Newbie with a bunch of Questions

[DionM]

Hi all,

Hoping some of you might be able to help me.

Background: 29yo married with family, engineer. In other words, conservative as all get out Have dabbled in the stockmarket and have a small portfolio, all funded out of our own pocket (no loans). Have the tried and true like Coles, CBA, Telstra1/2/3 etc. Lately took a punt on a couple of interesting stocks (eg AMP China Growth Fund) and dabbled with some of the bigger Uranium stocks (eg PDN, though I bought only yesterday). Also totally mistimed buying BHP Billiton some time ago and bought at 29.90 Who said you can't go wrong with bluechips no matter when you buy

Anyway, I'm looking to start playing the game a bit more and move away from blue chips, and also looking at a margin loan eventually to get some leverage. More Uranium and Gold stocks maybe, plus Biotech and Energy.

I have two aims - for some I am investing for the long term - eg CBA - maybe 20yrs. Will only sell when it comes to big life events - helping my children buy a house, etc. However I'd also like to realise some short term profit as well - not necessarily day trading, but buying and selling within the 1 year.

So I'm after a few recommendations.

Books - what should I read to learn about how to 'read' share charts? I mean I know the basics, but how to read trends etc I guess. And I guess what sort of size share parcels to buy, at present I buy based on price and $1500 total seems to be my sweet spot / confidence level. (Except BHP where I bought 200 shares at $29.90ea )

Brokers - who is a good one? Initially I would continue with our own funds, spending between $1k and $2k on various companies. I currently trade with Sanford.

Stock info - Lack of information frustrates me, I hammered the heck out of the asx site with delayed prices and charts the other day. I'm thinking of paying $9.95 / mo for Sanfords premium package to get live charts, etc, but I wonder if I can get the same level of info for free elsewhere? Charts with price and volume (I know I need at least those), watch screens, market reports, news etc are the kind of thing I'm looking for, I guess.

Software - Is there anything good for analysis, or are the tools provided on some brokers' sites pretty good? I get daily emails from Sanford with closing prices (in insight trader format, which I don't have but I've learnt the format of the file and browse it with notepad).

 

[julles]

Ok firstly books for Charting and this ones good for trends, moving averages etc.

Secrets for Profiting in Bull and Bear Markets
by Stan Weinstein

Charting packages
http://www.incrediblecharts.com.au/ Free for one month, delayed Data 12 hours I think.
$18.00 per month hourly updates, very good value with stock screening ability.

www.bigcharts.com (you still have to refresh the chart) Just place au:bhp to get the chart and quote.

Sanford Pro $79.95 a month for dynamic data if you trade intra day Free if you make a number of trades per month. I can't recall how many sorry I don't pay for it. Up to the minute charts

The $9.95 would probably suit you as you'll be eod trading?

Anyway I use IC charts for the overall big picture and Sanford 1 min and 5 min charts (the sanford pro package) intra day.

Good luck with it.

 

[Realist]

I'm looking to start playing the game a bit more and move away from blue chips, and also looking at a margin loan eventually to get some leverage

To me this sounds like a suicide mission.

A newbie, borrowing alot of money to speculate.

Leverage works both ways, and because you are paying interest and you may get a margin call it can kill you if it works against you.

Don't do it!

 

[DionM]

julles - thanks for the book recommendation. Will look into it. Will also look at those chart packages.

realist - I guess the margin thing is if/when I get confidence, and was more to give an indication of the direction I will head in if I get comfortable. That could be anything from 6 to 24 months away, certainly I'm not going to dive in tomorrow. I am a very conservative person so of course I will only take that course when I am confident I can avoid a margin call; until then it will be funded out of our own pocket.

 

[CanOz]

To me this sounds like a suicide mission.

A newbie, borrowing alot of money to speculate.

Leverage works both ways, and because you are paying interest and you may get a margin call it can kill you if it works against you.

Don't do it!

Given the fact we are in a three wave corrective move at the moment, i think it would be a good time for you to paper trade for a few months. Take this time to formulate a plan on how you intend to trade/buy and hold. Watch your capitol and what happens to it, as your learn and study, and analyse. Try very hard to be as thorough as you would be if it was real money. You'll need to spend allot of time, about 5 hours per day or more, especially when your learning, if your really serious.

If you worry about missing an opportunity, don't worry there will be plenty once you learn to preserve your capital.

Keep in mind that most who are profiting from short term moves are probably swing trading long and short right now. If you can't short the market then your not going to make much money. If your a buy and hold guy, then even Realist would tell you that there would be bargains to be found later if your patient and stand aside while the market corrects.

I jumped in last May, had no idea what i was doing, but i had money i was willing to lose. Thankfully the bull market resumed its trend, and even a fool could have made money. Thankfully i found this site too.

Good luck, and remember there are no stupid questions questions for newbie's.

Cheers,

 

[SevenFX]

Hi Dion & Welcome to ASF.

Whilst you are seeking out the tools that will aid you on your journey, the most important aspect, that I now beleive should come first is the trading or investing psychology.

The tools, charts & fundermentals will be much easier to absorb than the psychology & mindset. IMO

Cheers
SevenFX

 

[nizar]

DionM - Nice, i wish my parents would help me buy a house! LOL
Also, dont even think about leverage.
It will destroy you.

Be prepared to lose money.
Trading stocks is probably not the hardest way to make monet but its certainly the easiest way to lose it.

I would recommend 3 books to read:
1) Stan Weinstein - Secrets for profiting in bull and bearmarkets
2) Van Tharp - Trade your way to financial freedom
3) Alexander Elder - Trading for a living

After you have learnt about risk management and money management (books 2 and 3 cover this briefly), you can paper trade, or if you are confident, and have a trading plan, you can go straight in.

And Can - as for this being a corrective move, wave 3 or watever, thats just your view - and like any other view you could be wrong (just making an objective point, though i must add that i do share this view).

 

[DionM]

Thanks for the extra feedback!

I'm browsing the bookstore at present and will place an order today I think. I certainly want to understand both the tech and the psych, for sure. I guess I am keen to learn about charts after my very badly managed BHP purchase right on their peak; I should have done my research rather than just hope the price would continue up (it didn't, and has remained below for some time). I sort of assumed that blue chip meant fail-safe - lesson learnt and thankfully it's only $500 or so that I am currently running behind, and no doubt it will regain that over the next few years anyway.

I am definately holding off on the margin loan, don't worry . While it is my own money to loose I am (a) more cautious and (b) less gung ho. Lately we've been buying around $2k parcels of shares once every 3-4 mths (the latest being PDN, like I said), our philosophy has been that our 'spare cash' (after paying home loans etc) gets divided equally between additional loan repayments and investments.

The recent purchase of PDN has missed the big increases, but I will be happy with a steady increase over the next few years.

 

[coyotte]

Given the fact we are in a three wave corrective move at the moment,

Cheers,

That's only one school of analysis --- other schools may differ.



Cheers

 

[CanOz]

That's only one school of analysis --- other schools may differ.



Cheers

yeah yeah ok, fair enough. Perhaps i should have said "Given these uncertain times"

Cheers,

 

[AnalysisParalysis]

If you want a free charting package, go to spacejock.com, and get FCharts SE.

Free software, free eod data.

 

[Gar]

Hey Dion,

Im pretty new to this myself so im sure most of the guys here can provide some better suggestions than me but I'll share some of the things that have helped me as a newbie

Books - what should I read to learn about how to 'read' share charts? I mean I know the basics, but how to read trends etc I guess. And I guess what sort of size share parcels to buy, at present I buy based on price and $1500 total seems to be my sweet spot / confidence level. (Except BHP where I bought 200 shares at $29.90ea )

Two books that I found essential are:

Charting Secrets - Louise Bedford
This book runs through all the basics of technical analysis like indicators, chart patterns, trends and support and resistance, candlesticks etc. all in an interactive way. Its much easier to learn something if you have to practice it as you go and this book provides that.

Trading for a Living - Alex Elder
Im sure everyone agrees that this book is an essential, it covers the psychology of traders and the market as a group, I have the audio version and find its great for a reality check every now and then.

Brokers - who is a good one? Initially I would continue with our own funds, spending between $1k and $2k on various companies. I currently trade with Sanford.

I use eTrade but its frequently down these days

Software - Is there anything good for analysis, or are the tools provided on some brokers' sites pretty good? I get daily emails from Sanford with closing prices (in insight trader format, which I don't have but I've learnt the format of the file and browse it with notepad).

Best value for money charting software is Incredible Charts in my oppinion, it has millions of indicators and a nice clean interface to work from. The demo version alows you to use it for 30 days with a 16hr delay, after the 30 days it puts ads over the interface but its only $18 a month for the full version which has a 1hr delay.

Another program I used for learning was the demo version of Pro Trader, it has a mode called tuition mode or something that hides all the data after a specified date and allows you to tick through day by day, its great for testing yourself at recognising patterns and reversals.

The most important thing you should learn before all this though is designing a trading plan and sticking to it, work out how much your willing to risk and set your stops accordingly

Best of luck mate, Gar

 

[SevenFX]

Best value for money charting software is Incredible Charts in my oppinion, it has millions of indicators and a nice clean interface to work from.

Incredible Charts is a good program, but seems to be falling behind the times with client needs (Fib retracement, Gann retracemtns & Indicators, Multiple Windows within program, Live and/or 20min data delays), for some years now....Recently released V5 provided little improvements...UNFORTUNATELY

However they do support the existing product reasonably well.. I admit.

I also recently strarted using Amibroker, and was blown away by the bells n whistles, and much the same price....but seem to provide no tel support.

 

[Boyou]

Hi
Wasn't sure where to post this question, but this is definitely a newbie query...so here goes. Have just bought a small parcel of TAM. Looking at the current price on ASX I note a volume of 2,596,396, but no movement in the share price of 13.5c.
Is this unusual? From what I have seen regarding other stocks this type of volume has been moving the price at least a small amount. Any comments?

So much to learn!

Cheers, Peter

 

[tech/a]

There are buyers on oneside of the auction and sellers the other.

Where transactions take place with little price movement sellers are absorbing buyers. Sellers are not chasing lower prices and buyers are not chasing higher prices.
Market is 13.5c so both buyers and sellers are transacting business "At Market".

 

[Boyou]

Thanks Tech...all so obvious when you explain it that way

 

[Antics]

If you want to learn to invest rather than trade then you can't go past the following resources:

1) "The Intelligent Investor" by Benjamin Graham.

This book is reasonably dense, but it is written by the godfather of securities analysis, and it is more than worth its weight in gold.

2) "One up on Wall Street" by Peter Lynch

Lynch gives some insight into how he achieved over 25% a year in annual returns while managing huge amounts of money.

3) www.berkshirehathaway.com - this contains every one of Warren Buffett's letters to shareholders from the 70's till today. They are a very enjoyable read and outline his investment process in great detail. Every one of them is worth reading.

There are definitely other books out there, but I would start with these three and progress from there.

 

[Boyou]

Antics, your recommendations for reading are noted... Thanks. At the mo I am definitely only an Investor...the trading thing scares the pants off me, to be truthful.

I had been toying with the idea of doing something more with my Lazy money in term deposit, then a friend of a friend spruked loudly about HYO and I took a peep at the market. Long story short..in for a dip with $1000.00. Small potatoes, but I figure if you have money riding on something you are bound to take more interest in it.

Since then I have bought into MON and TAM and Gold shares. My "Portfolio" sits at 10,200.00. So far I am down about $200.00 including Brokerage fees (with E Trade).

I plan to sit on them for long time ..after all, as I have realised you haven't gained or lost anything till you cash in.


Cheers ,Y'all

 

[nizar]

I plan to sit on them for long time ..after all, as I have realised you haven't gained or lost anything till you cash in.

You have alot to learn, my friend.
That attitude will cause you to hold dogs for longer than you should.
Learn to cut your losses short, and let your winners run.
All the best with your trading/investing.

 

[Boyou]

Nizar, so right ..I do have a lot to learn.BUT ..maybe I will have some fun along the way.I think it's already started! The posts in here are great fodder for the mind.

Thanks for your thoughts,

Cheers Y'all