Beginner's Trading Blog

[kid hustlr]

Introduction:

Hi All,

I've been a member of this forum for the best part of a year. I've learned a great deal by reading through a number of the beginner threads as well as a number of others. I’ve decided to have a proper go at trading as it’s something I’m really interested in and I feel it would suit me well. I’ve read several books including Murphy’s ‘Technical Analysis of the Financial Markets’ and Lefevre’s book about bucket shops and his trading journey. Both were very interesting.

Whilst I’ve learnt a huge amount over the past 12 months (about investing/trading/life etc) it’s still obvious I have a great deal to learn before putting any money on the table and as such I’m going to paper trade for a period of time to let me develop my skills and see if this is something I’m any good at. I have an interactive brokers account with a small amount of funds in their and as such I set up a paper trading account.

I think the paper trading account starts you with 1mil US but I’m just going to assume I only started with 25k (AUD), that way I can measure the influence of brokerage and the whole trading system is more realistic. I might even message interactive brokers and ask if they can reduce my balance to 25k (paper money) now I think about it.

Plan:
I work full time during the week (generally 50 hours or so) so day trading is not for me, my plan is to take medium term positions, perhaps anything from 1 week to 3 months or more depending on the goal of the trade and the market movements. Ultimately I’m just looking to find what works best for me. I’m just looking to make simple trades (no derivatives etc.) and I’m interested in trying a whole bunch of different techniques but ultimately starting simple and going from there. I’m very interested in pairs trading however so that will definitely be something I explore at some stage.
I’m not sure how often I will update this blog. I’m quite busy in life at the moment, but I am looking to take this pretty seriously as I truly believe I want to be successful at this.

I’d love for some of the more senior members to chime in every now and then and give me their thoughts but the ultimate reason for keeping this blog is so that I keep focused on how I’m going. Any advice I pick up along the way is definitely an added bonus.

With regards to specific trading plans I’m going to start pretty simple, mainly focus on price, volume, and a couple of simple indicators such as a moving average and RSI and then look to explore from there. I’ll mainly look to trade the ASX200 to begin with.

As I said I’ll use interactive brokers as my trading platform and I think I’ll use Yahoo finance for my charting software as it seems pretty decent for free software, that said if anyone has any suggestions on a better chart program let me know. I have live data at work if needed however given that I’m not looking to day trade I don’t think live data is essential anyway. My plan is to study charts/trading options after work hours anyway.

I think that covers everything, I’m going to do some serious research over the next week or so and hopefully find some trading opportunities I like.

 

[Trembling Hand]

Re: Beginner's Blog

As I said I’ll use interactive brokers as my trading platform and I think I’ll use Yahoo finance for my charting software as it seems pretty decent for free software, that said if anyone has any suggestions on a better chart program let me know. I have live data at work if needed however given that I’m not looking to day trade I don’t think live data is essential anyway. My plan is to study charts/trading options after work hours anyway.

If you are going to trade using TA as your tool I would highly recommend you start with system testing. its all too easy to spend weeks, months, years, kidding yourself you are learning to trade. But after you spend some time looking at what "works" in a system you may save yourself years.

You may also find out what incorrect with this statement,

my plan is to take medium term positions, perhaps anything from 1 week to 3 months or more depending on the goal of the trade and the market movements. Ultimately I’m just looking to find what works best for me.

Anyone?

 

[Trembling Hand]

Re: Beginner's Blog

Just on programs for beginners there are a few ones out there that have free data and free to use with pretty powerful system design ability without going into learn a program language. yahoo charts would not be one of them.

Will follow up on this at a later time but for now its sake'O'Clock.

 

[Lone Wolf]

Re: Beginner's Blog

I'm still in the learning phase, have been for far too long. Why? Mostly because I have a full time job that for a long time ate up about 50-60 hours a week. By the time I get home and do the chores, it's getting late and I'm tired and blah blah... However, this is really just an excuse. I didn't previously make the time. You can always make the time if you want it enough.

So my first suggestion would be, don't drift along doing a bit here and there. Decide if you want to do this and understand how much time you need to put into it. Then either do it, or don't. Trading should be treated as a business. A business requires your full attention. It might not require your full time, but certainly your full attention.

It's encouraging to see that you want to start on paper trading. Also that you want to use the same amount of paper money as what you really have. Treat it seriously. Some say that paper trading is a waste of time because it's just not the same as real money. Sure, but if you can't succeed on paper then you certainly won't succeed with real money.

When starting you need to try things to know if they work or not. But don't spend your whole life changing strategies trying to find what's best. That's my second mistake, if you keep rotating between a bunch of different methods you risk never getting good at any of them. The average person tends to lose. You don't want to be average at many things, you want to be great at one thing.

TH's suggestion of system testing is good. Amibroker is a cheap (not free) charting package that allows pretty good system backtesting. There are many others of course, but I think Amibroker is the cheapest one than can backtest easily.

The drawback of paper trading a strategy to see whether or not it works is that you need to do many, many trades before you can get a clear picture of what works and what doesn't. If you are holding for 1 week to 3 months as you say then you'll spend a lifetime paper trading a strategy. Especially if you do it in your spare time when not busy, and with a 25K account (limited capital means fewer trades). That's where backtesting comes in. You can't backtest discretionary trading though, that requires experience.

my plan is to take medium term positions, perhaps anything from 1 week to 3 months or more depending on the goal of the trade and the market movements. Ultimately I’m just looking to find what works best for me.

I'm not exactly sure what TH dislikes about this statement. Might be the plan to paper trade long term. Might be "to find what works best for me". Just find what works and do that, don't be on the constant search for the holy grail.

Sorry if I sound short (even though the post is long), I don't mean to be, I'm just late to see a movie.

Also, remember I'm a beginner too, so my opinion is worth what I charge. Just pointing out some of my own mistakes. But one good thing around here is that people will quickley point out if someone's talking crap.

 

[kid hustlr]

Re: Beginner's Blog

I'm already glad I started this blog.

TH,

I appreciate your input, and please continue to critique/critize. Could you go into a little more detail about system testing/back testing and what that involves? Also please do go into detail about programs for beginners. Hope the sake went down well.

LW,

Perhaps you could start a blog also? I feel like I might be able to learn a great deal. As far as tiem is concerned, I'm not looking to set the trading world on fire overnight. I want to be succesful and I recognise it's going to take time. I'm simply trying to be realistic, currently I'm looking for a place to live, working 50 hours a week and attempting to learn to trade so I'm just noting that I think this will be a slow process. That doesn't mean I'm not focused on my goals though.

All,

This is a good thread and something I should keep an eye on:

https://www.aussiestockforums.com/forums/showthread.php?t=24308&page=2

I think I underestimated the importance of using good software. Yahoo finance provides a decent charting software (not great, only decent) but I need to keep an excel file and record all my thoughts and notes about each chart that I look at. From what I gather there are a lot of programs out there which will let me 'test' my trades quickly as well as set up alerts and save charts with great efficiency.

Finding good software and putting good systems in place is my number one goal right now.

 

[skc]

Re: Beginner's Blog

Incredible charts is one option for something free and simple.

When I first started trading I subscribed to Nick Radge's service (I think you can do it monthly if not a free trial). Although I've moved on substantially from what he does, I found his service to be quite valuable for a newbie.

Not everyone here is a supporter of his trading method and analysis, but I think most here will agree that he's a real practitioner who conveys very sensible messages in terms of risk management and approach to trading.

I have no idea whether he's profitable in the current market - but hopefully what you are learning from him is not his method per se (which is trend-following, micro pattern recognition) but something more fundamental than that. Once you've learned enough to disagree with him or see things differently for yourself, you will be well on your way to enter the beginner status (as opposed to a status I called complete ignorance).

Good luck.

 

[Lone Wolf]

Re: Beginner's Blog

LW,

Perhaps you could start a blog also?

Maybe I'll create a blog someday. People can have a good laugh and use me as a contrarian indicator. But as you can probably tell I tend to get carried away when I start writing. Right now I need to focus more on actually doing things rather than talking about doing things. So for me a blog would be more of a distraction than anything. But once I have a more solid grounding, it'd be good to get feedback from others.

Also, I said you can't backtest a discretionary trading system. That's not quite right. With a system based on solid rules you can code it up, then with the click of a button you can test that system over hundreds of charts. Change one of the variables, run that same test again and in a matter of seconds you can compare the effect of that change. You can even perform Monte Carlo analysis on the system to see the thousands of different portfolios that are possible even when using the same fixed rules system - You can't take every trading opportunity your system presents to you. So your choice of which opportunity to take will affect the end result.

With a discretionary system you can still backtest it. But you need to do so manually. Which is obviously much slower. So if you were using a fixed rule system, then don't trade it manually, test it with code. Save the manual testing for trades that can't be coded up. I certainly don't mean to knock discretionary trading. Some (most?) of the most successful people on this board don't rely on a fixed rules system. I myself would prefer to not use a fixed system. But it has been suggested that it's good to do system testing first to get an understanding of what works and why. Then use that understanding to develop your own discretionary system.

Please don't let me discourage you from your original plan. Pav started his "Simulated Trades and Analysis" thread and I'm certain he doesn't regret it for a moment. We all learn when people share.

I want to be succesful and I recognise it's going to take time. I'm simply trying to be realistic,

I understand. I didn't mean to imply that you weren't taking it seriously or that you need to devote your life to it. I personally failed because I constantly allowed the rest of my life to interrupt my trading goals. This pushed trading into the category of a hobby that I do when I have time. Now after years of studying trading I haven't accomplished anything significant. I just wanted to say, don't do what I did.

On the software. I don't know much about free stuff. Incredible charts as skc suggested is a good option. Back when I used them, the data for the day was delivered after midnight. Which might not suit your needs.

 

[kid hustlr]

Re: Beginner's Blog

It was pretty quiet at work today so I had a good read around a few of the beginner threads on the forums. I literally searched beginner.

I think my major goal for this week is to just establish what software I'm going to use. I should have a decent amount of free time on Sunday so the plan is to set myself up with Amibroker (I'm not sure if it's free or a couple of hundred bucks) and get used to using its basic charting software. That coupled with interactive brokers as my trading software and an excel file to keep my notes should be all I need for now. I'll need live data at some stage but I have Iress at work and as I said I'm not looking at really short term trading yet.

I'm a little concerned about my quantitative skills (or lack of?). I'm naturally mathematical and I know my way around a computer but the idea of writing code to hand craft a trading system seems a bit beyond me. Back testing and system testing is more of a factor in trading than I realised and it sounds like its something I'll need to get used to. I guess in my mind I just imagined learning all the tech/a techiniques then being able to identify what method would be best for a given market. Clearly it requres more work than that.

I also printed off Jack Schwagger's 'the new market wizards' at work today so I now have my bus reading to and from work set.

 

[kid hustlr]

Re: Beginner's Blog

I downloaded AmiBroker.

Very cool charting software and clearly something which will take a while to master. Will work through the guide/introduction and start becoming used to all the functions.

Am 40 pages in to the New Market Wizards as well, its proving to be very good bus reading I'm loving it.

 

[Garpal Gumnut]

Re: Beginner's Blog

It was pretty quiet at work today so I had a good read around a few of the beginner threads on the forums. I literally searched beginner.

I think my major goal for this week is to just establish what software I'm going to use. I should have a decent amount of free time on Sunday so the plan is to set myself up with Amibroker (I'm not sure if it's free or a couple of hundred bucks) and get used to using its basic charting software. That coupled with interactive brokers as my trading software and an excel file to keep my notes should be all I need for now. I'll need live data at some stage but I have Iress at work and as I said I'm not looking at really short term trading yet.



I'm a little concerned about my quantitative skills (or lack of?). I'm naturally mathematical and I know my way around a computer but the idea of writing code to hand craft a trading system seems a bit beyond me. Back testing and system testing is more of a factor in trading than I realised and it sounds like its something I'll need to get used to. I guess in my mind I just imagined learning all the tech/a techiniques then being able to identify what method would be best for a given market. Clearly it requres more work than that.

I also printed off Jack Schwagger's 'the new market wizards' at work today so I now have my bus reading to and from work set.

You sound very well prepared.

If you ever get stuck, go back to basics.

Dow, FTSE, XAO, XJO.

Monthly, weekly, daily charts.

Never ignore price and volume.

Indicators useful, but should never be a deciding factor over price and volume.

Don't ever be afraid to take a loss.

Conserve your capital at all costs.

gg

 

[kid hustlr]

Re: Beginner's Blog

Thanks gg.

Still getting hand of AmiBroker. It seems to have that same feeling as excel where it can pretty much do anything, you just need to know how to do it. The question is how far down the rabbit hole do I want to go.

I found a post by Wyswig (sp?) which had a link to the top 500 holdings in the ASX so that saved me a stack of time as I don't have to write out each ticker manually. I just need to add in a few of the major indices and I'm good to go as far as data goes (for now).



Goals for this week:
Continue reading Schwagger on the bus
Work through the introduction/tutorial documents on Amibroker
Check over a few chapters in Murphy (EW, relative performance + some others).

 

[Reasons]

Re: Beginner's Blog

Hi

Get hold of Dr. Alexander Elder's book 'Come into my Trading Room - A Complete Guide to Trading', read it, study it, anotate it and re-read it again as many times as is necessary to fully understand what he has to say. As he has significant practical trading experience you will likely learn faster than most about what resources, knowledge and processes you need to acquire before you start and then how to competently begin trading - and because he actually trades, his trading ideas are logical, simple and with time and experience you will find they work.

I have not updated these lists below for a few months, but they are close enough and it sounds like they might be of use...

Cheers


ASX20
AMP, ANZ, BHP, BXB, CBA, CSL, MQG, NAB, NCM, ORG, QBE, RIO, STO, SUN, TLS, WBC, WDC, WES, WOW, WPL

ASX20 to 50
AGK, AIO, AMC, ASX, AWC, CCL, CFX, CPU, CWN, FMG, GPT, IAG, ILU, IPL, LEI, LLC, MGR, NWS, ORI, OSH, QAN, QRN, SGP, SHL, STO, TCL, TOL, WOR, WRT

ASX 50 to 100
AGO, ANN, APA, AQP, BBG, BEN, BLD, BLY, BOQ, BSL, CGF, COH, CPA, CPB, CQO, CSR, CTX, DJS, DOW, DUE, DXS, EGP, FXJ, GFF, GMG, HVN, IOF, JBH, JHX, LYC, MND, MTS, MYR, OST, OZL, PDN, PNA, PRY, RHC, RMD, SEK, SGM, SKI, SWM, TAH, TSE, TTS, TWE, UGL, WHC

ASX100 to 200
AAD, ABC, ABP, ACR, AIX, ALL, ALZ, APN, AQA, AQG, ASL, AUN, AUT, AWE, AZT, BDR, BKN, BOW, BPT, BTU, BWP, CAB, CDU, CHC, CNU, CPL, CQR, CRZ, DLX, DML, DTE, EHL, ENV, ERA, EWC, EXT, FBU, FKP, FLT, FWD, GBG, GCL, GNC, GNS, GRY, GUD, GWA, HDF, HGG, IAU, IDL, IFL, IGO, IRE, IVC, KAR, KCN, KZL, LNC, MAH, MBN, MDL, MGX, MIN, MML, MMX, MQA, MRM, MSB, NUF, NVT, NWH, OGC, OMH, PAN, PBG, PPT, PRU, PTM, QUB, RRL, RSG, SBM, SDL, SFR, SGT, SIP, SMX, SPN, SPT, SVW, SXL, TEL, TEN, TPI, TPM, TRS, WEC, WSA, WTF

ASX200 to 300
AAC, AAX, ABY, AJA, ALD, ALK, ALS, AMX, ANG, APZ, ARP, ARU, ASB, BND, BRM, BTA, CCP, CCV, CDI, CFE, CFU, CIF, CLO, CNX, COK, CSV, CVN, DCG, EAU, ELD, ELM, EVN, FGE, FML, FMS, FXL, GGG, GRR, GXY, HIG, HIL, HST, HZN, IFN, IGR, IIN, IMD, IMF, IRN, IVA, KMD, KRM, MCE, MCR, MMS, MNC, MPO, MTU, NFE, NXS, OKN, PLA, PMV, PRG, PRR, PXS, REA, RMS, ROC, RXM, SAI, SAR, SDM, SGN, SKE, SLR, SLX, SPL, SRQ, SSN, STB, SUL, TAP, TGA, TGR, TGS, TGZ, TOX, TRY, UNS, WTP

ASX300 to 500
AGG, AGS, AHD, AHE, AJL, AKM, AMM, APE, API, ARH, ASZ, ATI, ATR, AUB, AVJ, AZM, AZZ, BCS, BFG, BKL, BKW, BKY, BMN, BOC, BOL, BRG, BTT, CCC, CDA, CDD, CDP, CGX, CHN, CMG, CMJ, CMW, CNA, CNP, COE, COF, CUE, CUP, CUS, CVW, CWP, CXM, CZA, DLS, DMP, DTL, DVN, DWS, DYL, EPW, EQT, EQX, ESV, EXS, EZL, FAN, FPH, FRI, GDO, GDY, GEM, GLG, GNM, GOW, GOZ, GPG, GUF, GWR, HGO, HHL, HIN, HTA, IOH, IPD, IXR, JET, JMS, KAM, KGD, KGL, KRL, KSC, LEP, LNG, LWB, LYL, MAQ, MCO, MCP, MEO, MFG, MGO, MIO, MLB, MLD, MLX, MOC, MOL, MSF, MYS, NAN, NCK, NCR, NDO, NFK, NGF, NHC, NHF, NHR, NKP, NMG, NYO, OCP, ORE, ORL, PAG, PEM, PEN, PFL, PGA, PLV, PMP, PPC, PPX, PRT, QRX, RCG, RCR, RDF, RED, REH, RES, REX, RFG, RHG, RHI, RHL, RIA, RIC, RKN, ROL, RRS, SDG, SEA, SFH, SGH, SHV, SIH, SKC, SKT, SLM, SLP, SMM, SOL, SPH, SRV, SRX, SSM, SST, SWL, SXE, SXY, TAM, TFC, THG, TLM, TNE, TOE, TRU, TSO, TWO, UBI, UOS, UXC, VRL, WBB, WCB, WEB, WHG, WPG, ZIM

 

[kid hustlr]

Re: Beginner's Blog

Thanks reasons. Once I've finished market wizards I'll get to it.

Wysiwig (there's no way thats how you spell his name) warned me that the list was out of date but I'm sorted anyway as I jumped onto Iress at work and printed off a watchlist of the top 500 so now I'm DEFINITELY sorted.

I'll need to actually purchase Amibroker soon because uploading the data each time will start to get on my nerves. That said whils't im still learning the program there's no rush.

There's not enough hours in the day.

 

[Reasons]

Re: Beginner's Blog

Have never used Ambibroker - I use something called Bullcharts. It provides multiple lists of ASX shares and indicies as shown below. I then use Excel to sort between lists so I get a shares list difference between say the top ASX20 and 50, 50 to 100, etc as I listed for you, so you are not looking at everything twice when you want to concentrate on particular share groups through to the top 500 or whatever. Hope it all goes well and for what it is worth, severely limit the time you spend in these environments. Cheers.

 

[kid hustlr]

Re: Beginner's Blog

Been a slow week on the personal trading front. I'm still reading to and from work and I had a bit of a play around with AmiBroker today - I have most of the basics down pat now which is good. Unfortunately the next couple of weeks may be difficult to get much personal time in given I have to study for a couple of work related tests.

I'm keen to start taking a few positions over the next few weeks though. I know a couple of people on here suggested back testing etc and I WILL get to that but I wouldn't mind taking a couple of positions if I think I can make a small gain here and there.

More in depth discussion coming soon when I get a chance.

 

[tech/a]

Re: Beginner's Blog

Been a slow week on the personal trading front. I'm still reading to and from work and I had a bit of a play around with AmiBroker today - I have most of the basics down pat now which is good. Unfortunately the next couple of weeks may be difficult to get much personal time in given I have to study for a couple of work related tests.

I'm keen to start taking a few positions over the next few weeks though. I know a couple of people on here suggested back testing etc and I WILL get to that but I wouldn't mind taking a couple of positions if I think I can make a small gain here and there.

More in depth discussion coming soon when I get a chance.

The lure of profit just too strong eh!
Lesson #1 on it's way.

 

[Trembling Hand]

Re: Beginner's Blog

The lure of profit just too strong eh!
Lesson #1 on it's way.

LOL

Which will quickly lead in to all the "other" lessons ending in the outcome of,

Psychology is the most important thing,
You must remove emotion from trading,
The insiders will always beat you,
TA doesn't "work",
You cannot time the market,
FX is better than ASX because you get 1X100 leverage,
The market is manipulated by Jewish dudes who run the world from NY therefore you cannot win,

etc etc etc,

:behead:

 

[skc]

Re: Beginner's Blog

Whilst I’ve learnt a huge amount over the past 12 months (about investing/trading/life etc) it’s still obvious I have a great deal to learn before putting any money on the table and as such I’m going to paper trade for a period of time to let me develop my skills and see if this is something I’m any good at. I have an interactive brokers account with a small amount of funds in their and as such I set up a paper trading account.

6 blog entries and 2 weeks later... SHOW ME THE MONEY. I've spent like 5 hours learning about the market - it owes me big time.

 

[kid hustlr]

Re: Beginner's Blog

Wow, lots of advice this morning.

Message(s) recieved.

 

[kid hustlr]

Re: Beginner's Blog

So I had a think.

First of all remember I'm new to this. I know cricket like the back of my hand. I could take anyone in this forum in a game of poker and I'm not a bad cook, but when it comes down to it I don't know much about trading yet. I might need things spelled out for me.

The idea with back testing is that there's no real need for a play money account (or atleast it greatly reduces the need)?

For example If I look at a few charts, find one that I think there is opportunity (say for example, the price and volume seem to be forming a trend, the rsi is oversold and we are at a level of strong support), instead of buying in my play money account I should just backtest whether those conditions would have made a profit over the last 1,5,10 years?

If it would have made a profit THEN I go ahead with the trade?