Quote:
Originally posted by lil2rich4u2
another thing i was curious about ...
lets say i buy 1000 shares of a $1 stock, costs me $1k plus any trading fees, right?
now lets say it goes up 10pts in one day and then i sell, now i have $10k roughly right?
who owes me the $10k and how do i get it? Do they send a check? Wire transfer to my bank? other?
thanks
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Assuming you trade through a broker (Etrade, Schwab, TD Waterhouse, etc.) all the proceeds are instantly put in your account.
Of course, you would have to wait for the securities trades to "settle" before you could withdraw the money. Your ability to withdraw the funds is relative to the type of account you have. Most brokerage accounts allow you to write checks, give you a Visa/MC debit card, or will mail you a check withdrawal at your request. Remember that stocks have a 3 day settlement period, and most mutual funds are 1-day.
Back to your original post, there are ways you can buy stock and limit your potential losses. The easiest way is to place a Stop Limit order, but these have their drawbacks. You can also use derivatives to limit losses. Simple put options will help "insure" your investment. Or you could choose not to even buy the stock outright and just buy call options. In this case, your only potential loss would be the cost of these contracts, and it would only cost you a fraction of the amount to have the same leverage in the company you wanted to speculate in.
There are many other strategies such as "covered calls" or dollar cost averaging into a position that you could choose to use. But the basic point is that stock ownership is risky.
Plunking $50,000 into just one or two stocks is very risky. If you're ready to take the gamble, you have to be prepared to take the loss. As you know, there are no guarantees. There's a tradeoff between risk and return that has always existed and always will.
