When and how did I start my trading journey?

I started my trading journey in 1994 with UK penny shares (*1).  The thought of a share price going from a few pence to many pounds was enticing as I calculated my expected rate of return in the thousands of percent.

I scoured the share listings in my parents newspaper to find those quoted for less than 10p.  Then seeing a price change from 2p to 4p overnight was exciting.  I had thoughts of grandeur, doubling my money every few weeks.

How do I buy these?

How much money do I need?

How do I sell them?

The answers are easy to find now but in 1994 they were not.

I somehow managed to find a broker (the name of which I have long since forgotten).  I chose them because I could send my share purchase instructions to them by fax.  I had to make a trip to the local petrol station as that was the nearest fax machine to me.  Then a few weeks later I would receive my share certificate in the post.

In those early years I purchased more penny shares in a few different companies.  I can only remember the names of Fortune Oil and Sutcliffe Speakman.  I have just searched for them and they both appear to still be trading.

Needless to say none of those shares generated the return I was hoping for and indeed they did not generate any return at all.

Lessons learnt (but not immediately)

  • Penny shares tend to be illiquid (*2)
  • The Bid/Ask spread for penny shares is wide (as a percentage)
  • They are cheap for a reason

*1 A penny share is defined as a share that sells for less than £1/$1.

*2 A share that has very little trading activity

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