Wednesday, October 7, 2009

The PSE and the Pursuit of Happyness – I


It’s simply amazing how easy it is today to start trading stocks in the Philippine Stock Exchange (PSE) and how very little money it takes to start investing. Just a month ago I had absolutely zero knowledge about the stock market. Except maybe for the fact that a lot of people make money on it and even more people end up losing their shirts. Through a series of serendipitous events (or maybe just a series of coincidences, depending on how you look at it), I found myself learning more and more about stock trading. Now, I’m sitting on top of a few stocks in my portfolio and writing a little about how I started.

The Pursuit of Happyness

This might sound lame, but the spark that started it all was this movie with Will Smith and his kid. It’s funny since it’s not even new and I just happened to catch a screening of it in HBO. The Pursuit of Happyness is a movie based on the true story of Chris Gardner, who basically went from rags to riches and now has his own brokerage firm. It’s a really great movie, both touching and inspiring.

Poster: The Pursuit of Happyness

After having seen it for the second time (I happen to catch it again and couldn’t resist), I thought, “Hmmm.. I could do that… I’m good with numbers!”. So I Googled “Philippine Stock Exchange” and started reading about what it actually takes to trade stocks. There’s so much about it on the net, but I found the following particularly useful:

  1. Philippine Stock Exchange – This is the website of the only stock market in the Philippines and there’s enough information here to get you started.
  2. How I Started My Online Stock Trading Activities – This Multiply Blog describes how you can start trading with minimal capital using BPITrade (more about that later).
  3. PinoyMoneyTalk.com – Learn the basics of the stock market. What is a stock? How do people make money? Or even more important, how do they lose money?
  4. Swing-Trade-Stocks.com – Probably my favorite site about stocks. It details one strategy that offers low risk with reasonably good returns (Swing Trading). The author writes very clearly and is very easy to understand. I recommend that you read this if you want to start with stocks.

CitisecOnline

The first thing you do after deciding you want to get into the stock market is to choose a broker. A broker (like Will Smith’s character) is a person (usually a whole bunch of them) who will file your buy and sell orders for you. These are the guys you’ve seen in movies shouting and waving at each other on the market floor. It’s a bit expensive to hire a live broker (an actual person) to trade for you. Especially for guys like me with only a little money to start with. The Internet to the rescue!

I decided that an online broker is more to my liking. You just need a computer and a connection to start filing your orders. After reading #2 on my links, I though I should open an account with BPITrade since I already have a BPI bank account and the starting money (5000Php) is so small. After a little more research, I quickly discovered that a lot of people don’t like BPITrade and besides the small starting capital, there really isn’t any reason to choose this broker. I also tried their test account and the user interface is archaic html or something. It sucked.

Just a few days after that, a friend of mine texted me if I wanted to go to this free seminar by CitisecOnline about starting in the stock market. He had absolutely no knowledge of my sudden interest on the market and I guess the timing was pure coincidence. He basically heard it from a friend, who also heard it from a friend. So we went to the seminar which is housed in the same building as the PSE in Ortigas. The seminar is FREE and there is no obligation to start an account. Plus, they give you free drinks (C2) and Dewberry biscuits.

Citisec Banner

After the seminar, we opened a free 7-day trial account to test out their services. You can go ahead and do that by heading on to their website and clicking the trial account button in the login page. Their site is so much better than BPITrade and considering that this is where you’ll be doing most of your trades, user-friendliness is definitely a priority.

Once the 7-day trial was over, my friend and I decided that it was time to start with real money. It takes 25,000Php to start an account with them. Note that this is usable capital. It’s what you use to buy stocks. It isn’t payment, so you still own that money.

But wait!!! They also have a student discount (if your a student in a university or something, even gradschool), wherein you can start with just 5,000Php! How’s that for small capital?! Good thing we already went to the seminar so we had application forms and everything. We just had to file our requirements and come up with the money.

Click here to read Part II of this post.

(If you have questions, just post a comment)

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