The market over a long period of time has gone up 6-12% every year so yes the buy and hold theory should work (although post-2008 believe makes us challenge if this is true). Don't believe what you baby boomer parent has told you about trading stocks because the last 40 years in the stock market has been a great time and even a monkey could have made money.
The cheapest trading fee is 5-20 dollars, therefore for you to make any money on a good trade (5% gain or greater) you must be betting/investing at least 100-500 dollars in principal. Now personally if I made 500 dollars to buy a few shares of APPL whoopty! do! I would net just 45 dollars, hardly enough to buy a round of drinks especially when I can just disappear in a few hours. A more standard unit to invest is 5000 dollars and many people don't even have that much to play nor the huevos.
There are pair trades where you short a sector and long/buy a standout company but at the end of the day you are just lowering the risk and lowering the reward.
Overall it all comes down to time. Going back to that 500 dollar APPL trade where you made 45 dollars but how much time did you spend fiddle-ling around on the website or doing "research" or shooting darts at a stock chart. If you spent 4 hours total which isint that much and assuming you time is worth about 20 dollars/hr you actually lost money. This is one of the problems with America's utilization of its people, but that's another post.
Jim Crammer recommends taking 5-10% of your net worth which he calls "Mad Money" and play the stock market with a small diverse portfolio of 3-5 companies. I think a better use of 5-30 grand is to invest it in something more Brick&Mortar or Mutual funds.
But ask yourself these questions if you think you have what it takes to be a trader:
Professionals spend their all their waking hours researching and have the best technology, networks, and mathematics- What makes you think your yahoo.com, engadget.com, grandmothers intuition gives you an edge?
When you hear a good/negative story about a company what makes you think it is not already built into the price?
The price of a stock is not "how well a company is doing" (we will call this X), it is a combination of X and "what is the street's expectations of the stock" called Y. In math you can't solve an equation with 2 variables X and Y, what makes you think you can solve this one?
Is it worth the stress?
You never try to catch a falling knife and you never chase a shooting star...so please do not waste your time with facebook ipo
http://www.consumerismcommentary.com/how-to-buy-facebook-shares-now/
And if you would still like to trade at lease use one of these 2011 Best Online Brokers by Kiplingers:
1. Fidelity: Top-notch all around.
2. TD Ameritrade: Tied for first place, with better investment choices than ever.
3. E*Trade: Solid in all areas.
4. Vanguard: Low costs and superb customer service set this broker apart.
5. OptionsXpress: A Mecca for options buffs that scores high on costs.
6. Charles Schwab: Offers the broadest list of funds with no loads or transaction fees.
7. Scottrade: A better Web site would have boosted this broker’s ranking.
8. TradeKing: The first broker to incorporate social networking.
9. Firstrade: Could use additional tools and investment choices.
10. Merrill Edge: This newcomer charges high fees.
11. Zecco: Offers low costs but few investment choices.
12. Just2Trade: Bare-bones broker boasts the lowest commissions.
13. Muriel Siebert: Impressive range of investment choices; abysmal Web site.
14. USAA: Costs are high, and Website and investment choices are lacking.
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