Total Noob Here

[Reveletron 10]

Hi Everybody, I'm Chris. I'm recently fascinated with trading, hoping to eventually get started. I've read a couple books and watched a lot of videos.

 

I have two fundamental questions.

 

Let's say I buy 100 shares of a stock at $35 = $3500 cost.

It goes up to $40, and my hunch is to get out there. Profit = $500.

 

Obviously other examples may gross better wins, but why would I risk $3500 to make $500? Why doesn't everybody trade options, where my downside is fixed, and my upside is many many times that? What am I missing?

 

Secondly, how are these profits taxed? I have never seen this mentioned, but I vaguely remember when I read about penny stocks that holding a stock for a very short period, triggers a very high taxation rate.

 

I understand as a newbie I should focus on trading well and not the money, but I can't help but wonder.

 

Thanks for any input!

[fxeconomist 11]

Well, holding stocks you receive dividends and can control better your risks. But I prefer to trade CFD's its similar to stocks but they require less trading margin but yield more profits. I use Hotforex services for that.

[CrazyCzarina 17]

One can hold a position for as long as a few minutes to a few or more years. Depending on the goals of the trader, one can take a position based on the fundamental economic trends in one country versus another.