# Hi All - about to dive in



## Rider (11 November 2012)

Hi All,

After watching, reading and learning small snippets about the share market for a couple of years I am willing to dive in and give it a go. I really don't understand a lot of how the market works but am willing to learn as I go without over committing great amounts of money. Over time my plan is to get comfortable and get some confidence in what I am doing and hopefully make a good $ or 2.

What I would like to know is, What are some basic rules I may apply to my investing e.g. I don't buy  if.... or I sell when..... or I wont buy this because..... or I prefer to buy when.....

I know everyone is different and their strategies can vary quite a bit. 

I need to setup a few basic guides for myself so I dont get carried away, any help will be appreciated.

Thanks
Rider


----------



## springhill (11 November 2012)

Rider said:


> Hi All,
> 
> After watching, reading and learning small snippets about the share market for a couple of years I am willing to dive in and give it a go. I really don't understand a lot of how the market works but am willing to learn as I go without over committing great amounts of money. Over time my plan is to get comfortable and get some confidence in what I am doing and hopefully make a good $ or 2.
> 
> ...




Firstly, welcome to ASF.

Secondly, be prepared for all types of replies. Nice and not so nice. The not so nice ones are still meant with the best of intentions.



Rider said:


> After watching, reading and learning small snippets about the share market for a couple of years I am willing to dive in and give it a go




It would help if you told the ASF community what you have learnt throughout this period.



Rider said:


> What are some basic rules I may apply to my investing e.g. I don't buy  if.... or I sell when..... or I wont buy this because..... or I prefer to buy when




If you can't answer any of these, then you do not have any semblence of a system or any criteria for buy/sell whatsoever. You need to start developing one, without committing any money yet. The stock market will always be there.



Rider said:


> I need to setup a few basic guides for myself so I dont get carried away




If you are entering the stock market this should already be done.


I am speaking from experience, I started 'investing' 7 or so years ago and knew nothing. I listened to 'tips' from mates and other frivolous things without doing any research myself.
I didn't lose much and made some good coin along the way, but looking back I was stupid and could have been rolling in loot if I knew then what I do know.

Mate, I am worried you are going to get chewed up and spat out by the market.

Keep those dollars you are going to commit in the the bank, and try to absorb as much info as you can from here and other sources.

Develop a system or criteria or you are just like a politician, policy making on the run.


----------



## Rider (11 November 2012)

Hi Springhill,

Thanks for the advice but I am not putting my life savings on this but rather just dabble in market for a while. I am interested in small/mid cap stocks. I have no grand plan of making truck loads of money yet but to get an increase would be nice.
As far as my knowledge goes with the share market is very minimal but watch a few stocks and am fascinated by how the price moves around.
I have been watching the likes of MAD, AXE, LYC, CQC and a few others. I try and read a little about the companies and what they do.

I read peoples tips and suggestions and try and sort through the good form bad.

I don't plan to be chewed up and spat out but have not yet bought a share in any company. 

I do hope that jumping in will accelerate my learning without too many hurdles.

Rider


----------



## springhill (11 November 2012)

Rider said:


> Hi Springhill,
> 
> Thanks for the advice but I am not putting my life savings on this but rather just dabble in market for a while. I am interested in small/mid cap stocks. I have no grand plan of making truck loads of money yet but to get an increase would be nice.
> As far as my knowledge goes with the share market is very minimal but watch a few stocks and am fascinated by how the price moves around.
> ...




You would know from the thread I have an interest in CQC. They show a lot of promise with a good MC:Cash ratio. One that has moved well for me in the last month.

I wish you all the best, if you have questions on the stocks I post in don't hesitate to ask I will do my best to reply in the limited time I have in this part of the year.


----------



## cynic (11 November 2012)

> October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February. -- Mark Twain







> If you must play, decide on three things at the start: the rules of the game, the stakes, and the quitting time. -- Chinese proverb







> Good judgment comes from experience, and often experience comes from bad judgment... -- Rita Mae Brown




Welcome to the financial markets (a.k.a. World's Largest Poker Machine/Casino)!

Extreme caution is advisable to those contemplating any new endeavour. The market is certainly no exception. Much has been read, said and written, and yet somehow precious little is truly understood. 

Whilst paper trading coupled with the study of expert' accounts (reminiscences, theories and practices) is highly recommended, your real education only truly begins upon active participation. Written words regularly fail to express the intensity of emotion(shock) one typically experiences when placing their hard earned at risk.


----------



## CanOz (11 November 2012)

Welcome to ASF...

Have you done any reading yet? If not, check Reminiscences of a Stock Operator. Its a quick entertaining read that will leave you with an impression of the markets that is still useful even today. 

Paper trade some of your concepts to see how you would have done.

Remember, the markets will always be there, so don't be in a rush or fear 'missing out'. Take your time and learn to be patience (one of my past weaknesses).

Cheers,


CanOz


----------



## Rider (11 November 2012)

Hey CanOz and cynic,

I will find and read whatever I can... I dont mind a good read so will look at as many books as I can..

That 'fear of missing out' is powerfull and I already feel as though I have missed out on a few opportunities, it's just trying to control myself as i enter the market. From what I have seen so far there is always some opportunities out there to make a dollar (and lose a dollar).

I feel by the comments that the path I am taking is a bumpy one and one traveled many time before, some make it, some don't. hopefully I can get through.

#1 Rule (for me)  Be patient  .


----------



## Julia (11 November 2012)

Rider said:


> #1 Rule (for me)  Be patient  .



In terms of?
e.g. waiting to enter the market until you know more than you do now?


----------



## scottw33 (12 November 2012)

Hi Rider. You sound like you're at a similar stage to myself - very eager to get in and give it a go, but with not enough know-how. It is very tempting to just throw some money in to the market and hope to make a dollar, but after reading through the forum, books and articles.. it doesn't happen quite like that!

I've been researching and reading about the market on and off for over a year, and still don't feel I know enough to try and make the first step. Why go in with the assumption of possibly making a dollar or losing it if that doesn't work, when you can go in with a calculated risk and a system that will help minimize your losses?

I could be completely wrong in that you may know what you're doing, but everything I seem to have learnt and read suggests you NEED a system before diving in.

Hope that I've been able to help!


----------



## pixel (12 November 2012)

Rule #1: Know what *you *will be doing because you'll never know what *the Market* is going to be doing.

In other words: Don't restrict yourself to one plan, but *always have a Plan B.*


----------



## McLovin (12 November 2012)

You've admitted yourself that you don't really know what you're doing, so why are you looking at such speculative companies? If you want to play in that end of the pool then you really need to know what you're doing. The first share I ever bought was Oilsearch in 1996. The last mining company I ever bought was Oilsearch, in 1996. There's easier money to be made, IMO, than messing around with miners.


----------



## Gringotts Bank (12 November 2012)

McLovin said:


> You've admitted yourself that you don't really know what you're doing, so why are you looking at such speculative companies? If you want to play in that end of the pool then you really need to know what you're doing. The first share I ever bought was Oilsearch in 1996. The last mining company I ever bought was Oilsearch, in 1996. There's easier money to be made, IMO, than messing around with miners.




Where is the easier money to be made?


----------



## McLovin (12 November 2012)

Gringotts Bank said:


> Where is the easier money to be made?




Small cap industrials...Every now and then large cap industrials.


----------



## Gringotts Bank (12 November 2012)

McLovin said:


> Small cap industrials...Every now and then large cap industrials.




Are you able to share your trading/investing method?  I'm intrigued that you don't trade mining stocks.


----------



## McLovin (12 November 2012)

Gringotts Bank said:


> Are you able to share your trading/investing method?  I'm intrigued that you don't trade mining stocks.




I buy profitable companies when they're less than what I think they're worth. There's a few of us on here who don't go near mining companies. I don't trade usually trade, value takes time to be recognised in the share price. I don't use leverage though, so I am happy to hold and wait it out.


----------



## Gringotts Bank (12 November 2012)

McLovin said:


> I buy profitable companies when they're less than what I think they're worth. There's a few of us on here who don't go near mining companies. I don't trade usually trade, value takes time to be recognised in the share price. I don't use leverage though, so I am happy to hold and wait it out.




I like that approach.  I'm not skilled enough at FA to do it myself.

May I ask what sort of ballpark return on capital, and drawdowns can be achieved that way?


----------



## McLovin (12 November 2012)

Gringotts Bank said:


> I like that approach.  I'm not skilled enough at FA to do it myself.
> 
> May I ask what sort of ballpark return on capital, and drawdowns can be achieved that way?




I usually go somewhere between 20-30%. I don't pay attention to drawdowns because I don't pay attention to SP movement. Calendar YTD I am up about ~25%. And I've been holding about 25% cash.

My average position is, I guess, quite large by private investor standards. Which would preclude a lot of micro cap miners anyway.

It's a strategy that requires patience and conviction that you're correct. I guess it's not suited to everyone and everyone needs to approach the market in a way that suits their temperament.


----------



## Gringotts Bank (12 November 2012)

McLovin said:


> I usually go somewhere between 20-30%. I don't pay attention to drawdowns because I don't pay attention to SP movement. Calendar YTD I am up about ~25%. And I've been holding about 25% cash.
> 
> My average position is, I guess, quite large by private investor standards. Which would preclude a lot of micro cap miners anyway.
> 
> It's a strategy that requires patience and conviction that you're correct. I guess it's not suited to everyone and everyone needs to approach the market in a way that suits there temperament best.




Nice one.  Thanks.


----------



## Rider (12 November 2012)

Hey Guys & Girls,

Thanks for the responses, Mclovin your strategy sounds great but I am not sure as a 'new to market' person I am capable of doing what you are doing. Gringotts Bank's view probably reflects a good portion of others around as they like the mining stocks. I will probably start as a speculative type trader of micro/small cap companies as this does excite me, risky I know and hopefully my emotions wont get the better of me.

It is clear that everyone has a 'system' of their own and my own system will develop over time, at the moment my system is read, research, watch and learn. I intend to add buying and selling in there as well.

I am not borrowing money or mortgaging the house to start, I am using my own savings to start so I don't feel overly pressured or have a fear of failure. I just want to learn as I go.

I have to start somewhere

Rider 
julia - patience in term of everything - Have patience with all things, But, first of all with yourself.


----------



## Rider (10 April 2013)

*Hi All - About to dive in (part 2)*

Hi All,

A while ago I started a thread saying how I was about to enter the market and basically asking what rules people use and for some general advice. I did get some advice but the overall feeling was that I needed to start educating myself... so thank you. Spring Hill expressed his worry that I would get chewed up and spat out by the market and that really got me thinking and I wasn't even close to being ready.

So I went to the library and borrowed a couple of books. 1 was Louise Bedford : Trading secrets and the other was Matthew Brooks : Stock market strategies that work in Australia. Louise's book was enlightening and I just wanted more, I felt I had taken a huge step with that book and I had/have a hunger for more information. I bought Louise Bedfords : charting secrets for more of the same thing from her. I also bought Nick Radge : Adaptive analysis for Australian stocks to get another perspective of TA and trading strategies, his points on the expectancy curve, risk management and Mind set are really starting sink in and shows If you do have a good system and you can place yourself on the profitable side of the expectancy curve then your going to make consistent good returns

I  downloaded and read 'Reminiscence of a stock operator' referred by CanOZ and Louise Bedford and wow that book packs a lot of punch, I took notes and really loved the story and the psychological side of the equation that that book highlights. It really is a powerful book and I wanted more. Nick Radge recommended in his book to read  Mark Douglas : Trading in the Zone, I am nearly finished that book and I am now getting to understand the psychological challenges I face in the future.

So a brief summery of what I have learned

1 Risk management - I believe I need to have a pre-defined risk on any trade with a stop planed before a trade is put on. If a trade doesn't go the way I am expecting and a stop loss is reached then close the trade every time. Psychologically this may be a hard thing to do but it is a must. Don't have a fear of picking a loosing trade as any trade can go in any direction at any time, this highlights the importance of a stop loss to limit your losses. Use a trailing stop which moves to breakeven ASAP to protect capital then move it as the price moves. Never average down as this is betting against a trend

2 Money management - Selecting position size relevant to the amount of dollars I would like to risk. using a 2% rule as risk is a good idea ( 2% rule = 2% of capital/risk = amount of shares to buy (risk = entry price - stop loss)) don't commit more than a certain amount say 25% of capital on any given trade. Look at pyramiding when the trade is going how I expected.

3 Keep records and self evaluate on each trade - I have made 2 trades and 1 closed with a loss and the other is at a loss at the moment, in my diary I have highlighted what I have done wrong and learned valuable lessons from them, these trades were put on before I probably should have but hey I'm learning.

4 psychology is very powerful in trading and I will need to learn how to manage myself and my trades, I have to accept that even though I can follow a trend I can still get it wrong. I have to accept that the market can and will do anything at anytime therefor don't fear being wrong, don't hope! just accept whatever happens and move on.

These are probably just the basics but most of what I have read all seem to be pointing to the same thing, you can use FA or TA or whatever you want to pick your stocks but the rules of trading should still be the same.

If anyone would like to recommend any more books that might help me go ahead. Or if you have any advice for me then please throw it at me. I am like a sponge at the moment so it all feels good

Thanks all
Rider


----------



## springhill (10 April 2013)

Hi Rider,

If I could make one small insight, you are obviously very level headed and have a good temperament.

There are those you would have taken my 'chewed up and spat out' comment in an offensive manner and told me to go stick it where the sun don't shine.
Instead you were able to perceive my intent was to help, not to belittle you.

Congrats on what you have acheived so far, no doubt if you reflect back on your thought processes then and how they operate now, the difference would be phenomenol.

If you wish I have a copy of The Intelligent Investor you can have for nothing.
PM me if you are interested.


----------



## burglar (10 April 2013)

McLovin said:


> You've admitted yourself that you don't really know what you're doing, so why are you looking at such speculative companies? If you want to play in that end of the pool then you really need to know what you're doing. The first share I ever bought was Oilsearch in 1996. The last mining company I ever bought was Oilsearch, in 1996. There's easier money to be made, IMO, than messing around with miners.







> Paul Clitheroe says stay away from penny dreadfuls unless you know what you are doing!
> I say, how do you learn if you stay away?


----------



## nysefloortrader (10 April 2013)

burglar said:


>




Paul is one of the most conservative investors / Commentators out there. 

He probably even warns people before he farts. 

There is nothing wrong with the penny dreadfuls, as you can get one  hit wonder massive rection to news, just do not play with money you can not afford to lose, and keep your investments to a minimum and remember your ratio;s 3:2:1 and u should be fine.


----------



## AdamVW (12 April 2013)

Hi Rider

Well, I was in the same position really only a month ago.  Been thinking about it for a while and just wanted to get into the market.  i understood that there was a bit of a market correction going on and it was likely things may be on the slide for a short while.
However, I have selected 4 shares in different sectors to wet my feet.  I bought equal values in each as a bit of a  test on how they perform against each other.
So, how am I going after only one month.  Well, as I type, my best performer is up 16% while my worst is down 27%.  I might point out that the worst performer was a speculative miner so high risk but I do not think it is still a bad share, just bad timing.
Overall I am actually in front if you do not take into consideration brokers fees so fairly happy with the situation at present. 
My view going is similar to yours, I am not going to loose too much even if it all went to custard. Just learning and like anything, the best way to learn I believe is by hands on experience.
Have fun!


----------



## springhill (12 April 2013)

AdamVW said:


> Hi Rider
> 
> Well, I was in the same position really only a month ago.  Been thinking about it for a while and just wanted to get into the market.  i understood that there was a bit of a market correction going on and it was likely things may be on the slide for a short while.
> However, I have selected 4 shares in different sectors to wet my feet.  I bought equal values in each as a bit of a  test on how they perform against each other.
> ...




Did someone say speculative miner? 

Do you mind if I enquire as to which company?

I follow any lead, anytime, anywhere.

Private message me if you don't wish to publish.


----------



## AdamVW (12 April 2013)

springhill said:


> Did someone say speculative miner?
> 
> Do you mind if I enquire as to which company?
> 
> ...




I have PM'd you Springy as I don't want everyone too see just how dopey I am, however I have revealed my first picks in another thread so they are there for all to see really. :1zhelp:


----------



## burglar (12 April 2013)

nysefloortrader said:


> ... He probably even warns people before he farts. ...





Ha ha ha! 




nysefloortrader said:


> ... remember your ratio;s 3:2:1 and u should be fine. ...




Concrete is made by mixing gravel, sand and cement in the ratio 3 : 2 : 1 by volume.
But i suspect you are talking about some thing else.


----------



## Rider (13 April 2013)

Hey Adam, It really is hard to know what to do but I wanted to highlight how much I have learned over the past 6 months (in my last post) with really no desire to throw money away before I really had a plan in place. I now have a plan and have some idea of what to do as  trader. 

If you read the books I have read and what is recommended by others on this forum it can really change perspective of the markets. Basically picking the stocks you pick is only the start of it, its the emotions and challenges and ultimately the decisions that you make while holding that will determine your future as a trader. Have a solid trading plan and stick to it. Don't think your dopey for picking stocks go the opposite way you think they would go... everybody does it and will continue to do it. 

I am looking forward to a win and wish you all the best on your journey, this is a great forum for advice and a few aren't afraid to help you in their threads.


----------



## AdamVW (14 April 2013)

Rider said:


> Hey Adam, It really is hard to know what to do but I wanted to highlight how much I have learned over the past 6 months (in my last post) with really no desire to throw money away before I really had a plan in place. *I now have a plan and have some idea of what to do as  trader.*
> 
> If you read the books I have read and what is recommended by others on this forum it can really change perspective of the markets. *Basically picking the stocks you pick is only the start of it, its the emotions and challenges and ultimately the decisions that you make while holding that will determine your future as a trader.* *Have a solid trading plan and stick to it.* Don't think your dopey for picking stocks go the opposite way you think they would go... everybody does it and will continue to do it.
> 
> I am looking forward to a win and wish you all the best on your journey, this is a great forum for advice and a few aren't afraid to help you in their threads.




Yes thanks Rider, it is indeed a great forum and many learned people to speak with.

I am of course trying to get my head around it all and to be honest, I am only doing it for a bit of fun.  I reached the magical age of 55 last month so can access my super which is nice and the interesting part of my super is that it is currently earning upwards of 20% so is doing ok.  I think realistically that my chances of achieving those sort of figures across the board with my shares are probably slim.  Hence I am here to learn but not in it expecting to make my fortune, although that would be a bonus.

I am also learning that tips are just that, tips.  Certainly not sure things.  Of my 4 stocks, 3 are doing ok but the fourth has sucked the life out of any gains made by the other 3.  So this side of my strategy needs some work.

One word that comes to mind though and that which you alluded to above is 'DISCIPLINE'.  I think this is the key to anything that happens to one's portfolio.  I have been reading some reports reports that have made want to waver from my plan but I know that if I did this, I would regret it in the long run. So, I must step back, take a deep breath and be honest with myself and remain disciplined. Not easy to do but a vital skill to have in this game I think.  ld:


----------



## CanOz (14 April 2013)

AdamVW said:


> ....the interesting part of my super is that it is currently earning upwards of 20% so is doing ok.  I think realistically that my chances of achieving those sort of figures across the board with my shares are probably slim.




So you think a fund manager following the index has a better chance than someone that applies themselves, treats their money management as a business, and uses tested systems?

What exactly do you think your Super manager is?  Super man?

CanOz


----------



## AdamVW (14 April 2013)

CanOz said:


> So you think a fund manager following the index has a better chance than someone that applies themselves, treats their money management as a business, and uses tested systems?
> 
> What exactly do you think your Super manager is?  Super man?
> 
> CanOz




With my limited knowledge CanOz at this point, indeed I do compared to me.  Perhaps later on when I understand things a little more I may think differently.


----------



## CanOz (14 April 2013)

AdamVW said:


> With my limited knowledge CanOz at this point, indeed I do compared to me.  Perhaps later on when I understand things a little more I may think differently.




Well, there is your goal then, outperform your fund manager

Pitter Patter....

CanOz


----------



## AdamVW (14 April 2013)

CanOz said:


> Well, there is your goal then, outperform your fund manager
> 
> Pitter Patter....
> 
> CanOz




Yes I hadn't thought of it that way CanOz, and quite a respectable initial goal to aim for a little old security guard sitting in a refinery in Kwinana I would think. ld:


----------



## CanOz (15 April 2013)

AdamVW said:


> Yes I hadn't thought of it that way CanOz, and quite a respectable initial goal to aim for a little old security guard sitting in a refinery in Kwinana I would think. ld:




We're all built to learn AdamVW!


----------



## burglar (15 April 2013)

CanOz said:


> Well, there is your goal then, outperform your fund manager ...




I thought I could outperform my fund manager.
Geez he must be good, or I must suck.


----------

