Buy Low, Sell High

I want to help you learn to play the stock market profitably. First, let me explain a few common mistakes—things I did wrong when first playing the stock market and then you can learn from my blunders.

One of things I did at first was to buy stocks that were going up in price. If there was a +12 or so after the name of the stock, I would buy it, thinking that a stock increasing in price is a good place to start. The title of this article says, “Buy Low, Sell High.” It really doesn’t matter if a stock price is going up or down for the purposes of buying the stock. What is important is the number 15.

The lowest price you can buy a stock is 15 neopoints per share. In other words, you cannot buy a stock that is selling for 1-14 neopoints per share. So, if you are going to buy low, 15 is the place to buy. I will occasionally buy stocks selling from 16-20, especially if they are bigger name stocks such as HELT, KSON, YIPP, that are very hard to find for prices less than 20. However, 15 is the “magic” number, especially when you are new to the stock market.

The second major mistake I made was in not investing enough. Since I didn’t really know what I was doing, I would buy 10 shares of one stock, maybe 25 of another. The stock market (just like a good shop) requires a certain amount of neopoints be invested in order to have the opportunity for profit. The maximum amount you can buy is 1000 shares a day. Simple math says 1000 shares a day times 15/share is 15,000 neopoints. That is the amount you should expect to invest daily if you intend to make a profit from the stock market.

Patience is the third point. Sometimes the stock market requires you to persist. If you know you are on the right track for investment and you have a good plan, it is far easier to wait. However, there will be tough days when your portfolio shows you have more invested than your stocks are worth at the moment. Just remember with time they will go up again. There will also be joyous days when your stocks are increasing and your portfolio is “in the black.”

You can find the stock market from the Neopets homepage, where it says Neodaq Index; right next to the Players Online and the Total Neopets. It can also be found by searching in the Games Room.

When you are ready to start investing, the first thing to do is find a stock to buy shares in. When you click on Find Stocks, it is not very helpful. However, it will say click here for a full list and that is where you can actually get a good look at the 43 different stocks that are part of the Neopian Stock Market.

The important things to look for on the chart are the Ticker, which will be a 2-4 letter code related to the name of the stock and the current selling price per share (Curr). Please, completely ignore the +33.33% and +16.67% for now and look only at the stocks selling for 15-20. Maybe you will find 3-4 stocks in the price range you are looking for; now you might want to see if they are increasing or decreasing in price and make your decision accordingly! Next click on “buy” and enter your Ticker and 1000 for shares.

Part of building a profitable portfolio is diversification. What this means is simply buying shares in a variety of stocks. As you come to the stock market daily to buy your 1000 shares, try to find different stocks that meet the qualifications listed above. Hopefully as time progresses, your portfolio will be spread over at least half of the available stocks.

The next obstacle to overcome is learning when to sell. It makes no sense to sell at a loss. Plan ahead when investing so you are able to give your portfolio time to mature. If you are investing for the avatar, you need to decide whether to continue investing without selling until you reach the required investment (recommended), or whether you will sell and make a profit along the way. The second option is nice, but hopefully you will realize you may become so involved in making a profit that the avatar can take quite a long while to get.

Many players have rules they follow about selling. Some sell every time a stock reaches +100%, some +50%, and for some +25% is an occasion to sell. At 100 percent, you have doubled your investment, which is a great position to be in. Selling is very individual and it can vary as time goes on.

When you are ready to sell your first stock, you need to click on the tiny, gray triangle in the upper left side of your portfolio. This will trigger a drop-down box showing all the different times you have purchased this stock and the different prices. You are then able to pick which ones to sell. Possibly you bought 1000 shares in DROO at 15, 17 and 19. Today DROO is selling at 25 and you would like to sell the shares you bought at 15. However, you want to hold on to the 1000 you bought at 17 and 19 in case DROO is up to 30 later today or tomorrow. This selling option allows you that flexibility. All you need to do is enter the number of shares you wish to sell, go to the bottom of the page and enter your pin and click on Sell Shares.

Nigel the Chia runs the Neopian Stock Market and he charges a 20 NP commission on each transaction. If you have several stocks to sell, trading them all at once will save you from paying the nominal price of 20 NP for each sale.

A couple of other interesting tidbits include the existence of a special Message Board, just for stock market chatting. Also, you might someday need to know that the stock market refreshes on a 30 minute basis. If you have a stock that is going up and you’re close but not quite ready to sell, it can be comforting to know, you can check back every half hour.

Whether the avatar is your primary objective, you are looking for a new challenge or you just want to make some neopoints from something other than a flash game, the Neopian Stock Market is a great investment--once you have a few pointers.