Category: Investing

How I Started Trading – Part 2

How I Started Trading – Part 1 covers my introduction to the stock market and business world, mostly through high school and university classes, and my personal interest.

I have always wanted to start and run my own businesses, which I feel greatly increased my attentiveness and receptiveness in my business oriented classes. I had a deep passion to learn everything I possibly could about the business world – economics, accounting, finance, entrepreneur studies, mathematics, statistics, marketing, sociology, banking, trading, investing, and every other related topic. Thankfully, I still possess this strong desire to continue learning, studying, and applying my knowledge to business, trading, and investing. I still have the drive to start my own successful businesses as well as be a successful stock trader and investor, just as I did when I was younger.

I know I can, and will, succeed in my ventures. Do you know you can, too?

To recap part one of how I started trading, I took as many classes, I read as many books, and I learned as much as I could about the stock market, investing, and business. These were the first major steps I undertook on the road to where I am today.

I never had a lot of money. I was not poor, but I was not rich. You could classify my family as “middle” middle class. I did not have a trust fund. I do not have inheritances. Everything I have, or my family has, we have worked very hard for. I suppose my drive and desire to learn, and turn my thoughts and ideas into actions, with results, was partly driven by necessity. The necessity to survive in the world (or rather, in the U.S.), which seems to promote a certain lifestyle or standard of living. I don’t want to be poor, living on the streets and begging for change. I don’t think anyone would choose to live like that. I also don’t want to be rich, having more than I could possibly ever need or use, such as Bill Gates. I saved most of the money I earned. I bought what I needed and every now and then I bought something I wanted. But importantly, I saved and I kept saving. I realized after I had enough money, I could have my money work for me. Not me working for money. I like this idea of money working for me.

I continued saving my money.

One of my friends opened a stock market trading account. He was very excited about the possibilities the stock market offered. He was making money while he was in class. He was making money while we were playing video games. His trades and investments were generating cash flow for him. We would talk about his stocks he owned and the stocks he was looking at. He would research many companies, finding the ones that fit his investing and trading style. I would then research his stocks as well. I became even more fascinated with the stock market, and more dedicated to opening my own online stock account. I wanted to make money while I was learning in university, just as he was.

I did some math regarding capital gains taxes and stock broker commissions. I quickly realized commissions fees would eat me alive. I would have to make a large percentage gain on my stocks just to cover commissions fees. However, I was not deterred from my ultimate goals. I felt $1000 was the minimum amount I could invest or trade which would not quickly disappear with commissions. I figured I could buy two stocks, putting $500 in each one. Saving $1000 was my immediate goal.

I continued saving my money.

Eventually I had saved $1000. I opened a stock trading account with Scottrade, which had $7 commissions on trades – the lowest commissions I could find at the time. I was very excited. I could finally start having my money work for me, through stock trades. I had already done my research and I had two stocks in mind: Walgreens (NYSE: WAG) and Sirius Satellite Radio (NASDAQ: SIRI). As soon as my money cleared and the cash was available for trading, I bought these two stocks. I wanted to hold on to each of these stocks for at least one year, since I knew the capital gains tax was substantially lower after you hold for one year. I remember purchasing shares of SIRI at 1.71 per share, shares of WAG at 29.98 per share. My first two trades. YES! I had completed one of my goals. I had opened an account with a stock broker. I had bought my first shares. I now had money in the stock market. I was now making money with my money. Rather, I hoped I would be making money with my money. 🙂

I continued saving my money.

My first two trades turned out to be fantastic picks. Looking back, I had bought WAG and SIRI at a great time. The market was at a very low point. Almost immediately after my purchases, the market picked up, and I was making good money on my picks. These profits unrealized until I sold, of course, and just profits on paper. But I was still making money. Eventually, I sold my shares to lock in profits. I sold Walgreens for a return of about 16%. Sirius Satellite Radio was even more profitable for me. I sold SIRI for a return of 100%. I had doubled the $500 invested in SIRI. Selling my first shares was very exciting for me. My hard work had paid off – handsomely. I had reached another personal goal. I successfully used my money to make more money.

How I Started Trading – Part 3 coming soon.