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Buying On The Aim

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Mr Nice, jonpo, pent vaar, wayne l and all you other traders, can you advise?

I bought some AIM stock last week through Hoodless, supposedly the cheapest online broker. PLAA buy at 23p sell at 20p. In the end I had to buy at 23.5p.

That's a 16% spread! The shares have got to go up by about 16% or more just to beat the spread.

RIO on the other hand also have a 3p buy and sell spread, but they trade at 2665 to 2668, so it's far more negligible - 0.1%.

How does one get round this?

My other broker TD Waterhouse are no better.

Also, I use TD in the UK to buy foreign stock. Am I better going to interactivebrokers.com or another US based company?

And when you're trading foreign stock, you have to just factor in currency fluctuations as well? Or is there a way round this?

For example, you expect a US stock to rise, but the dollar to fall, so the stock has to rise by x much more to make the trade worthwhile.

Can anyone offer any tips on the above?

Does anyone know a good site that can advise?

Thanks, chaps, in advance.

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The smaller and more risky the stock, the higher the spread. It is the worst part of AIM and to a lesser extent the smallcap and fledgling indexes.

Some of these stocks will quadruple (and more) in price, however most will go no-where. They are a bigger risk and the spread just makes the risk so much more. If the price goes nowhere you lose, if it goes up a little, you lose, if it falls guess what - you lose!

Edited by erd

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Unfortunetly the glut in global liquidity does not extend to AIM shares,

Some are more liquid than others, but there are sometimes some bargins on AIM. freind of mine bought some TSG.L after I told him they looked real cheap at 37.5p he bought for 44p and then sold at 80p a month or two later for a 60-70% gain.

the point is the shares are very much more illiquid on AIM but the flip side of that is that the market might be much more inefficent and if you know what your doing you can turn that to your advantage.

don't rely on the market to be efficent, read the annual reports, get to know what the business you are buying really does, and then see if the market cap reflects your valuation of the business and its future prospects (reading the accounts helps).

I agree some of the spreads are riduculous. AIM shares arn't exactly something you can day trade ! lol

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I think Bubb has a similar gripe with Aim. The way I play it is to only buy AIM shares for medium-long term. You just don't have the liquidity to play on the price as you do with larger shares, so you have to go for companies that you think will have sustained ongoing growth. I have started a subscription to the Small Company Sharewatch newsletter which is pretty good, and I am VERY sceptical of subscription and tips services. The newsletter is very reasoned, not pushy and the author lists the trades it has carried out itself. To be honest though I wouldn't buy anything on AIM with your core investment money or with money you can't afford to lose. It is high risk, and you have higher gains, but also higher losses.

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Agree with all of the above posters. Stop whinging ;)

Seriously, AIM is an illiquid market with low volumes, you have to renumerate the brokers for making a market in those shares, AIM stocks held for more than 2 years are cap gains tax emempt, and given good stock picking over time can make some spectacular capital appreciation....... but they are NOT for short term trading.

To trade you want a large, liquid market with tight spreads, but a reasonable amount of volatility. And there are plenty of markets like that. FTSE 250, springs to mind.

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Agree with all of the above posters. Stop whinging ;)

Seriously, AIM is an illiquid market with low volumes, you have to renumerate the brokers for making a market in those shares, AIM stocks held for more than 2 years are cap gains tax emempt, and given good stock picking over time can make some spectacular capital appreciation....... but they are NOT for short term trading.

To trade you want a large, liquid market with tight spreads, but a reasonable amount of volatility. And there are plenty of markets like that. FTSE 250, springs to mind.

Whether it's a market for short term or long term trading is irrelevant. The spreads are still an almighty rip off. A share should not have to go up 16% just to cover your dealing costs.

The argument that they are only for long term investment is akin to an EA's blag as he tries to sell you an overpriced new-build BTL.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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