How does one invest with more control than your standard mutual fund or other run-of-the-mill investment vehicle? [closed]

Question

When one looks to get into investing they are usually provided with the usual options offered by banks or product companies; Mutual funds by the banks or products/apps (e.g Betterment).

But these options don’t allow for much control over the actual day to day trading. With mutual funds and apps there isn’t much need to know the market or prices of stocks since everything is being money-managed for you.

But if someone wants to trade in the stock market, such that they follow the news and inspect individual company stock prices, so that they can make informed decisions with their money, how do they get this kind of control? Does it require one to become a “day trader”? Specifically, what is the avenue one takes to get actual control over the buying and selling of stocks with their own money? Is it still through the banks or some other, more direct, route into the market?

Answer 1

Just open any brokerage account. Don't choose one of the "super discount" ones - they constantly seem to have problem and complaints.^†

Put say $20,000 in the account.

Start buying and selling stocks.

Note that a "day trader" is just someone who buys and sells stocks really quickly, only holding them for perhaps a few hours. I'm guessing this is totally unrelated to what you wish to do.

Simply decide which company you want to buy, (so some stock XYZ) and how much (perhaps $5,000 of your $20,000) and click the "buy" button.

It could be, in six months or two years, you happen to decide to sell that one.

(That could be for various reasons ..

• It is plummeting and you feel you should get out
• It has gone up a lot and you want to take that profit
• It has gone up a lot, but you guess it is about to go down
• You decide you would rather take the money out of that one and buy some other one.)

Next,

1. do that for five or ten years to get a feel for it

2. realize that nobody can stock pick, you just buy SPY

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^†* (Just choose one of the obvious, household names like fidelity, etrade, merrill, ameritrade, etc. It makes little difference. If you like, try two or three different ones.)*

Answer 2

Specifically, what is the avenue one takes to get actual control over the buying and selling of stocks with their own money?

There are a growing number of "free" stock trading services and apps, and even "traditional" brokers offer individual stock trades (note that you can't usually trade individual stocks in a 401(k), but that's a different story).

A "day trader" is simply one who buys and sells the same stock in one day. The pattern is to get in to a stock, hope it goes up, and get out before the day is over. You can trade individual stocks and hold them for long periods of time and not be a "day trader".

So the "avenue" is to pick an app or broker, or if you already have an broker for your mutual funds, use their stock trading services. You can choose whether you want to start a normal investment account (where gains are subject to taxes), or a "retirement" account like an IRA, where the tax is deferred until you withdraw the funds, but there are limits on what you can contribute and withdraw.

Depending on the broker or service you'll have to deposit the cash to use to buy stocks. Avoid margin trading like the trade unless you are absolutely certain you know what you are doing. With margin you can lose multiple times what you start out with.

Do note that individual stocks can pose incredible risks. The last few days have taught many people that stock price can become completely disconnected from the value oft he underlying company, and if you're on the wrong side you can suffer massive losses. Even "informed" investors can get blindsided for completely unexpected reasons. That's one of the big benefits of mutual funds (or ETFs if you want more control of the price you pay during the day), is that they spread this risk over hundreds of stocks, so even if one "stonk" goes bananas, your exposure is limited.

Answer 3

This is a U.S. centric answer:

If you want control, open a brokerage account with a major no commission broker (Vanguard, Ally, Schwab, TD Ameritrade, etc.).

If you want to day trade (more than 3 day trades in a rolling 5 business days, you'll need a margin account and you'll have to maintain a minimum of $25k of cash and marginable securities. You can trade as often as you like in a cash account as long as it is with settled cash.

You can day trade, swing trade (holding period of up to a few weeks, buy and hold, or any combination of these.

Avoid banks because their trading platforms tend to be slow to non existent (phone orders) and their commissions tend to be high.

As one who has traded for 20 years, my best advice for you is to avoid the impulse to trade until you really understand the financial markets and know what you are doing. If you do attempt this, only start with an amount of money that you can afford to lose. I offer this advice to you because the large majority of traders lose money.