Am I suited to investing?

[Tysonboss1]

For the record this was what I was commenting on:



Maybe think a little about what you say if you don't want to be criticised in the future

The dictionary defines a "mugs game" as a futile or unprofitable venture.

In my opinion, over time (long term) any form of capital management that relies on regular share trading will become a "futile and unprofitable venture" so yes it is a mugs game.

But just as with poker and horse racing there are a few with such a knack for it they can turn a profit, but most traders will not generate long term returns higher than the average investor no matter how many hours the spend looking at charts, and transaction fees will probally mean their returns will be lower than the average investor who just invested in a basket of average companies and never traded.

 

[professor_frink]

The dictionary defines a "mugs game" as a futile or unprofitable venture.

In my opinion, over time (long term) any form of capital management that relies on regular share trading will become a "futile and unprofitable venture" so yes it is a mugs game.

But just as with poker and horse racing there are a few with such a knack for it they can turn a profit, but most traders will not generate long term returns higher than the average investor no matter how many hours the spend looking at charts, and transaction fees will probally mean their returns will be lower than the average investor who just invested in a basket of average companies and never traded.

To be perfectly honest tyson, I'm not overly interested in debating the validity of trading with a random walker! It's been done before and never ends well

Sorry, I withdraw my comments about you trolling earlier, I didn't know where you were coming from until now.

Cheers

 

[Tysonboss1]

Aren't investors just long term traders who are too proud to use a stop loss

How can you be a trader if you are not trading anything.

If your sole focus is on selling at a future date for a higher price then yes you could be right.

But If for example I find a business and after doing some analisis I find that it earns about $100K a year, if I buy it for $1M because I am happy with a 10% return and hold the asset with the mindset of collecting the $100K profit each year or reinvesting the profit to grow earnings I am involved in investing. The current market value of the business is less important to me once I have bought it than the earnings.

however, if I buy it for $1M with the sole intention of flipping to another trader the next day or week for a higher price then I am a trader.

 

[AzzaB80]

Sure its an unprofitable venture for those who can't.

But wow you gotta feel sorry for all those US 'investors'. 10 years later and still underwater. That's what I call a mugs game

 

[Tysonboss1]

Sure its an unprofitable venture for those who can't.

But wow you gotta feel sorry for all those US 'investors'. 10 years later and still underwater. That's what I call a mugs game

which investors?

 

[AzzaB80]

which investors?

If you invested in the S&P 500 10 years ago you would still be underwater.

My point is investing in a secular bear market is my idea of a mugs game.

 

[Tysonboss1]

If you invested in the S&P 500 10 years ago you would still be underwater.

My point is investing in a secular bear market is my idea of a mugs game.

I guess if you invested your entire capital base right at the peak of the market and made no further investments and there was no such thing as dividends then yes you would still be under water.

But that wouldn't be the case for many people.

 

[AzzaB80]

I guess if you invested your entire capital base right at the peak of the market and made no further investments and there was no such thing as dividends then yes you would still be under water.

But that wouldn't be the case for many people.

Nup wouldn't even had to invest at the peak. Have look at a 20 year monthly S&P500 chart. I think the majority would have lost money actually.

To make matters worse the quality stocks didn't really take part in the rally off last years lows.

 

[So_Cynical]

Am I suited to investing?

My skills:
- good saver (I save on average $200 a week into an account that does not get touched)
- willing to learn and a quick learner
- humble
- asks good questions
- makes decisions quickly but also can modify them if new information is available

My weaknesses:
- is somewhat hesitant to 'pull the trigger'
- sometimes makes an analysis of the situation too quickly

I'd like some of your thoughts on whether it's possible for me to be a good trader. By good I mean consistently generate at least $5000 net a week. I would like to position trade or intraday trade the options or futures markets.

Share your ?

Hello greasy

As an investor that can see most of your listed skills and weaknesses in myself, i can see how those quality's in myself have worked well for me so perhaps they can work for you too...interesting in that your 2 weakness i immediately saw as strengths in myself.

Throwing 10s of thousands of dollars into the stock market is a great way to get an education of yourself...of course assuming one has the ability and objectivity to analyse there mistakes and make the necessary adjustments.

At your age that's probably not possible, just as your 5K a week goal is probably not possible...for myself to make 5K a week on average, doing what i do now just with bigger numbers, i would need at-least a million to play with i would be playing on white sand beach in Boracay...not the ASX.

Good luck.

 

[CanOz]

Greasy cakes,

In my view its pretty simple. If you can take losses emotionally, and your account can withstand enough losses, and you learn to let your winners run and snip your losses....its just math. I don't care how you get in, random is fine as long as your win% is over 40% and you winning trades generate more profit than your losing trades generate losses. This had to be beaten into my head from those on the forum and 'elsewhere'.

It works, even in the toughest of markets. Remember its not about being 'right', its about living to play another day. Trading capital has allot to do with this if you want to make a living from it. Again, its math. Risk 1% of capital or less on every trade and you've got a fighting chance to stay in the game.

Work out the math on that and decide if you have the account to stomach the losses.

You don't even need to decide which trades to take, there are hundreds of subscriptions for this.

Cheers,


CanOz

 

[brty]

CanOz,

You are saying that money management alone is an edge in your post. Is that what you really meant to say??

brty

 

[CanOz]

CanOz,

You are saying that money management alone is an edge in your post. Is that what you really meant to say??

brty

No, i pay for the edge. Money management makes the edge pay.

CanOz

 

[awg]

Hi OP,

You have asked whether you are suited to investing, but your post indicates trading for a living is your prefered mode.

You indicate you have symptons similar to bipolar disorder.

I would suggest that you have a close look at DSM-IV or similar internet
anaysis of BP symptons,( if you already havent) and you will probably realise that Trading would be hugely risky.

This would resonate with some things you have said, such as inability to concentrate and persevere, mood swings etc.

However, by far the biggest risk occurs if the noted symptom of "grandiosity" manifests itself.

The textbooks are littered with examples of persons who have blown there finances under these conditions.

It is more common than people realise, and behind the headlines lurks BP in many cases.

If you were to take a longer term investment approach, that may be better suited to your temperament.

I cannot see any obstacles to investing, and believe the structure and discipline is a good thing

These are generalised comments of course, everyone is different.

I am not saying it is impossible to trade, and think many such individuals are attracted to this occupation, however, there is a profound extra element of risk that cannot be ignored

Rene Rivkin was a bipolar sufferer, and a debatedly succesful trader, but things didnt end well there

.

 

[moXJO]

Paper trade while you build up an account to trade with. Worse thing to do is jump in with no experience and lose real money. I would suggest no money trades till you have a system that is profitable on paper.

 

[gav]

Hi OP,I am not saying it is impossible to trade, and think many such individuals are attracted to this occupation, however, there is a profound extra element of risk that cannot be ignored

Hi awp, can you please explain what you mean by this?

 

[brty]

Canoz,

i pay for the edge

Can you explain this please?? Do you mean you buy some subscription service and have success with their choices?? If so, how long have you been doing it for??

brty

 

[CanOz]

Canoz,



Can you explain this please?? Do you mean you buy some subscription service and have success with their choices?? If so, how long have you been doing it for??

brty

That's exactly what i mean, and yes i have success with their choices. They are trade setups. They have an entry, and initial stop loss, as well as a target price.

I've been doing this for two full years after two full years of less than mediocre trading.

There are many services like this, google 'stock picks' or 'trade setups' and you'll find oodles.

Pattern traders use these as the edge, there's no secret in picking patterns. In fact the two services i use quite frequently pick the same patterns. Some offer better risk to reward potential than others.

Whether or not you can make the edge pay is in your trade management skills. If the service also provides these you get the benefit of their skills too.

Heres and example of one such service that i do not currently use, but i have heard good things about.

Cheers,


CanOz

 

[awg]

Hi guys and girls,

I'm 21 and my doctors have finally decided that I have bipolar disorder.

Share your ?

Hi awp, can you please explain what you mean by this?

Hi Gav,

In answer to yr question

The poster has stated they have a diagnosis of Bipolar disorder, even though they dont neccesarily agree

The profound extra element of risk is that if they suffer a manic phase, then grandiosity may arise.

This term is associated with individuals losing touch with reality, and very often wrecking their finances in far-fetched flights of fancy.

Very hard to predict.

Extra-Special precautions should be put in place. ( for a trader)

Self-monitoring is not entirely sufficient imo

The OP mentions making a largish amount per week, which would imply a reasonable capital base, or unrealistic expectations in terms of the learning curve and capital to be a trader.

Even if they had an insufficient amount, say <50k, it would be a shame to see it diminuished, especially if leveraged products were used.

The stories of mania-induced grandiosity can be very amusing, but distressing allround...btw, also accounts for individuals believing they have Messiah-like powers, and many other things as well

Having said that, I am only cautioning a young individual to be very careful, as I am sure there are individuals who have bipolar both diagnosed or not, who trade succesfully

 

[gav]

Cheers awg.

 

[nioka]

My point is investing in a secular bear market is my idea of a mugs game.

Is there such a thing as a non secular bear market and if so is it different to an ordinary bear market.

I must be a mug regardless of the difference because I always look for an opportunity to get in when others are getting out. If the fundamentals question the reason why there is selling then I'm happy to get in.