Sharemarket on your desktop

Online share trading is fun and easy - you can even make some money. But, as CHRIS DANIELS discovers, there are many traps for young players.

Tim, 27, has been trading shares online for the past six months.

He had previously dabbled in share trading, but this year took the plunge, buying shares in four companies - Air New Zealand, Rubicon, Mooring Systems and Vending Technologies.

He invested a few thousand dollars and now trades online through Direct Broking, which took over the online customers of Sharechat, now a purely information, data and share discussion site.

Since then he has sold his shares in three companies - hasn't made a lot of money, but hasn't lost much either.

Though he hasn't exactly joined George Soros or Warren Buffett in the ranks of billionaire investors, Tim broke even and now rates online trading highly.

And this writer, a mere baby in this heady world of p/e ratios and fully imputed dividends, found it fairly easy to grasp how the whole thing works, although I did arrive at a few dead ends.

Starting with stockwatch.co.nz and sharechat.co.nz, I was able to set up a dummy portfolio of shares in New Zealand companies (500 shares each). My investment, which would have been worth $10,000, is now sitting there, quietly earning make-believe money - I've made $15 already!

Tim says the information provided by sharetrading websites is a huge advantage, and one of the aspects of online trading that attracted him. But he has a warning.

"The information online, through sites like Sharechat, and the ease of trading, make it almost too easy, really. It almost pushes you to the point of gambling," he said.

"You can get information about the shares and get feedback from what seems like pretty experienced investors. I'm just an amateur."

Tim said he had yet to meet, or even speak to, anyone at Direct Brokerage, since all his business had been done online.

"I was testing the market, it was pretty nominal amounts, so if I got burned I didn't get hurt."

He recommends getting a practice portfolio first, and practising with it before putting any money in. Most of the major share sites, such as stockwatch.co.nz and asbsecurities.co.nz have good "portfolio" features for the uninitiated to practice on.

Tim found it tempting to check the stocks every day, so he recommends signing up to an e-mail news facility that will alert you when anything important happens to your shares.

But the convenience could have a downside, he said, making it easy to get addicted to checking and re-checking how your shares are doing.

He uses the chat groups a lot - checking out the scuttlebutt flying around the market.

"You wonder where a lot of this information comes from," he says.

"There's a lot of information out there, and I don't think a lot of people realise it."

Sometimes, he says, it's a case of information overload.

But if Tim's tale of online dealing has you rushing for the computer and the cheque book - a few words of caution.

Think of the advice often given to children in relation to the internet: don't believe everything you read in chat groups; not everyone is who they claim to be.

And don't forget the warning in that old chestnut about "If these people are such canny investors, why do they spend all their time giving others tips?"

Speaking personally, I would be on a nice beach somewhere with a beer in my hand, counting my millions.