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Thread: Newbie Question

  1. #1
    Junior Member
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    Default Newbie Question

    Hi, I'm a noob with a question.

    I haven't got a enough $ to buy property and I've done the term deposit thing a few years back when the rates where about 8+% and the current rates are a bit ho-hum.

    So over the last month, I've decided to take a risk and invest in shares. So I've set up online share trading with the National Bank and brought shares each of FBU, AIA & TEL. Already my portfolio is up 5.7%.

    My question, I received a letter from Computershare advising me of my FIN number. What is this for?

    Dan.

  2. #2
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    Welcome DB

    The FIN number is like a PIN number on your cash card. You need it, along with the CSN number when you wish to sell the shares.

    Good luck with your investing.

  3. #3
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    Hi all,
    Being a cold miserable Friday I thought that I'd ask the below question
    I often hear the comment of 'going long' and 'going short' what do these refer to?
    This is my understanding.

    To go long means that you see a share that you want to buy, company XYZ, at $5.00. You pay your $5.00 and get the share. If the price goes to $5.50 you have made 50 cents. So you are effectively saying that you believe that the shareprice is going to rise in value.

    To go short means that you see a share that you think is going to decrease in value, company ABC. At this point you don't own the share, however you sell it (i.e. nothing) at $5.00 you wait until it drops in value to $4.50 and then you buy it. You then make your 50 cents per share.

    Is that what 'to go long' and 'to go short' means?
    Thanks for any replies

  4. #4
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    Yes, that's pretty much it, Ponda. Technically, you are not really selling "nothing" though - you are actually selling shares that you have in fact "borrowed" from a holder. Sooner or later, they have to be repaid.

    When, as per your example, you Buy the stock at $4.50, closing out the trade, it is called "covering" the short.

  5. #5
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    Phaedrus, you are helpful as always, thank you.
    Here comes another one.

    I use an on-line system (the National Bank one). When it comes to purchasing a share you can see it go onto the depth chart. However, sometimes you end up owning the share for a cheaper price than what you have put your buy price in for.
    i.e XYZ you want to buy at $5.00, you place your order of 1234 shares (it's a random number and so you can assume that there are not too many buyers out there wanting exactly 1234 shares. You see a trade go through of 1234 so it is safe to believe it is your order, however, you have got them at $4.97. Does that not disadvantage the seller who only gets $4.97 for their share when there is a buyer out there prepared to pay $5.00.
    And I guess that leads to the next question is that if I really want that share and I put an order in for $5.50, will I then get it for $4.97 or $5.50.
    Is that why at the start of the days trading you often see the bid at $5.50 and the ask at $5.00. Is this done to ensure that the buyer is first in the queue.

    Just my ponderings for the day.

  6. #6
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    Quote Originally Posted by Ponda View Post
    Phaedrus, you are helpful as always, thank you.
    Here comes another one.

    I use an on-line system (the National Bank one). When it comes to purchasing a share you can see it go onto the depth chart. However, sometimes you end up owning the share for a cheaper price than what you have put your buy price in for.
    i.e XYZ you want to buy at $5.00, you place your order of 1234 shares (it's a random number and so you can assume that there are not too many buyers out there wanting exactly 1234 shares. You see a trade go through of 1234 so it is safe to believe it is your order, however, you have got them at $4.97. Does that not disadvantage the seller who only gets $4.97 for their share when there is a buyer out there prepared to pay $5.00.
    And I guess that leads to the next question is that if I really want that share and I put an order in for $5.50, will I then get it for $4.97 or $5.50.
    Is that why at the start of the days trading you often see the bid at $5.50 and the ask at $5.00. Is this done to ensure that the buyer is first in the queue.

    Just my ponderings for the day.
    Hi Ponda. You must remember that when you place a limit order, in this case at $5.00, your effectively putting in an order to purchase XYZ at $5.00 OR better. So in your example you would have been at the top of the bid que at $5.00 and there would have been a seller at the top of the sell que at $4.97. Therefore you order would trade as the seller was happy to sell his shares at $4.97. In regards to the last part of you question (the high bid at $5.50) before the market opens it goes into whats called the pre open or the match. Basically the bidder at $5.50 is trying to ensure that he gets his shares on the open at the match price/opening price.

  7. #7
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    Moneymaker,
    Thanks for your reply. Sorry for the delay in getting back to you.
    All these bits of information helps me build up a bigger picture.
    Thanks again

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