out of TDWH to something less costly.


OK, this was me two years ago. The best advice I can give you is after you go and sell these stocks at a loss, think back to what you were feeling ... think about the fear you had ....think about all the anxiety running through your body. Why is this important? Well, every time you go through this and lose more money, if you don't really think deeply about why you sold, then you will continue to always lose money. You see, fear overrides your ability to think rationally, and its not easy to maintain composure in a market that acts like a rollercoaster. Only seasoned investers understand the 'psychology' of investing. This may sound kind of hoakie to you but as time goes on you will begin to see that the actions you take when anxiety sets in will be the difference between losing money and making money. Its not for everyone. Don't treat this like your at the casino. Just trying to help and open your eyes .... and why not try buying some ETF's instead of individual stocks. Oh, and Questrade has the lowest fees that I know of. 

Cheers


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## donald (Apr 18, 2011)

Try the practice virtual acct in your brokers acct(damn i wish i did this)Rbc offers this,you can set it up with 100k.Some say its not the same without hard cold cash on the line and i would agree but-you can learn on the fly how tricky somethings are in reality-proper allocation and position sizes(you only have 1k so it wont matter but proper building is the toughest,thats what im learning)

Plus when things swings against you,you we see first hand what its "like" out in the real markets......You have the freedom to [email protected] up.

You will see if you have a aptitude for this really quick(not normal times).Test your stomach this way_If i could go back i wish i built a mock portfolio first and tested and learned that way.


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## londoncalling (Sep 17, 2011)

When things went south a couple years ago I switched to DIY investing. I read everything and anything I could get my hands on. I watched podcasts and read forums day and night. I signed up for virtual accounts while I chose an online brokerage. None of these things were identical to using real money in a real market. However, I do think it did help me prepare for understanding risk tolerance, asset allocation and how only you care more about your retirement savings than any broker, FA etc. I have had some ups and downs over the past year of being in the market and over time have been able to remove most of my emotion from the equation. I still get gut feelings about things but I consider that a hint to do more research or to give more thought to an investment decision. Most oftentimes, I find that doing nothing seems to be the right call. When emotion gets involved and I think I need to do something I usually take a walk, watch TV, read a book, spend time with family or lay down till the mood passes or I become certain that it is the right decision. Am I always right? No. 

Nothing but true experience will determine if the market is the place for you. In a few trades you will learn more about your risk tolerance than you could ever imagine. For me, I found out I had more tolerance than I thought going in. I don't think that is true for most people.

Good luck and enjoy the ride!

Cheers


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## kcowan (Jul 1, 2010)

I"m with TDW but I would go with Questrade if I was starting out. I am with TD because of Greenline which was historical. Now it serves me because of the size of my book.


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## buhhy (Nov 23, 2011)

kcowan said:


> buhhy, the amount you have is not as important as the source of those funds. Is this savings of some windfall. If savings, how long did it take you?


These are mostly savings from the past 2-3 years. It's the portion of my money that I won't need for the foreseeable future, thus I can invest it, and not be living on the streets if anything bad happens.

Can anyone refer some good books for technical analysis, and options trading?


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