# Where to draw the line with education before dipping toe in the trading water?



## joe8489 (24 February 2009)

Hi fellow traders (budding and other)

This is officially my first post to ASF and I must say that i am very pleased to have found it. Its been valuable in proving me with some giudance down this trading path I head. To give you abit of background about myself - I have been investing for the past 5 years and trading for about 6 months. I have had some great success (in hindsight mostly luck) and I recently started trading for a living on the aus equities markets. My current method is through scalping, no leverage, no cfds, just direct market acess. Though CFD's is where I made 90% of my trading capital. Despite my success, I have come to realise that loading up my position with 30:1 - 100:1 leverage on november 21st 2008 was pot luck and I wouldnt have even guessed it was going to be the lowest point of 2008. I have come to realise that I was being stupid and have reflected on my trades and have quickly concluded that i could have blown all my capital in one sitting. No risk management, no trading plan, no definative direction, no stop losses - just load 'em up and hope for the best. All this thinking has made me realise how much it is I dont know which has been the main catalyst for wanting to educate myself and become better at trading.

Since last November I have educated myself to a great extent. Workshops, seminars, courses ( i recently paid $1,000 for a trading course that has been going fro about 2 weeks and have found that to actually be quite hepful).  I have read about 8 books since novmeber on trading plans, trading psychology, techincal analysis, trend following, fx, et etc etc. Which has been awesome. 

The only issue (if you want to call it an issue) is that I have found myself reading copious amounts on books, literature, newsletters etc. The more i read, research and backtest the more I realise how much i dont know therefore wanting to learn more and more. I still find myself applying what i know, but i find that i now have an addiction towards studying and reading, how do i stop and when do i tell myself , 'joe enough is enough'?

Im sure many budding traders have gone through this so if anyone can shed light on it that would be appreciated. I spoke to a friend recently who trades for a living as well and he said that the most successful traders are the ones that keep their trading plan, stragegy and execution very simple. They dont complicate things with too many indicators and other variables, they stick to what they know and whats makes them a profit, 'if it aint broke, dont fix it' - blah blah blah

Keen to hear anyones thoughts on this?


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## GumbyLearner (24 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*

Ask the Dead Kennedys, I have no idea?


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## joe8489 (24 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



GumbyLearner said:


> Ask the Dead Kennedys, I have no idea?




my first reply, im honoured

not sure i understand your reply gumby? I have read through enough posts to realise that there are enough sarcastic replies but also that there are some unusually named members.

Is your reply the former or the latter?


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## Trembling Hand (24 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*

When is enough? Simple when you have positive expectancy on sim. Till then you aren't ready to trade. How could there be any other answer?


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## beerwm (24 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*

I dont think anyone ever stops learning, whether it be from books or live trading.

what TH said is basically when you should start though.


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## CanOz (24 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



joe8489 said:


> The only issue (if you want to call it an issue) is that I have found myself reading copious amounts on books, literature, newsletters etc. The more i read, research and backtest the more I realise how much i dont know therefore wanting to learn more and more. I still find myself applying what i know, but i find that i now have an addiction towards studying and reading, how do i stop and when do i tell myself , 'joe enough is enough'?
> 
> Im sure many budding traders have gone through this so if anyone can shed light on it that would be appreciated. I spoke to a friend recently who trades for a living as well and he said that the most successful traders are the ones that keep their trading plan, stragegy and execution very simple. They dont complicate things with too many indicators and other variables, they stick to what they know and whats makes them a profit, 'if it aint broke, dont fix it' - blah blah blah
> 
> Keen to hear anyones thoughts on this?




Hi Joey,

I don't think there is anything wrong with reading and learning more points of view on trading....i love it. I love the markets and stories of how trades have made a living out of them.

Reality is though, its not about winning or losing, its how you play the game. Play to stay in the game. Give yourself a chance to get exposed to a winner, whatever your system. Preserve capital, to trade again another day. That is the holy grail. 

A professional trader told me that if i wanted to turn Pro i should earn 3.5 times my annual salary before i considered it. I think its good advice. I think that in a bull market, trading equities would be like shooting fish in a barrel. These are tough times for experienced swing traders. The only way i am trading now, today, is after i have tested it, or it has been tested and proven to me.

I Hope this helps mate,

CanOz


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## GumbyLearner (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



joe8489 said:


> my first reply, im honoured
> 
> not sure i understand your reply gumby? I have read through enough posts to realise that there are enough sarcastic replies but also that there are some unusually named members.
> 
> Is your reply the former or the latter?




*Well, where do you draw the line?*

Famous song by the dead kennedys...here's the lyrics

Seems like the more
I think I know
The more I find I don't
Every answer opens up so many questions anarchy sounds good to me
Then someone asks, "Who'd fix the sewers?"
"Would the rednecks just play king
Of the neighborhood?"
How many liberators
Really want to be dictators
Every theory has its holes
When real life steps in
So how do we feed
And make room for
All the people crowded on our earth
And transfer all that wealth
From the rich to those who need it
[Chorus:]
Where do ya draw the line
Where do ya draw the line

I'm not telling you I'm asking you
Ever notice hard line radicals
Can go on start trips too
Where no one's pure and right
Except themselves "I'm cleansed of the system."
('Cept when my amp needs electric power)
Or-"The Party Line says no.
Feminists can't wear fishnets."
You wanna help stop war?
Well, we reject your application
You crack too many jokes
And you eat meat
What better way to turn people off
Than to twist ideas for change
Into one more church
That forgets we're all human beings
Where do ya draw the line?
In Toronto someone blew up
A cruise missile warhead plant
10 slightly hurt, 4 million dollars damage
Why not destroy private property
When it's used against you and me
Is that violence
Or self-defence
You tell me


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## Bobby (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



GumbyLearner said:


> Ask the Dead Kennedys, I have no idea?




Stupid reply to someone asking for legitimate help , go away


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## joe8489 (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



GumbyLearner said:


> *Well, where do you draw the line?*
> 
> Famous song by the dead kennedys...here's the lyrics
> 
> ...




You know what everyone , please refrain from enlightening me with your responses. No need for any more posts. Gumpy has provided some amazing insight and I have found the answer in his song. 

Gumpy, your mix of blending trading and lyrics is truly genius. Is it ok if I just discontinue my posts and just direct any trading questions I have to you personally by way of PM'ing. Can I also ask you general questions regarding life?


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## nunthewiser (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



joe8489 said:


> You know what everyone , please refrain from enlightening me with your responses. No need for any more posts. Gumpy has provided some amazing insight and I have found the answer in his song.
> 
> Gumpy, your mix of blending trading and lyrics is truly genius. Is it ok if I just discontinue my posts and just direct any trading questions I have to you personally by way of PM'ing. Can I also ask you general questions regarding life?




LOL now that was funny


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## CanOz (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



nunthewiser said:


> LOL now that was funny





Deserves to be a member of ASF just for the first effortless use of acid tongue sarcasm....well done mate.

CanOz


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## GumbyLearner (25 February 2009)

Well the question needs to be asked...

Where do you draw the line between old hat entrenched philosophy/tradition
and newly accepted/scientifically discovered "radical" thinking?

Too many crusty old conservatives want to smash the young people on this forum in my honest opinion? 

Bring it.. Lets see what results?

Hopefully... a balance of old and new!


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## joe8489 (25 February 2009)

GumbyLearner said:


> Hopefully... a balance of old and new!




Better.


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## tech/a (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



Trembling Hand said:


> When is enough? Simple when you have positive expectancy on sim. Till then you aren't ready to trade. How could there be any other answer?





So how long is enough trading on sim with a positive expectancy?
A week?
A month? 
A year?
Is it not possible that a good method is discarded during sim (Forward testing) as you could be un knowingly trading in a period where a sound system is suffering drawdown.
Is it not also possible that a positive expectancy on a sim could well produce trading results that in the longterm could be nett un profitable?

Consistently profitable trading in my view needs a complete understanding of why the method your trading 
(1) Could be successful and
(2) Is successful.
(3) Produces a blueprint which gives you enough information to be able to track your forward testing (sim) with confidence that all is as it should be or all is going off track.

This requires far more than a plan and far more than sim trading which shows positive expectancy.


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## nizar (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



CanOz said:


> A professional trader told me that if i wanted to turn Pro i should earn 3.5 times my annual salary before i considered it. I think its good advice.




Can,

You mean 3.5 times annual salary from trading?
As in before you turn Pro, say you earn $100k a year from work, you should aim for $350k a year from trading, before you trade fulltime?

A pro trader once told me that he had something like 6 months living costs in cash (as a backup to his trading capital) for when trading profits dry up, and a further $2million in liquid assets (bonds) to get him through the tough times.


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## nizar (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



tech/a said:


> This requires far more than a plan and far more than sim trading which shows positive expectancy.




Maybe so but i would say that sim trading with positive expectancy is enough to get you started and put you well ahead of the pack.


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## tech/a (25 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



nizar said:


> Maybe so but i would say that sim trading with positive expectancy is enough to get you started and put you well ahead of the pack.




Yeh like opening for business with a product no body has ever bought and you think its just gotta be a winner.
OR
Opening for business with a product that a few people have bought over a limited time (Could have been sale time (a trend)) with a profit margin greater than 1:1
OR
(My own prefered option)
Opening for business with a product 1000s have bought through various business periods over many years with a consistent profit of well over 1:1
How you wrap/present and distribute the product may well place you well in front of the pack who also trade the same product. 

Just as one business may well stand out from another at the end of a trading period.


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## GumbyLearner (26 February 2009)

*Re: Where to draw the line with education before tipping toe in the trading water*



tech/a said:


> Yeh like opening for business with a product no body has ever bought and you think its just gotta be a winner.
> OR
> Opening for business with a product that a few people have bought over a limited time (Could have been sale time (a trend)) with a profit margin greater than 1:1
> OR
> ...




Or reading the headline of RBS reporting a 24 Billion pound loss! 

*Royal Bank of Scotland has posted losses of £24bn for 2008 - the worst results in British corporate history.*

http://news.sky.com/skynews/Home/Bu...on_Pound_Loss_Biggest_In_UK_Corporate_History

Why those who are new to trading might wonder and ask?

Well, if you take a look at history and the Merchantile banking rules of the UK. 

This is certainly worth reading as a STARTING POINT. IMHO

http://en.wikipedia.org/wiki/Royal_British_Bank_v_Turquand

DYOR


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