# Starting with not enough funds?



## ekwipt (13 January 2013)

I've read a few topics with the same problem, although I guess mine is a little different.

I have some term deposits, gold and i've allocated a percentage to the stock market, have never traded before, done some reading and chose to go with TheChartist Growth recommendations.

I've allocated $12,000 for my stock and will eventually hold 20 positions and i'm using Commsec. I'm now a little worried after $20 buy/Sell for each of these positions i'm already effectively down $800. I could get an extra $8000 which would bring my pool of money to $20,000.

Maybe this is what i should have done at the start? I like having a little cash in the bank for emergencies, but now i'm thinking my positions might be too small???


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## McLovin (13 January 2013)

*Re: Starting with too lower funds?*

20 positions with $12,000 is ridiculous, frankly. I'd be looking at 2 or 3. If you want that sort of diversification with such a small amount, buy an index fund.


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## burglar (13 January 2013)

*Re: Starting with too lower funds?*



ekwipt said:


> ... i'm thinking my positions might be too small???



Hi ekwipt,
Welcome to ASF! 

I'm thinking if you're asking this question you need to learn.
The best thread here is by SirO:
https://www.aussiestockforums.com/forums/showthread.php?t=14370

Whilst I can't offer advice, I will offer my opinion, for what it is worth.
My first hurdle is picking something that is rising.
The next hurdle is breakeven (after brokerage, both buying and selling).
With larger brokerage (your Commsec and my netwealth),
you don't want the brokerage to rule your trade.
I prefer $3,000 per trade (but have gone as small as $1,100)
Start with one or two trades, watch how they go.
Learn as much as you can; here, the library, Utube.
Find out if you are an investor, a trader or a gambler.

In my opinion, don't touch your banked money.

Clement trading weather,


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## notting (13 January 2013)

*Re: Starting with too lower funds?*



burglar said:


> Hi ekwipt,
> the library,




The Lirbrary.
I can't believe they still exist.
Go to Rome and check out the ruins of the slave trading yards too.


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## McLovin (13 January 2013)

*Re: Starting with too lower funds?*



notting said:


> The Lirbrary.
> I can't believe they still exist.
> Go to Rome and check out the ruins of the slave trading yards too.




You mean you don't read the newspaper on one of those wooden stick things?

I have to admit to being sort of spoilt when it comes to libraries. This is the garden to my library that backs right onto the Harbour. I never use it though.

Back on topic, perhaps the OP can clarify if he wants to trade or plans to invest longer term?


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## Muschu (13 January 2013)

*Re: Starting with too lower funds?*



ekwipt said:


> I've read a few topics with the same problem, although I guess mine is a little different.
> 
> I have some term deposits, gold and i've allocated a percentage to the stock market, have never traded before, done some reading and chose to go with TheChartist Growth recommendations.
> 
> ...




I assume you have checked The Chartist for position sizes?  Ask them if you have not.

Regards

Rick


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## burglar (13 January 2013)

*Re: Starting with too lower funds?*



notting said:


> The Lirbrary.
> I can't believe they still exist.
> Go to Rome and check out the ruins of the slave trading yards too.




I forgive you, but this is not dyslexia.

I'm not talking about the Great Library of Alexandria.


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## notting (13 January 2013)

*Re: Starting with too lower funds?*



McLovin said:


> You mean you don't read the newspaper on one of those wooden stick things?




Laughing.



McLovin said:


> This is the garden to my library that backs right onto the Harbour




WOW!


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## springhill (14 January 2013)

*Re: Starting with too lower funds?*



ekwipt said:


> I have some term deposits, gold and i've allocated a percentage to the stock market, have never traded before, done some reading and chose to go with TheChartist Growth recommendations.




A recommendation is, after all, just that. It is not an iron clad guarantee of a positive return.

Have you researched and formed your own opinions on these recommendations, and then followed up on the results of your opinions?

No matter who or what you are following, it is folly to follow them blindly.



ekwipt said:


> I like having a little cash in the bank for emergencies




Cash is king and most importantly it is instantly liquid. 

Anyone who does not allow for emergency scenarios is asking to be chewed up and spat out. 



McLovin said:


> 20 positions with $12,000 is ridiculous, frankly. I'd be looking at 2 or 3. If you want that sort of diversification with such a small amount, buy an index fund.




Agree, you are spreading yourself too thin. Even with the increased number of $20k you talk about you are 4% down before you even start, then account for selling at some stage, that becomes 8%.



burglar said:


> Find out if you are an investor, a trader or a gambler.
> 
> In my opinion, don't touch your banked money.




You have all the time in the world, the markets aren't going anywhere.

If your money is secure in the bank while you still have fundamental decisions to be made, neither is your money.

----------------------------------

There are 3 clear choices; increase your funds, take less positions or take more time to develop a clear and concise strategy.
*Most importantly, ask questions.* Absorb what you feel you need to, disregard what you don't. 

That is the value of ASF.


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## ekwipt (14 January 2013)

Thanks for the positive replies... Reading and waiting it is


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## tech/a (14 January 2013)

This maybe more helpful.

Call Radge

Ask him to run simulations on 

( a ) smaller capital bases
And importantly
( b ) fewer positions
Say 7

See how they fair.

You can increase the number of positions as your capital grows.

I see Rick touched on it.
From my experience less positions shouldn't hurt performance that much in systems.


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## Porper (14 January 2013)

ekwipt said:


> I have some term deposits, gold and i've allocated a percentage to the stock market, have never traded before, done some reading and chose to go with TheChartist Growth recommendations.
> 
> I've allocated $12,000 for my stock and will eventually hold 20 positions and i'm using Commsec. I'm now a little worried after $20 buy/Sell for each of these positions i'm already effectively down $800.




ekwipt, if you go to the Growth Portfolio section on The Chartist site it gives you guidance on starting capital etc. I think from memory it's around $20,000 but you'll need to check. You also need a low cost broker...$20.00 each transaction is high when you can pay a third of that with Interactive Brokers. I use them and find them fine but I'm sure there are others out there much less than Commsec.


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## tinhat (14 January 2013)

*Re: Starting with too lower funds?*



McLovin said:


> You mean you don't read the newspaper on one of those wooden stick things?
> 
> I have to admit to being sort of spoilt when it comes to libraries. This is the garden to my library that backs right onto the Harbour. I never use it though.
> 
> Back on topic, perhaps the OP can clarify if he wants to trade or plans to invest longer term?




The eastern suburbs of Sydney, especially Double Bay is so pretty, but the people are ar$eholes, except for present company of course.


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## Porper (14 January 2013)

*Re: Starting with too lower funds?*



springhill said:


> A recommendation is, after all, just that. It is not an iron clad guarantee of a positive return.
> 
> Have you researched and formed your own opinions on these recommendations, and then followed up on the results of your opinions?
> 
> No matter who or what you are following, it is folly to follow them blindly.




Can't agree whatsoever with this.

The whole point of a Systematic system is to follow the recommendations blindly. If you start filtering out you deviate from the tested systems expectancy. If you are paying for the system you need to follow it to the letter otherwise you are trading with discretion which is a totally different kettle of fish. And it's almost impossible to be profitable without experience...in my opinion;especially in current market conditions.


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## ekwipt (14 January 2013)

Thanks Porper, that's what I've read and what he recommends as well. I'll look more into it


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## Trembling Hand (14 January 2013)

*Re: Starting with too lower funds?*



springhill said:


> A recommendation is, after all, just that. It is not an iron clad guarantee of a positive return.
> 
> Have you researched and formed your own opinions on these recommendations, and then followed up on the results of your opinions?
> 
> ...





Funny but this is well intended advice and maybe even "common sense" but its just wrong.


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## boofis (14 January 2013)

If you are set on trading a system but don't have a lump sum to chuck in, consider the idea that if you're working a job as well (which I assume you are) you can always put into the position the needed commission out of your wage to make the system as if commission is zero. It'll be costly but if the system is validated and you're keen on seeing theoretical returns in real life why not do everything you can to get your 'portfolio' up to a level offering survival from brokerage, and worst string of losses etc.  
All the best with it!


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## burglar (14 January 2013)

tech/a said:


> This maybe more helpful.
> 
> Call Radge
> 
> ...




ekwipt, 
I didn't realise you were trading a systematic system involving Nick Radge, ...
I assumed discretionary.
Never mind.
In that case, *definitely get a cheaper broker*.

Ask the talking duck about almost anything involving trading.
He is the best, but don't tell him I said so! It might make his day.


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## springhill (14 January 2013)

*Re: Starting with too lower funds?*



Trembling Hand said:


> Funny but this is well intended advice and maybe even "common sense" but its just wrong.




That is fine, but it is wrong... in your opinion and probably others too.

There should always be room for lateral thought. 

There is no requirement to act on it. 

If you never seek the answer to 'Why?' you will never find your own answer on 'Why not?'.

It is for ekwipt to go one way or another, but think and also think outside the square. That is all.


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## Trembling Hand (14 January 2013)

*Re: Starting with too lower funds?*



springhill said:


> That is fine, but it is wrong... in your opinion and probably others too.
> 
> There should always be room for lateral thought.
> 
> ...




You do not buy a system them just pick and choose bits of it. What you are recommending is equivalent to going to the Doctors and getting antibiotics and deciding to skip every second dose!!

The system works due to the sum of ALL its parts not due to you second guessing it.

Do you know what system trading is and how it works?


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## white_goodman (14 January 2013)

*Re: Starting with too lower funds?*



Trembling Hand said:


> You do not buy a system them just pick and choose bits of it. What you are recommending is equivalent to going to the Doctors and getting antibiotics and deciding to skip every second dose!!
> 
> The system works due to the sum of ALL its parts not due to you second guessing it.
> 
> Do you know what system trading is and how it works?




+1

if you're running an automated system with positive expectancy why are you tinkering with it and having an unquantifiable asterisk for the 'thought of the day'...

dumb dumb dumb


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## CanOz (14 January 2013)

*Re: Starting with too lower funds?*



springhill said:


> There should always be room for lateral thought.




Can you back-test this?

Springhill, 'systems' refer to algorithmic programs that give you the buy and sell signals. This mechanical or systematic trading must be followed to the 'T' if the actual results are to replicate the test results.

And yes, it does work and more successful hedge funds than you would believe are probably running systematic portfolios.

CanOz


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## tech/a (14 January 2013)

Ill split this into a couple of bits.
But the answer is strictly related to Radges Growth Stratagy as a *SYSTEM*



> A recommendation is, after all, just that. It is not an iron clad guarantee of a positive return.




Firstly they are *NOT* recommendations.They are buys as signalled by the system search.There is no emotion attached to them they will be proven to succeed or fail. They are a COMPONENT of the system.

*BUT* 

Think about this a bit. 

*You DONT HAVE TO TAKE EVERY SIGNAL*
If you already had 20 stocks in the system and buys keep being churned out---will the system break because you dont/cant take them?---Of course not. You are away 3 weeks come back and need to buy 5 more stocks as the sales have left you depleted---but wait you missed 10 while you were away---disaster---of course not!



> Have you researched and formed your own opinions on these recommendations, and then followed up on the results of your opinions?




You dont have to nor should you its a system signal buy--clear and simple if its a sell you dont question that either from your own system.



> No matter who or what you are following, it is folly to follow them blindly.




Absolutely not you *MUST* follow them blindly---its a buy signal the system will be proven correct or incorrect you have no opinion.
Your looking to replicate the returns of the system.


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## lenny (14 January 2013)

ekwipt said:


> I've allocated $12,000 for my stock and will eventually hold 20 positions




Hi Ekwipt, from memory I think minimum captial to trade the growth portfolio is 25K.

25K is the minimum amount of capital to trade most of Nicks portfolios, best to drop Nick an e-mail.

Have you watched the webinar on the growth portfolio in the members area? It goes into detail of just about everthing you need to know about the GP


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## springhill (14 January 2013)

Trembling Hand said:


> You do not buy a system them just pick and choose bits of it. What you are recommending is equivalent to going to the Doctors and getting antibiotics and deciding to skip every second dose!!
> 
> The system works due to the sum of ALL its parts not due to you second guessing it.
> 
> Do you know what system trading is and how it works?




Do you also go to the doctors and not want to know WHY you need this antibiotic?

I am not recommending picking bits and pieces, I am recommending understanding why it works (or why not sometimes).



white_goodman said:


> +1
> 
> if you're running an automated system with positive expectancy why are you tinkering with it and having an unquantifiable asterisk for the 'thought of the day'...
> 
> dumb dumb dumb




Because humans are not automated. Humans are, by nature, curious. It may just be me, but I want to know the "Why it works component".

epwikt may not, and that is fine.



CanOz said:


> Can you back-test this?
> 
> Springhill, 'systems' refer to algorithmic programs that give you the buy and sell signals. This mechanical or systematic trading must be followed to the 'T' if the actual results are to replicate the test results.
> 
> ...




I am not saying it doesn't work, just encouraging exploration of thought.



tech/a said:


> Ill split this into a couple of bits.
> But the answer is strictly related to Radges Growth Stratagy as a *SYSTEM*
> 
> 
> ...




I have no problem with this, or any other replies to my comments.

I stand by what I have said, which is to promote understanding.


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## tech/a (14 January 2013)

lenny said:


> Hi Ekwipt, from memory I think minimum captial to trade the growth portfolio is 25K.
> 
> 25K is the minimum amount of capital to trade most of Nicks portfolios, best to drop Nick an e-mail.
> 
> Have you watched the webinar on the growth portfolio in the members area? It goes into detail of just about everthing you need to know about the GP




There has to be a standard set of inputs and Id say $25k was it.
It doesnt mean that less capial wont work nor less stocks in the portfolio.
What it WILL DO is alter the inputs to the Algorithm and as such the results will also differ.

Nick can run simulations for exact $ capital and exact Proposed number of stocks held.
The results would then give you a blueprint of possible outcomes which you could then make a decision as to wether to trade it or not.

Now I cant speak for Radge its his method and his rules.
So as suggested by a few give him a call.
But now you have specific requests you could seek advice on.


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## Trembling Hand (14 January 2013)

springhill said:


> Do you also go to the doctors and not want to know WHY you need this antibiotic?




Err yeah mate....... but once ya bought them and started taking them you would be an idiot to then fluff with the prescribed method.


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## springhill (14 January 2013)

Trembling Hand said:


> Err yeah mate....... but once ya bought them and started taking them you would be an idiot to then fluff with the prescribed method.




Before you buy them.

You are obviously missing the point.

Once again, to be clear, not talking about messing with the system, talking about understanding it.


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## CanOz (14 January 2013)

springhill said:


> Before you buy them.
> 
> You are obviously missing the point.
> 
> Once again, to be clear, not talking about messing with the system, talking about understanding it.




This is important, you need to understand why your system has a positive expectancy. This is why i don't like black box systems....if you understand why its profitable then its much easier to trade too.

In regards to the right capital to trade with its important to have enough, otherwise the costs to trade the system outweigh the potential rewards. 

For the OP, can you add capital from other sources each week? If so how much? Sometimes you may be able to start trading a system if you are going to be able to raise capital from salary or wages as you start to fill positions.

CanOz


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## ekwipt (14 January 2013)

CanOz said:


> This is important, you need to understand why your system has a positive expectancy. This is why i don't like black box systems....if you understand why its profitable then its much easier to trade too.
> 
> In regards to the right capital to trade with its important to have enough, otherwise the costs to trade the system outweigh the potential rewards.
> 
> ...




Yes definitely can add capital, I should probably re-update my budget, have been getting a bit lax in the savings lately.

I've asked Nick a couple of questions via email, hopefully I'll get some answers. I'm pretty sure I'm going to raise my pool of money to $20, 000 and go from there.


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