# Why is it so hard?



## stargazer (4 March 2008)

Hi all

Over a period of time i have trying to gather as much info as i can to generate some income from the market.  

At first it was buy some stocks they go up and sell etc well not much progress there as the market has gone done.  On some occassions i did sell only to see the stock take off and miss nice profits.  On the other hand i held on to stocks i should've in hindsight sold and of course they went down.

Then i looked at stocks with dividends well the dividends were not that great eg OXR and BPT  so no joy there.

I started to look at options and just when i thought i had some progress with covered calls they appeared to be fairly low risk.  Looked good for some monthly income but via this forum i was alerted to the risks.  The volatility trap etc

Finally got to understand Calls and Puts etc but again lots of confusion and everyone telling me how risky it is if you get it wrong infinite losses etc

CFDs have been touted as very risky so have steered clear of these.

So as time goes by trying to absorb so much info i am getting more and more confused   of which direction i should take to learn how to gain some income from the market.

Has anyone got any suggestions where my first base should be to try at least.

Cheers
SG


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## theasxgorilla (4 March 2008)

stargazer said:


> Has anyone got any suggestions where my first base should be to try at least.




Start with the end in mind.  What do you want?  What are you capable of? Is what you want realistic?  The markets are a means to an end.  If being in the market is the end itself then your mission is already accomplished 

ASX.G


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## barrett (4 March 2008)

The best thing you can do IMO is to spend some time seeking  out the most skilled people you can find to manage your money, and give 95% of your money to them until you've convinced yourself that you can beat their performance based on whatever trading or investing activities you do with the remaining 5%.  Many of the best performing fund managers (eg Paradice) tend to focus their efforts on very wealthy clients, which is a shame for the rest of us, but there are other consistently high-performing funds (over 5+ years and preferably 10+) who will take your money.
I think this is the most logical thing to do (and the thing that no-one does), since it's very unlikely that relative beginners in the stock market are able to beat the most highly skilled value investors.


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## nizar (4 March 2008)

stargazer said:


> Then i looked at stocks with dividends well the dividends were not that great eg OXR and BPT  so no joy there.




If I were looking at stocks with dividends I wouldn't be looking at the resources.

The financials and property trusts will give you far better yields.


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## Trembling Hand (4 March 2008)

stargazer said:


> Hi all
> 
> Over a period of time i have trying to gather as much info as i can to generate some income from the market.
> 
> ...




The first two important steps a Newbie has to go through in what would have to be the most lucrative game going is,
1, realizing that they know nothing about the market and how it really works.
2, realizing that the work they need to do to become consistently profitable is immense and a long way off.

If after that point you are still interested then the obvious thing to do is set about educating yourself to get a broad based knowledge in market mechanics then along the way you should find something that sparks your interest that you can then specializes in. Only after that ,finding a niche and learn & practise till the cows come home, have you any chance. Bottom line you are probably a couple of years off, minimum. 

Do you really think it should be easy?


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## freddy2 (4 March 2008)

Consider you are competing against people who are either much smarter (PhDs in statistics, etc) and/or have much more inside information. Than consider the markets are mostly efficient especially taking into account transaction costs (spread, commisions, taxes, etc) and even the smarter people find it very hard to make money.
Perhaps your best option is to invest your money in index funds and work on whatever skills you have in other fields to earn more income.


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## ROE (4 March 2008)

stargazer said:


> Hi all
> 
> Over a period of time i have trying to gather as much info as i can to generate some income from the market.
> 
> ...




I wouldn't look into CFDs and Options when you start out.
I would

1. Understand the market, what makes it tick and what affecting share prices
2. Understand fundamentals of a business, know how to read their balance   sheet
3. Buy on fundamental, try to identify stock that trades under its real worth

If you got all that yesterday and today should provide some bargain stocks for you to pick and often ample returns in a few years from now


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## Geffro77 (4 March 2008)

Stargazer,

I read your post and can relate, as I am relatively new to the stock market (and these forums) as well. I'm also keen to try and find the best way to 'tackle the beast' and make some income with the long term goal of supplementing the income from my day job - I'd be happy with one day off a week...

While I don't know the 'best' way to go about doing it, the thing I've decided to focus on is to learn as much as possible about basic share price movements and technical analysis. I figure all the derivatives (options, cfd's etc) are all based on shares so a good understanding of share price movements should make it easier to understand derivative pricing.

I've been reading a lot of books on technical analysis and the two authors I've found most helpful so far have been Darryl Guppy and Leon Wilson. There is also a plethora of really useful information and market wisdom on these forums  . 

One thing these authors put me on to that I didn't think was so important when trading shares is the money management side of things. It isn't just enough to be able to make money from a share, you have to know how to keep it....

Also keep in mind that when the market as a whole goes down, that doesn't mean that some individual shares don't go up....

Cheers,

Geffro77

**No Advice, Just Opinions...


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## tech/a (4 March 2008)

*You need a MENTOR*

Go find someone who is consistently turning profit,who has been where you have and is where you wish to go.

Pay for their tutorage if necessary.
Three things will happen.
You'll save masses of time.
You'll learn what you DONT need to know to be successful.
You'll find renewed confidence and profit.


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## prawn_86 (4 March 2008)

tech/a said:


> *You need a MENTOR*
> 
> Go find someone who is consistently turning profit,who has been where you have and is where you wish to go.
> 
> ...




Easier said than done tech :

Especially for those younger ones amongst us.


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## Santob (4 March 2008)

I'm sorry i couldn't resist, and completey off topic..

*thats what she said*

Sorry I've been watching the US version of The Office...


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## ceasar73 (4 March 2008)

God question! Im in the same boat as you.Problem is so many factors can 
effect a share price.You may have found a company with a great product and sound fundamentals but it drops b/c the MANAGEMENT are greedy fkn idiots (abc/eddy groves).

how can one do their research on management? not easy I suspect.

Peter Lynch says to invest in a company that even a monkey could run!


ceasar73


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## dutchie (4 March 2008)

Share trading certainly looks easy - but we all know that its not!

If peoples' initial foray into trading is in a bull market and they have success they think that it is easy and that they should be able to repeat the winning process. In a bear or choppy market its a different story and its not so easy to start with a winner.

Most people only remember their successes and put any losses down to bad luck. Its often like gambling where the rush one gets with a winning hand spurs on punters to try and get that feeling again and again.

For long term and sustained success the solution is education. Starting to trade without knowing fully what you are doing is a recipe for failure and the loss of capital. 

See other threads for psychology of trading, fundamental analysis, technical analysis, money management and limiting risk to retain capital etc etc.

It seems that when all else fails be a contrarian. If the majority of beginners lose money share trading, using options etc then it might be a case of getting your partner to trade your money by doing the opposite to what you intended to do.

i.e. if you were going to BUY BHP then tell your partner that and they can then SELL BHP. If you were going to buy a CALL then tell your partner that and they will buy a PUT - statistically that should work!! LOL


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## tech/a (4 March 2008)

prawn_86 said:


> Easier said than done tech :
> 
> Especially for those younger ones amongst us.




OK then add this up.

(1) What have you lost in your efforts to turn a profit?
(2) What has it cost you in books,software,seminars data etc
(3) Allocate an hrly rate to your time---what have you spent there?

Now look forward forgetting tutorage---what do you think you'll invest in the 3 above in say the next 2 yrs.

Now divide both time and price by up to 75%---I'll bet you cant afford NOT to.

Finally if your serious about turning a decient profit you'll have to invest a decient amount in your apprenticeship.If you were to buy a business that gave you an income ONLY---say $55k a year NETT you'd need to invest around $150,000 + stock and Equipment.

What makes everyone think that the hardest business in the world (95% fail)can be entered into profitably for peanuts.

*If your going to be in the top 5% then you had better do something different to the OTHER 95%.*

Infact its easier and less expensive than you can imagine.
*The biggest problem will become Capital base.*

If you dont have a decient one then trading for a living is an unrealistic expectation---which your Mentor will tell you before you invest a cent!


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## tech/a (4 March 2008)

> Peter Lynch says to invest in a company that even a monkey could run!




Does Andrew Symonds have a listed company?---only kidding


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## ceasar73 (4 March 2008)

heheheheheh...maybe this the new way to invest - find an idiot and buy
into his/her company!!?!!

ceasar73


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## dutchie (4 March 2008)

Good one Tech. 

I think Andrew is doing alright for himself now!


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## nioka (4 March 2008)

ceasar73 said:


> .You may have found a company with a great product and sound fundamentals but it drops b/c the MANAGEMENT are greedy fkn idiots (abc/eddy groves).



Eddy Groves ,on a lot of these forums is the village idiot. REMEMBER THAT HE WAS DOING EXACTLY THE THING THAT A LOT OF HIS CURRENT CRITICS ADVOCATE....... USING LEVERAGE AND OTHER PEOPLES MONEY TO GET RICH QUICK. It backfired for him . Will it eventually backfire for most who trade that way. Give the guy a break.


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## sails (4 March 2008)

nioka said:


> Eddy Groves ,on a lot of these forums is the village idiot. REMEMBER THAT HE WAS DOING EXACTLY THE THING THAT A LOT OF HIS CURRENT CRITICS ADVOCATE....... USING LEVERAGE AND OTHER PEOPLES MONEY TO GET RICH QUICK. It backfired for him . Will it eventually backfire for most who trade that way. Give the guy a break.




Agree Nioka.  A few weeks ago Eddy Groves was probably considered a successful businessman, but because the leverage backfires, now considered greedy...  

Happens time and time again - if heavy leverage works, it's considered successful.  If it fails, then it's condemned and called greed.


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## sails (4 March 2008)

tech/a said:


> *You need a MENTOR*
> 
> Go find someone who is consistently turning profit,who has been where you have and is where you wish to go.
> 
> ...




Agree too, Tech - but that's IF you can find one.  It was the need for education that got us sucked into paying extremely high prices for seminars a few years back that, in reality, taught little more than the basics.

In options trading, I have learned far more from free material (or much lower priced material) available out there in addition to scouring dedicated options message boards / forums mostly based in the US.  After a while, you get to know those who are above average.   Then thoroughly tested any ideas or concepts learned with both backtesting where possible and in real time.  Very time consuming, but in the absence of a mentor, found no other way.  IMO, mentors are not only difficult to find, but also difficult to differentiate between the real thing and the abundance of overpriced, well marketed rip offs.


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## ceasar73 (4 March 2008)

I will concede he's no idiot, but he is definately greedy, and this my friend
has led to his downfall.

ceasar73


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## Chorlton (4 March 2008)

stargazer said:


> Has anyone got any suggestions where my first base should be to try at least.
> 
> Cheers
> SG




Hello SG,

I was in a similar situation when I first started. I played around with many different strategies and instruments. If I was initially profitable, I kept with a particular one but as soon as I received a string of losses, I dumped the idea, thinking that it wasn't robust and moved on... very frustrating!!!

What has personally helped me was my quest to develop mechanical systems. The learning process along the way, although very frustrating at times, has taught me what ideas can and cannot make money and as a result very quickly allows one to focus on the more robust and potentially long-term profitable ones. Also, by having some statistical evidence to back up a potential idea helps to trade it through the inevitable bad times...

There's a number of posters on here (Tech/A, Stevo, Nizar) to name just a few whom have also followed this path. I don't want to speak for them but IMO I believe their understanding of what really matters to turn a profit from the Mkts has probably been helped by this process.

All IMO,

Chorlton


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## nioka (4 March 2008)

ceasar73 said:


> I will concede he's no idiot, but he is definately greedy, and this my friend
> has led to his downfall.
> 
> ceasar73



 And I'll concede he is greedy as are most that use other peoples money to get there in a hurry. Using other peoples money puts you in a position to be managed by them. I learnt this from greedy banks. It is not only people that are greedy. My motto "neither a borrower nor a lender be."


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## ceasar73 (4 March 2008)

nioka said:


> And I'll concede he is greedy as are most that use other peoples money to get there in a hurry. Using other peoples money puts you in a position to be managed by them. I learnt this from greedy banks. It is not only people that are greedy. My motto "neither a borrower nor a lender be."




I AGREE 100% WITH THE ABOVE.

ceasar73


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## wayneL (4 March 2008)

Chorlton said:


> Hello SG,
> 
> I was in a similar situation when I first started. I played around with many different strategies and instruments. If I was initially profitable, I kept with a particular one but as soon as I received a string of losses, I dumped the idea, thinking that it wasn't robust and moved on... very frustrating!!!
> 
> ...



Mech trend systems certainly have some advantages, but they also have some downsides. eg Drawdown, (Not that other methods don't have it) but one must be psychologically prepared.

They may not suit what the particular trader wants to achieve.

That's the first decision before recommending a method. What is it the trader is trying to do, then design/implement a method to suit.


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## tech/a (4 March 2008)

nioka said:


> Using other peoples money puts you in a position to be managed by them. I learnt this from greedy banks. It is not only people that are greedy. My motto "neither a borrower nor a lender be."




Not necessarily.

One of our clients is doing a developement in Henley Beach.People will see it if they are down that way.

Its a 12 million developement.
50 apartments.
They were sold off plan only last weekend.
46 are now sold.
Return $25 million on the 46 sold.
Banks are topping themselves to do the business.

To be one of the 5% you need to do things differently to the 95%



> What has personally helped me was my quest to develop mechanical systems. The learning process along the way, although very frustrating at times, *has taught me what ideas can and cannot make money and as a result very quickly allows one to focus on the more robust and potentially long-term profitable ones.* Also, by having some statistical evidence to back up a potential idea helps to trade it through the inevitable bad times...




Important in the learning process.
To be one of the 5% you need to do things differently to the 95%


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## Chorlton (4 March 2008)

wayneL said:


> Mech *trend* systems certainly have some advantages, but they also have some downsides. eg Drawdown, (Not that other methods don't have it) but one must be psychologically prepared.
> 
> They may not suit what the particular trader wants to achieve.
> 
> That's the first decision before recommending a method. What is it the trader is trying to do, then design/implement a method to suit.




They don't all have to be Trend Following


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## tech/a (4 March 2008)

In conventional trading you need a trend to make a profit in one direction---that which your trading. Not talking options.

That trend can be 1 bar.


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## IFocus (4 March 2008)

stargazer said:


> Hi all
> 
> Over a period of time i have trying to gather as much info as i can to generate some income from the market.
> 
> ...




Good post SG

I can remember thinking the same when I started out and as a trader still do from time to time as trading can be a war of attrition as the account moves up then moves into draw down and then up and then into.....

The image of making a steady income is one often pushed by sprukers with some trading system or other usually during bull markets.

Its also an alluring aspect to the market but outside of a bull markets unlikely for at least 95% of retail traders to achieve IMHO. 

I have seen that it is possible for those investors that have built a portfolio of div paying stocks to earn an income through most market phases the method I have seen takes time / patience  and you do need certain market conditions to achieve effective entry like serious market crashes. 

Have a guess at what you think is the method you want to engage the market with, Investing / trading / time frames / fundamentals / technical analysis do some serious work in the area chosen and at the same time find as Tech suggests a mentor. 

Then become an expert at one thing before moving on to the next remembering that the trader / investor / hedge fund / what ever on the other side of your position will be likely to be an expert that wants your money.

My own experience was that I had a reasonable knowledge of markets / methods but went around in circles going backwards for up to 3 / 4 years before finding a mentor, since that moment I only ever went forwards.

From my mentor  didn't get airy fairy feel good crap from a seasoned spurker I got knives though the front of my chest and a serious talking to about market reality.

If you are thinking of paying for a mentor post the name or even PM some of us here and ask if there is value

Just keep asking questions the answer is out there but I doubt it will end up being what you think it is now......

One last comment if you do take this on the best method of success is never give up, never that means never........


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## julius (4 March 2008)

Chortlon that's how I started, and it does help, but in hindsight I wish I'd spent it following the market in real time.

prawn86 unless I'm mistaken you've got a couple of years on me - I've found most people help if you're persistent enough.

wayneL posted this long ago,



> The Four Stages Of Learning:
> 1/ Unconscious Incompetent
> 2/ Conscious Incompetent
> 3/ Conscious Competent
> 4/ Unconscious Competent




Worth a thought, it helped me alot.

I've said this before, but the best information is the hardest to 'find'...this ends up working in your favour once you find what you were looking for


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## Junior (4 March 2008)

Santob said:


> I'm sorry i couldn't resist, and completey off topic..
> 
> *thats what she said*
> 
> Sorry I've been watching the US version of The Office...




Nice one!  I've been watching that show non stop for the past 3 weeks.... big tuna!


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## prawn_86 (4 March 2008)

julius said:


> prawn86 unless I'm mistaken you've got a couple of years on me - I've found most people help if you're persistent enough.




I think the hardest part is finding like minded people, or those with the same interest at our age.

I know most people in my degree dont really care about the markets, and finding 'older' people generally requires you to be in the industry.

Hence why this forum is so good. It allows like minded people to voice their ideas/opinions. 

However finding a mentor has proven to be more difficult for me...


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## tech/a (4 March 2008)

julius said:


> I've said this before, but the best information is the hardest to 'find'...this ends up working in your favour once you find what you were looking for




I've said this before, but the best information is the hardest to RECOGNISE.

More to the point I think.
Most gloss over the MOST important aspects of trading.

If all those COMMON things discussed in countless threads had major impact in trading profits then 95% would be successful.

Things like

Its not the analysis which makes the profit.
Understanding RISK.
Its NOT about the entry.
Radges --prove disprove prove disprove.
Radges--its not the getting it wrong thats the problem its STAYING wrong.
Radges ---its not about being right.
Tech/a--To be one of the 5% you need to do things differently to the 95%


That are all glossed over as not important.


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## nioka (4 March 2008)

tech/a said:


> I've said this before, but the best information is the hardest to RECOGNISE.
> Tech/a--To be one of the 5% you need to do things differently to the 95%
> .



Hard to recognise. How true how very true.
I find there is nothing wrong with being in the top few % of the 95%. That is all I aim for, there is less need to take so much risk. you just do things a little differently to the top 5 and the bottom 90.


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## MichaelD (4 March 2008)

tech/a said:


> Radges--its not the getting it wrong thats the problem its STAYING wrong.




My new favourite market cliche - so true, especially in this market. It says much in few words.


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## Trembling Hand (4 March 2008)

tech/a said:


> Radges--its not the getting it wrong thats the problem its STAYING wrong.
> Radges ---its not about being right.




That is probably why its so dam hard. Newbies want to be right. Experienced traders want opportunities to be proven wrong or right.


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## IFocus (4 March 2008)

Information?

Just counted the books behind me on my book shelve that I have read purely trading (60) must have had at least 10 from the local library, ring bound folders (15) stuff on my PC 1.5gig 

(no wonder my wife gets cranky)


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## tech/a (4 March 2008)

IFocus said:


> Information?
> 
> Just counted the books behind me on my book shelve that I have read purely trading (60) must have had at least 10 from the local library, ring bound folders (15) stuff on my PC 1.5gig
> 
> (no wonder my wife gets cranky)




Just sent 25 to Trish Radge to sell on her second hand book stall!

I know what you mean--kept 30 more on the library shelf!


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## julius (4 March 2008)

tech, you are right that it takes a while to develop a 'critical eye' for information...at this point you are still unconscious incompetent "you dont know what you don't know"


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## trtkjd1 (4 March 2008)

Some of the best information is the cheapest and the best and cheapest info you will get is right before your eyes on this forum with thousands of people giving their views, their highs and their lows. People with experience and some without. I personally think too many people get greedy and want results straight away. Just do you research be patient and don't get carried away.


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## Rainmaker2000 (4 March 2008)

Agree with those above, specially advocating the knowledge route.....

You want income, you need to get to the basics.....buying stock is about buying part of a living, breathing business....you need to be just happy with the income that business is generating for you...that is EPS and DPS.......and that's it....how to buy a good business for a good price? That's what its about.

The great one's like Buffet, Graham could not care less whether the actual stock market exists because they are business owners...

The rest of it like buying and selling for capital gain....and derivatives like Options, CFDs........this stuff all is derived from the underlying business.....these things are for people in a hurry and it sounds like you are in a hurry

Right now is the worst stock market time since maybe 1987 for people in a hurry....leverage is getting more and more disadvantageous........fundamental are king


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## freddy2 (4 March 2008)

You can use all the mumbo jumbo you want but in the end if you are going to trade you must have a mathematical advantage plus adequate capital to handle the fluctuations. 

IMO a good book to read is "Fortunes Formula" and the parts about Edward Thorp (who by the way invented blackjack card counting and independently derived the Black/Scholes option formula years before almost anyone else). Then realise you will be competing with these sort of people (IQ > 150 + knowledge/education) when you trade. And that is not to say that being smart is enough as if you have the wrong models (eg Long Term Capital Managment) you will go bust too. Like I said before concentrate at what you are good at (eg electrician, doctor, whatever) and invest whatever income in a low fee index fund. It's probably not what you want to hear and it's not as much "fun" but in the end you will be better off.


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## Bill M (4 March 2008)

trtkjd1, Rainmaker2000 and freddy2 your posts are right on the mark, fully agree with you all. I've seen the lot, from crashes, recessions, bear markets, wars, Asian financial crisis, Mexican Peso Crisis, terrorist attacks and now the sub prime mess. The thing about all these previous crises is that we all pulled through and so did most of the companies. 

People have short memories, remember when Westpac nearly went broke in the early 90's you could have bought them for $3 a piece. Lets not forget QBE at $4.50 straight after the 9/11 attacks. There was AMP and nobody wanted to touch them at $3.80. Then there was Telstra as well (only about 14 Months ago), it was dog, it was going downhill and nobody wanted them for $3.40. In the end all of these companies survived. Long term investing in good quality companies is definitely the way to go. Sharemarkets around the world have been going up and down for centuries but they always pass their previous highs. Look at my signature for my final note, good luck with your investments.


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## nizar (4 March 2008)

tech/a said:


> In conventional trading you need a trend to make a profit in one direction---that which your trading. Not talking options.
> 
> That trend can be 1 bar.




I used to think that markets can head in 3 directions:
1/ Up
2/ Down
3/ Sideways.


It is just recently that I have found that markets ALWAYS trend (up or down).

Its just that sometimes you have to look into smaller timeframes to identify them, and then all of a sudden, what looked like "noise" is actually some very nice trends.

TH.
I like what you said here:


> That is probably why its so dam hard. Newbies want to be right. Experienced traders want opportunities to be proven wrong or right.




And this is worth repeating:
To be one of the 5% you need to do things differently to the 95%


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## robots (4 March 2008)

hello,

concentrate on your income (work), you will make far more money in life time from this, 

you could probably make "$200-$300 profit" a week just by "saving".

thankyou

thankyou


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## wayneL (4 March 2008)

nizar said:


> To be one of the 5% you need to do things differently to the 95%



Does that include writing in big red letters? :


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## tech/a (4 March 2008)

robots said:


> hello,
> 
> concentrate on your income (work), you will make far more money in life time from this,
> 
> ...




Bots.

Its not how much you ferret away or how it is that you come to have surplus to ferret away its what you do with it that will determine your financial success.

But you knew that!


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## Chorlton (4 March 2008)

tech/a said:


> In conventional trading you need a trend to make a profit in one direction---that which your trading. Not talking options.
> 
> That trend can be 1 bar.




Ah...   Depending on the timeframe....   Good Point!!


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## stargazer (4 March 2008)

Hi all

Well i didn't think this would generate so much response great to see and appreciate everyones comments.

It appears that many have been at this point and have progressed with experience and wise decisions.

Yes the MENTOR is i have tried to establish with anyone that was interested but realistically if you are not paying them why would they bother with your constant barrage of questions.
This is why i think people go off on dangerous roads such a seminars and glossed up presentation and are prey because the speakers are good and they are convincing.

Heard one the other day  about buying futures said it was the easiest market to trades and has never been wrong.  Well you do sit up and listen.  He made sense to me.  But talk to a person that is not selling you anything and is truthful by experience and putting his own money in and he/she may have a different version of the futures market.

Well thanks again for all you replies and as they say the Longest Journey starts with the first step.


Cheers
SG


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## Porper (4 March 2008)

trtkjd1 said:


> Some of the best information is the cheapest and the best and cheapest info you will get is right before your eyes on this forum with thousands of people giving their views, their highs and their lows. People with experience and some without. I personally think too many people get greedy and want results straight away. Just do you research be patient and don't get carried away.




Trading or investing is no different to starting any job as an apprentice, yet people (myself included), think they can come in and after a few weeks make continuous profits.

If you start a job as an aircraft fitter they don't let you re-programme the electronic control unit in your first month  Yet we think trading large accounts with borrowed money is a doddle we can do with our eyes closed.

It's no different to any other job/business, time is needed to learn, experience is needed to weed out the mistakes.Dedication is needed so as not to give up in the tough times.

Effort equals reward.


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## motorway (4 March 2008)

> and invest whatever income in a low fee index fund




what index, what market  and what time ?

NASDAQ,,, 2000 ?
Nikkei 1989 ?



> I used to think that markets can head in 3 directions:
> 1/ Up
> 2/ Down
> 3/ Sideways.




They do 

and at the same time




> Ah... Depending on the timeframe




I would say depending on the scale of magnitude..

motorway


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## austek (4 March 2008)

Trembling Hand said:


> The first two important steps a Newbie has to go through in what would have to be the most lucrative game going is,
> 1, realizing that they know nothing about the market and how it really works.
> 2, realizing that the work they need to do to become consistently profitable is immense and a long way off.
> 
> ...




As TH above said you have a couple of years work ahead of you, reading books, scouring forums, searcing the internet for things you do not understand. If nothing comes to mind as far as finding a method that suits  you haven't worked hard enough.

You have to really want it, and while working at it systematically (you have a goal in place don't you?) the type of trading that suits your personality will creep up on you.  It's there waiting for you to grab it, develop it and finess it.  This will take more years than you expect, but once money making confidence creeps in it becomes a joy if it blends in with your life style.

I trade for living, and go fishing every week competatively and make time to keep my wife company (the hardest part).

Don't have to spend squillions, get money bags list of the top 10 trading books in the world and get them 2 at a time from your local library.
Costs $1 per book, then buy the ones that interest you as a reference book,
probably around 1 book in 5, maybe less.

I stopped at just trading shares, but guys like TH I dips my lid to, although we have been trading for the same amount of time he trades everything - futures options and shorts among other things, but I am happy with my lot at this stage.  It's up to you, nobody else, I just saw it as a challenge not as something *hard* to do.  but then again it must be obvious to you that you will be pitted against the best traders in the world.  We all are.


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## IFocus (4 March 2008)

stargazer said:


> Yes the MENTOR is i have tried to establish with anyone that was interested but realistically if you are not paying them why would they bother with your constant barrage of questions.




SG if you do all the work and don't be a time waster you will be surprised how large the crowd will get, follow Nizars posts for example kept asking kept getting hopefully help Often people will hope because it helps them to revisit old ground its a never ending learning experience for as long as you step up to the market you are forever learning never stops


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## tech/a (4 March 2008)

> Yes the MENTOR is i have tried to establish with anyone that was interested but realistically if you are not paying them why would they bother with your constant barrage of questions.




Why?
Because they want to.
If they dont then they wont.
Personally I'm happy to pay for an expert.

*"Who,s smarter those with a degree or those who employs those with degrees?"*


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## weird (4 March 2008)

Why not try something like SPA3,

http://www.sharefinder.com.au/

Looking at the results ( http://www.sharefinder.com.au/deloitte.php ) , sounds alright, for a few grand (includes a charting package and system).

I would consider it if starting from scratch, and over 50K + capital, and have reasonable expectations on ROI.

I believe there may be a monthly subscription, although if trading sufficient capital, and the system works, this hopefully would not be an issue.  

I am not an actual customer so do not know the service in detail, but heard some good reports.

I hope that if there is a monthly subscription, it is mainly paying for the data subscription for the package, and system developments (although if the system is robust you would hope that they are not too regular). 

Anything less than 50K trading capital , I think you may struggle (with brokerage and having a sufficient size portfolio), if trading shares, and not using leverage (which I would avoid at this stage, or evenly completely - my bias).

"You only find out who is swimming naked when the tide goes out." - Warren Buffett


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## stargazer (4 March 2008)

Hi



IFocus said:


> SG if you do all the work and don't be a time waster




I don't consider myself a time waster I try and absorb as much as I can and investigate it.  


cheers
SG


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## ghotib (5 March 2008)

stargazer said:


> ...Yes the MENTOR is i have tried to establish with anyone that was interested but realistically if you are not paying them why would they bother with your constant barrage of questions....



Some non-financial reasons a person might even enjoy a constant barrage of questions:

*  Teaching is one of the best ways to learn. Answering questions forces people to clarify their own ideas, and maybe to recognise gaps or inconsistencies in their knowledge or to think about something in a new way.

*  Gratitude to someone who mentored them; it's usually hard to give back to a mentor, but you can pass on.

*  A chance to talk in depth with someone who's really interested. If you think about it, most people have most of their social interactions and close relationships with people who are not not expert, or even particularly interested, in their field of expertise. Your mentor might be training you up to be someone they can talk shop with.

*  They might just like you; or they might recognise themselves in you; or there might be a gap in their life from losing a partner or a child going overseas or something and mentoring you is a way to fill it. 

*  They might love to argue, and your questions can be good starting points for good arguments - you have to challenge the answers though, which probably means you need to do your own research because you'll have made all their effort worthwhile when you beat them... Oh gee, that's what a mentor will be helping you learn to do 

Mentoring is a personal thing, and there's more to people than money. OTOH, don't take an unpaid mentor for granted; a bit of gratitude goes a long way. 

Cheers,

Ghoti


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## Nick Radge (5 March 2008)

I thought this may be appropriate. I met Brett last year and have a lot of respect for him...


*What Makes an Expert? Three Surprising Research Conclusions*
by Brett Steenbarger
traderfeed.blogspot.com

The goal of every serious trader is to acquire expertise: the ability to succeed across a variety of market conditions over time. A recent study that I reviewed found that such expertise is rare indeed, perhaps as uncommon as 1 in a thousand. The same researchers, however, found that such expertise *does* exist; a small core group of traders persist in their success year after year.

So what makes an expert? How can traders guide their own development and become expert traders?

A research summary from K. Anders Ericsson, a leading researcher in the field, offers three surprising conclusions:

1) "Measures of general basic capacities do not predict success in a domain" - Experts cannot be distinguished by their superior intellects or other cognitive talents. This suggests that, while certain inborn traits and lack of capacities might prevent the development of trading expertise, the presence of particular native talents cannot ensure success.

2) "The superior performance of experts is often very domain specific and transfer outside their narrow area of expertise is surprisingly limited" - Being an expert in one domain does not predict expertise in others; a person can be a highly accomplished trader, but not expert in other areas. Moreover, a person can be an expert scalper or portfolio manager and yet fail at other forms of trading. This is the notion of "niche" that I describe in my book: *the successful trader has found a particular sphere of success* that expresses his or her skills and interests.

3) "Systematic differences between experts and less proficient individuals nearly always reflect attributes acquired by the experts during their lengthy training"- A saying among expertise researchers is that practice does not make perfect; perfect practice makes perfect. *The expert is one who has undergone a structured, deliberate process of training that builds competencies, offers extensive feedback, and draws upon intensive effort over time to internalize knowledge and skills.*

What does this mean for traders? Here are three conclusions of my own:

1) The majority of traders are looking for expertise in all the wrong places. They look for *the* right trading charts, indicators, setups, or systems. They are like beginning golfers who think they'll succeed if they only get the right set of clubs. Because they hope to get "the answer", they expect success in a year or two. The research is unequivocal: expertise develops over a period of many years. *If those years are not structured properly, traders will repeat a single year's experience ten times; they won't acquire ten years of experience.*

2) The vast majority of offerings in trader education are not structured for expertise development. Seminars, books, Web articles and blogs, weekend courses--all can be useful in imparting information. But expertise development is not simply about the accumulation of information; it is about skill development under realistic, challenging conditions. No doctor, athlete, or musician could acquire expertise by attending seminars or reading books alone. The same is true for traders.

3) The reason most traders fail is that they never enter a path of expertise development. It is rare to find training programs of any quality and substance at proprietary trading firms; one finds mentorship at investment banks and some hedge funds, but this is very hit or miss depending upon the commitment of the mentor and his/her skill in imparting skills and structuring a learning process. The independent trader has even fewer resources to generate and sustain an accelerated learning curve. There is much more to acquiring expertise than keeping a journal and trying to follow a simple plan.

So what does a trader need to progress from being a novice toward becoming competent toward exhibiting expertise? A curriculum: a structured process, like physicians undergo, that begins with information and understanding and then progresses steadily through skill development. In my next post on this topic, I'll explore what such a curriculum might look like.


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## theasxgorilla (5 March 2008)

Nick Radge said:


> A recent study that I reviewed found that such expertise is rare indeed, perhaps as uncommon as 1 in a thousand.




Sounds like the whole 5%/95% ratios people have been throwing up are way ambitious...0.1%/99.9% according the Brett S's study.

ASX.G


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## Trembling Hand (5 March 2008)

Here is the study. Its from Taiwan over a 4 to 5 year period tracking all day trading accounts. Very extensive study. 

http://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trade 040330.pdf


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## freddy2 (5 March 2008)

theasxgorilla said:


> Sounds like the whole 5%/95% ratios people have been throwing up are way ambitious...0.1%/99.9% according the Brett S's study.
> 
> ASX.G




And when you take out the traders who were trading with a mathematical disadvantage (IMO almost all traders are) but got "lucky" the figure is more like 1 in 10000.


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## tech/a (5 March 2008)

freddy2 said:


> And when you take out the traders who were trading with a mathematical disadvantage (IMO almost all traders are) but got "lucky" the figure is more like 1 in 10000.




So here at ASF we have 14000 Members of which it is highly likely that only somewhere between 2 and 140 are consistently profitable.


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## Trembling Hand (5 March 2008)

tech/a said:


> So here at ASF we have 14000 Members of which it is highly likely that only somewhere between *2* and 140 are consistently profitable.




Ok who is the other one?


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## nioka (5 March 2008)

tech/a said:


> So here at ASF we have 14000 Members of which it is highly likely that only somewhere between 2 and 140 are consistently profitable.



You would have to take into account how many are ;

1. Just interested
2. Part time investors
3. Full time investors
4. Investors who only sometimes trade
5. Part time traders in a small time way.
6. Traders learning the ropes.
7. Full time traders. Split into 3 groups;

                                a. Successful
                                b. Breaking even but living on savings.
                                c. Gradually going broke.

For the record I class myself as a mixture of 2 and 4. Maybe that is another group.


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## theasxgorilla (5 March 2008)

Trembling Hand said:


> Ok who is the other one?




Now I know you're just trying to stir me up :


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## ShareIt (5 March 2008)

stargazer said:


> Hi all
> 
> Over a period of time i have trying to gather as much info as i can to generate some income from the market.
> 
> ...





Sometimes doing it the hard way is the best way as you learn very fast from your mistakes and are never to make them again in the future. 

Most people who do start out play it the safe path and then somewhere down the track it all goes wrong and they give up... I think the quicker you experience the bad side of trading, the more disciplined you set yourself to become successful. It's one thing to say "I will cut losses short, I will trade my plan, etc" but when your money is on the line, most beginners will never follow it, resulting is losses and then giving up.

I started in the deep end (options, due to the limited risk of buying calls and puts) which was not a good thing in the start... but having done some terrible mistakes and loosing hard earned cash, it has made me a much better trader and have been quite profitable since. Most of my calls are usually wrong these days, but being able to cut my losses quick and catch the big waves is what makes it all worth it.... good luck


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## IFocus (5 March 2008)

Trembling Hand said:


> Ok who is the other one?




Crack me up TH 

BTW I am today, not so sure about tomorrow......


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## IFocus (5 March 2008)

nioka said:


> You would have to take into account how many are ;
> 
> 1. Just interested
> 2. Part time investors
> ...




Nioka I think you are number 8


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## austek (5 March 2008)

Agree with 'Share It'    
I recall reading Dr Ehlder's book where he says the best way to learn is to have as many small trades as you can, to get the experience.   But do not lose all your money in your first year.

Therefore reading up on risk mngmnt to minimise loss, and money mngmnt to restrict position size well within your own risk parameters, has gotta be a big help before placing trades.

Learning to trade by your self, your own way systematically with some degreee of structure, must have something going for it, because you read so often from some of the best traders in the world, who are proud to admit that that is how they started out.


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## IFocus (5 March 2008)

weird said:


> Why not try something like SPA3,
> 
> http://www.sharefinder.com.au/
> 
> ...




Ah yes forgot about Garry Stone have never used the service but know some one that has and she has gone on to be is in the top 1% IMHO, good advice weird where were you in the late 90's when I started out?

BTW I rate Nick Radge the same or better for learning, (no ramp read on) every thing Nick does  is transparent (keeps records) and I believe Garry Stone is the same. Its not important if its real trades or assumed entries and exits its the record to have to do your home work on that counts plus it shows market reality.

The records that some keep are profits only or the last great move they picked out of hundreds......


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## IFocus (5 March 2008)

Nick Radge said:


> I thought this may be appropriate. I met Brett last year and have a lot of respect for him...
> 
> 
> *What Makes an Expert? Three Surprising Research Conclusions*
> ...




Nick I think his two books are a must read for anyone in the market 2nd one below would put most off as Brett talks about what it takes


http://books.google.com.au/books?id...arger&sig=1EdrqmQtGif38ACWN-UyK8a9LqU#PPP1,M1

http://books.google.com.au/books?id=GC5UAAAACAAJ&dq=inauthor:Brett+inauthor:N+inauthor:Steenbarger


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## nioka (5 March 2008)

IFocus said:


> Nioka I think you are number 8




Not the only one. I know they say it is hard to teach old dogs new tricks but I say if it aint broke don't fix it and it is working OK for me. But then, as I have said before, I'm not trying to be the richest man in the cemetary all I do is try and afford the way of life I desire without too much risk.
 Can we have 8 as ".Part time investor who sometimes trade but prefers property as a better source of reliable income."


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## IFocus (5 March 2008)

nioka said:


> Not the only one. I know they say it is hard to teach old dogs new tricks but I say if it aint broke don't fix it and it is working OK for me. But then, as I have said before, I'm not trying to be the richest man in the cemetary all I do is try and afford the way of life I desire without too much risk.
> Can we have 8 as ".Part time investor who sometimes trade but prefers property as a better source of reliable income."




Oh god don't start talking property here LOL


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## Trembling Hand (5 March 2008)

IFocus said:


> Nick I think his two books are a must read for anyone in the market 2nd one below would put most off as Brett talks about what it takes




Yep huge fan of his second book. Probably the most helpful book I have ever read. and good news for Dr S fans from his latest blog post,

"I also had an excellent meeting with my editor at Wiley, and it looks as though we have a very early January, 2009 publication date for my new book. "

Only 300 odd more sleeps.


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## austek (5 March 2008)

Trembling Hand said:


> Yep huge fan of his second book. Probably the most helpful book I have ever read. and good news for Dr S fans from his latest blog post,
> 
> "I also had an excellent meeting with my editor at Wiley, and it looks as though we have a very early January, 2009 publication date for my new book. "
> 
> Only 300 odd more sleeps.




TH would you mind giving me the name of his second book?


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## Trembling Hand (5 March 2008)

austek said:


> TH would you mind giving me the name of his second book?




Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading) Brett N. Steenbarger​
What I like so much about this book is its not a how to trade book, but rather a how to learn how to trade.


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## freddy2 (5 March 2008)

For the OP if you want to improve your understanding of investing I would start with reading introductory texts on:
1) Statistics/Probability
2) Micro-economics
3) Accounting
4) Finance
5) Books by or about Munger, Buffett, Thorp, Lynch

Stay well clear of
1) Technical analysis
2) Modern Portfolio theory


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## Trembling Hand (5 March 2008)

freddy2 said:


> Stay well clear of
> 1) Technical analysis
> 2) Modern Portfolio theory




Yeah! no one has ever succeeded with tech/a


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## freddy2 (5 March 2008)

Trembling Hand said:


> Yeah! no one has ever succeed with tech/a




Pretty much true unless you mean in the sense of "No one ever succeeded with playing lotto". Of course some people will be successful through luck, but overall both technical analysis after transaction costs and lotto are losing propositions.


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## prawn_86 (5 March 2008)

freddy2 said:


> Pretty much true unless you mean in the sense of "No one ever succeeded with playing lotto". Of course some people will be successful through luck, but overall both technical analysis after transaction costs and lotto are losing propositions.




I think you will find this way off the mark Freddy.

However, there are plenty of TA versus FA threads, so as to not derail this one, if anyone wishes to take the arguement up further i suggest the do so in an appropriate thread.

thanks guys 

Prawn


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## jman2007 (5 March 2008)

theasxgorilla said:


> Start with the end in mind.  What do you want?  What are you capable of? Is what you want realistic?  The markets are a means to an end. ASX.G




A couple of good points raised here,

Obviously you need to decide what type of investor you are, as has already been touched on by numerous posters. I guess never investing more than you can afford to lose goes without saying as well.

Stargazer, if you've just recently jumped aboard the market in the past 5-6 months, you've come onboard at a very difficult time.  I'll be the first to admit that I was swept up in the hype during the uranium boom early last year, and subsequently like a lot of people lost my shirt in a few companies while trading on emotion and unrealistic expectations. Not huge dollars mind you, but enough to teach me a short, sharp lesson.

The marketplace these days is a very different place from that of 12-18 months ago, where almost any Joe could seemingly strike it rich.  Gone are the days of pipe-puffing and beard-stroking certainty that the All Ords would easily push through 7000 by the end of 07. At the oppposite end of the spectrum, probably these same people went through shock, denial and then despair and declared in a chorus that the world was indeed coming to an end on "Black Tuesday" a few weeks ago.

Imo, the balance is definitely in the middle somewhere, what we all thought was the tamed beast that we were happy to ride last year, has suddenly turned into a cornered beast, unsure of where to go, and capable of delivering a vicious kick to the unwary. It is still possible to make some good investment decsions at the moment, but you need to be very clear on what it is company XYZ is doing, how they are/intending making money and what their financial capabilities are.  If you pull up short here, then exercise extreme caution.

Perhaps you're just not being patient enough, I'm sitting on losses at the moment in several companies, but am happy to hold as I'm quite happy in the fundamentals.  Look at the boom in gold prices in the early 80's, the real wealth wasn't generated then, but in the subsequent 6-7 years that followed.

Just my 
Best of luck
jman


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## ShareIt (5 March 2008)

freddy2 said:


> Pretty much true unless you mean in the sense of "No one ever succeeded with playing lotto". Of course some people will be successful through luck, but overall both technical analysis after transaction costs and lotto are losing propositions.




Totally disagree with you.... I base most of my trades on T/A supported with some FA and it has definately worked.... T/A is a good way to determine market sentiment and because so many traders use T/A, price movements will sometimes go against what the fundamentals are telling us.... perfect example is oil... demand is slowing / we have increasing supply, yet prices are rising... which I believe has a lot to do with what the technicals are telling us, a break and close above $100.

If you are looking to invest, then that's a different story... FA would be more appropriate.


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## Rastan (1 April 2008)

FWIW I thought I would put my 2c in. I am very much a newbie to investing - I caught the bug when I came into contact with energy traders as I am a software developer and worked for 2 years with them on a trading and risk management solution.

Many things attracted me to trading and I am not under any illusions that its going to be an overnight process. I have been sick and tired of the IT industry for a few years now (have been doing it for 10 or so) and finance/trading looks like something that would suit my personality and background. The first step of my plan is to get a Masters of Business (Applied Finance) (I am in the middle of my first semester right now).

Now I know this isn't _required_ and certainly isn't for everyone but I have a number of reasons to do it.

1. A year off doing 9-5 in the cubicle soul crusher, plus I love learning new things.
2. I get more experience that i can use in a new industry either with or without my existing quals.
3. If I'm going to do this thing, I have to focus on it 100%, be blinkered.

Now like I said its not the path for eneryone but its the one for me. I simply couldn't work fulltime in one industry and have enough time to make a succesful trader. I have 2 properties and am selling one and will free up ~ 80K. Of that I plan to use -
40K for living expenses for one year to learn.
20K invest in long term stock (which is a bargain right now).
2x10K trading accounts to learn with (different risk profiles) - when im ready - they can go in safe shares/high int accs till then.

Its been a very big decision and I haven't taken it lightly (I'm 32). I plan to go to London for at least 1-2 years on completion of the Masters and work for an Investment company. I will earn and learn (and hang glide all through Europe) for the next 3 - 5 years. Hopefully I will build up a reasonable trading account in 5 years. I will diversify my total investments across other areas such as property and maybe business.

Hopefully, at the end of it, I either learn to trade (fulltime) or if not maybe buy a profitable (something returning 200K a year, cost about 1.2M right now at a guess) business on the north coast. If things go well, I can get to 5+ MIL in 10-15 years and look at changing my strategy. You have to set goals i suppose and they may as well be lofty, so long as your willing to admit to the work they require and be determined.

So for now I am staying in the boring job so it can fill the coffers and doing my best to complete my 2 uni subjs (and reading investment books). But in 3 months time I will be studying and learning fulltime and probably picking the wealth of brains that so wonderfully put their time into this great forum. I look forward to it.

On another quick note, I considered getting a 100K capital protected loan for the 5 year Emerging Markets (EM US) fund (since before making the big move this will be my last chance to organise big loans etc), but i think since it is mostly based on a NYSE Index (ETF) - I would rather wait out the next one year and see what happens to big ol uncle sam.

Thanks for your time and I look forward to learning with you all.


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## treefrog (25 April 2008)

stargazer said:


> Hi all
> 
> Over a period of time i have trying to gather as much info as i can to generate some income from the market.
> 
> ...




perhaps it is hard because we don't accept *understanding* it really is simple - liked this simple but true explanation.

Stock Market Stages
Stage Analysis on a Stock Chart
To trade stocks successfully, you must first understand the four stock market stages that individual stocks and the overall market go through.

These cycles tell you if you should be long, short or in cash.

Once you are able to identify what stage it is in, you can then trade accordingly to those characteristics.

After a while you won’t even have to think about whether you should be long or short. You will know, without question, exactly what you should be doing NOW. You will either be focusing on long positions, short positions, or you will stay safely in cash - just by glancing at a chart!

Here are the four stages that stocks go through. This happens in all time frames whether it is a monthly chart, weekly chart, daily chart, or an intraday chart.



Ok, so I’m not the best artist in the world but I think it will serve our purpose here! What? You thought it would be more complicated that? My philosophy on the stock market is that if it is too complicated then it is just not worth doing. Now, we’ll look at the characteristics of the four stock market stages. I promise it will be painless!

Stage One
Stage 1 is the stage right after a prolonged downtrend. This stock has been going down but now it is starting to trade sideways forming a base. The sellers who once had the upper hand are now beginning to lose their power because of the buyers starting to get more aggressive. The stock just drifts sideways without a clear trend. Everyone hates this stock!

Stage Two
Finally stocks break out into Stage 2 and begins the uptrend. Oh, the glory of stage 2!! Sometimes I have dreams of stocks in Stage 2! This is where the majority of the money is made in the stock market. But here is the funny thing: No one believes the rally! That’s right, everyone still hates the stock. The fundamentals are bad, the outlook is negative, etc. But professional traders know better. They are accumulating shares and getting ready to dump it off to those getting in late. This sets up stage 3.

Stage Three
Finally, after the glorious advance of stage 2, the stock begins to trade sideways again and starts to "churn". Novice traders are just now getting in! This stage is very similar to stage 1. Buyers and sellers move into equilibrium again and the stock just drifts along. It is now ready to begin the next stage.

Stage Four
This is the dreaded downtrend for those that are long this stock. But, you know what the funny thing is? You guessed it. Nobody believes the downtrend! The fundamentals are probably still very good and everyone still loves this stock. They think the downtrend is just a “correction”. Wrong! They hold and hold and hold, hoping it will reverse back up again. They probably bought at the end of Stage 2 or during Stage 3. Sorry, you lose. Checkmate!

Here is an example:



Stock market stages occur in all time frames on every chart you look at. This could be a five minute chart of Microsoft or a weekly chart of the Dow.

Generally, you want to stay in cash when a stock (or the market itself) is chopping around in a stage one. In stage two you will want to be aggressively focusing on long positions. In stage three you want to be in cash. In stage four you want to be aggressively focusing on short positions.

That’s all there is to it. I told you that trading with stock market stages would be painless!


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## tech/a (26 April 2008)

Treefrog.
Basic but good Weinstein stuff.

The real key is learning what makes individual stocks and markets move.
Understand this and profit abounds.
From the consolidation below on this chart over 100% return on investment was easy pickings---can you see why?
This chart --- each bar is telling a very strong story.

Its at an interesting point right now---can you see what its saying?
If you really know what makes the money in trading "Choppy" markets--- (as you call them)--- are a god send.


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