Hi All - about to dive in

[Rider]

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]

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

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.

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.

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.

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]

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]

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

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]

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]

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]

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]

#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]

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]

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]

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]

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]

Where is the easier money to be made?

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

 

[Gringotts Bank]

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]

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]

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]

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]

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]

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]

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