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Ottawa trader Brendan Cowie participates in online investment forums.Cole Burston/The Globe and Mail

Brendan Cowie learned how to trade stocks online the hard way – by losing $2,500 in one hour on one of his first trades.

He was in his mid-20s at the time, and his financial obligations were fewer. "So it wasn't too bad. But I definitely learned a lesson."

The Ottawa trader had made the mistake of focusing on penny stocks – cheaper shares in speculative companies. "But then I realized that these aren't really the kind of stocks I want to trade because they're way too volatile," he said.

A decade later, Mr. Cowie is still trading and sharing his experiences in online investment forums such as HotStockMarket, where he has had a blog. Other sites such as StockTwits, InvestorsHub and Stockhouse also create a similar sense of community that's so necessary for independent traders. The seemingly isolated practice of day-trading and investing online benefits from being part of a greater community.

That's how Mr. Cowie, who works in technical support for a supply-chain management company in Ottawa, learned the ropes of trading and how he continues to keep tabs on the market.

After graduating to more secure, larger-cap stocks on the Dow and Nasdaq, Mr. Cowie also went from trading in various stocks in sometimes willy-nilly fashion, as he describes it, to focusing more concertedly on detailed technical analysis, which looks for patterns in stock prices.

He found others using technical analysis through investment forums, and they have worked together to understand market patterns. Yet, while joining online bulletin boards and reading discussions may be crucial for understanding market trends, it also requires the ability to recognize all the junk advice out there.

"After you've been posting on the site for a while, and you see the same regular users, eventually you learn who you can trust and who doesn't know what they are talking about, or is trying to spread rumours," he said.

Vancouver-based investment forum Stockhouse has found that "over 50 per cent of our audience say that they come to Stockhouse for ideas and information," said Patrick Finucane, vice-president of strategy.

These traders typically describe themselves as experienced, sophisticated investors. Eighty-eight per cent say they either fully or mostly manage their investments, Stockhouse has found in surveys.

But it's critical for online community participants to do additional research on their own, Mr. Finucane said. "What's important from there is for each individual to develop a solid way of acquiring knowledge about investments they are making," he said.

That's especially important given that some day-traders are evolving from hit-and-run artists – those who hold a stock for a day or two, just long enough to profit from a quick gain – to longer-term investors. More than 80 per cent of Stockhouse users say they research a stock for more than seven days, and most say they hold on to a stock for at least six months, often much longer.

Part of this may be because short-term day-trading is exceedingly risky and dominated by major institutions.

"The way day-trading is done now is by the nanosecond – the program trading, the algorithmic trading. These are the big influences on the stock market today. They are not the individual traders making buys or sells out of their own personal account. These are massive financial entities that are moving in and out on mathematical algorithms," Mr. Finucane said.

Similarly, Mr. Cowie said he holds on to securities for longer than he used to. He looks at five- and 10-year horizons, for instance. He continues to abide by lessons learned, though, and is interested these days only in stocks that are traded widely and have good volume.

"I found, definitely at the beginning when I was buying and selling some stocks, that the volume on the stock would be low. So, one person who has a lot in [the stock] could actually move the price with their buy or sell," Mr. Cowie said.

This can wear on emotions and cause a trader to act out of panic rather than cool calculations.

At first, Mr. Cowie used a training platform that allowed him to practice without actual money invested. But "when you move to real money, you're, like, whoa, this is hard to hold [a stock] when it has gone down a bit. It's really tough to control your emotions."

That's where a community of fellow traders helps. It's a place to bounce ideas off others to better understand the market, but also to tap into others' emotions so that you can be more calculating.

Said Stockhouse's Mr. Finucane: "It's part of the data collection that any smart investor should go through."

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