Can we quit job and invest in stocks full time?

ducati916 said:

Mag's baby,

Yes I have, have been interested in Bank's generally, sub-prime, and the CMO's + CDO's [have a few thoughts on the blog]

I note Greenspan called a US recession by years end in a lecture he gave in HK over the weekend.

There's also been another sub-prime implosion [NFI] in the US
This market is falling apart at the seams.

jog on
d998

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Nice work!... hope you don't mind me linking to your posts elsewhere in cyberspace.

Cheers

enzo baby

Absolutely, feel free.


jog on
d998

I really didn’t see the need to say much on this thread directly to Tony/violet. Most of the poster’s aren’t full time traders, but despite this the undercurrent was cautionary as it should be. This is the hardest game in town, and requires considerable effort and ability to succeed.

However, there was a subtle message in my posts… Who was listening? violet, if you didn’t get my subtle message on this thread, you are just not ready… Just read the Duc’s first post on this thread (number 3). It says it all. Also, Margaret/Sails’ comment about tops bringing out the “newbies” is prophetic.

Why not consider what I was conveying in my last posts. Did you get my “subtle message” about trading? Think about it this way. Who in the posts on this thread are full time traders/investors? What methods do the full time players use, and how do they operate? Vicb made an excellent comment suggesting taking a minority portion first to see how you go.

If you are really considering going full time into trading, who would you ask? - a part timer/hobbyist, or someone who lives and dies “by the sword”? I’m a full time trader (mainly trade the swings, bit with some long term strategies too), others use long term bullish methods, and a few here do trade the swings too.

But it seems to me you already have an approach loosely mapped out – by a few blue chips and hope. This is not sufficient in my opinion to beat the odds. You need to be across a host of disciplines. If the market does correct, can you trade short effectively? If the market does correct, and then goes sideways, can you trade non directional markets effectively? If you are relying on a bull market, you have left your run a little late when there is real risk this year of a significant pull back or consolidation.

If you are holding straight unhedged shares, the potential exposure to a significant fall is considerable. Also, any comment about using CFDs without sufficient derivative knowledge and experience is also inviting considerable risk.

How is your derivative knowledge? If you can only trade shares and have no derivative knowledge, this is a significant set back. Trading on margin is very exposed if you get it wrong (particularly if there’s a significant sharp move against you), let alone CFDs which also require a full knowledge of leverage and margins to trade effectively (let alone their exposure and the pit falls of exposure and the need for having deep enough pockets). So I fully agree with Wayne here too.

Me, I prefer options, but I also study all derivatives both exchange based and OTC instruments, including structured financial instruments. But that is my personal choice. You need to find out sufficient information to make up your own mind. Many of the posters here giving advice are not well versed in derivatives. Go to the derivative area and start looking at what is required. This is a significant discipline in itself.

Do you have sufficient capital? What happens in the lean/negative months? Can you survive? Is $100,000 sufficient? If you’re just trading shares I really doubt that is enough without leverage, unless you have very good small cap trading skills (and lots of luck).

Do you have a workable business plan? You need to develop a series of well structured highly organised areas of knowledge, and be able to develop and modify effective plans and follow these. You are contemplating setting up a business, and this requires all the required boxes have a tick. – Analysis, psychology, system, strategy. And then all these have sub categories, they all need a tick too. This is the hardest game in town, and if you are not fully prepared, you are unlikely to succeed (at least the first time).

Have you ensured you are fully resourced and equipped? This means more than having a good PC network and internet access.

This is about being psychologically prepared for probably the most gruelling pressure you will ever be confronted with. Have you done enough work on your own psychology yet, let alone understanding market psychology?

This is about having an edge – be it technical analysis, fundamental analysis, specialist knowledge of a sector, economic segment or company (can be specialising in a future for instance, or a currency, or an index, or a stock, or a sector of stock – you get the picture). Maybe you trade a pattern (e.g. Elliott Wave analysis). But you need a way as Douglas says to “be the casino”.

You need to cover all contingencies, office set up, insurance, taxation, essentially you are running a business…

Do you get what we’re talking about re the threat to the bull market regarding structured derivatives? Do you understand the Yen carry trade for instance and what it means to the world economy?

I’m a full timer, and I tell you, it’s a 24x7 challenge. Are you prepared to put in 100%? Are you prepared to learn everything you can? Are you prepared to invest years into evolving and developing effective approaches?

As you can see, in my view Tony you need at least 3-4 years concerted effort to even think about going full time. Learn at least 1 analysis discipline and become a master in it, learn about derivatives and become a master in that, learn about risk management and become a master in that, fully research and develop the right mindset (reads psychology) and become a master at that too. In fact, you will really need to become proficient in all areas covered on this thread that are relevant to your success.

Got your foot on the start line? Ready, set….


Regards


Magdoran

Terrific post Mags.

I notice you only have 500-odd posts but if there were WPP index (words per post) I suspect you'd be top 3 on the forum

theasxgorilla said:

Terrific post Mags.

I notice you only have 500-odd posts but if there were WPP index (words per post) I suspect you'd be top 3 on the forum

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Thanks theasxgorilla,


Thank-you for your kind words…

If I can only reach 1 person and make a positive difference to their life via posting, then it’s all worthwhile.

There were times when others have helped me along the way, so I try to “pay it back/forward”…

So, you’ve read (all) my posts? Now that’s scary. Just imagine, I had to write them! (There are other notable posters here too like Wayne, Margaret, Duc, tech, and I bet they had fun typing too!!!).



Regards


Magdoran

Wayne you goose!

I just noticed your new epitaph! You Grizzly bear you! So is that “count bear” in the early hours of the morning?


Mag

Hi Magdoran ,

Thank you very much for your time and effort to write such a comprehensive post which required me years to understand them all. !!!
you're right, it needs a lot of time to be a full time trader,
i need to print your post a read it again and again...
Thanks alot for your kind help.
i am sure your post will help others too.
cheers
Tony/Sydney

CanOz said:

Interesting post Mag...add to this the 'toppiness' of the Shanghai markets, the US markets (although not a spectacular), Japanese, India...the staggering level of debt around the world, and like i've mentioned its a perfect storm brewing. I'm watching as much as i can as closely as i can right now...it will only take one straw to start things off i reckon.

Cheers,

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You were spot on CanOz,


It was the Shanghai markets that were the trigger for this corrective event. Good call!


Regards


Magdoran

violet said:

Hi Magdoran ,

Thank you very much for your time and effort to write such a comprehensive post which required me years to understand them all. !!!
you're right, it needs a lot of time to be a full time trader,
i need to print your post a read it again and again...
Thanks alot for your kind help.
i am sure your post will help others too.
cheers
Tony/Sydney

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Glad it helped, best of luck!

Magdoran said:

You were spot on CanOz,


It was the Shanghai markets that were the trigger for this corrective event. Good call!


Regards


Magdoran

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Thanks Mag....now, wheres that bottom?

If it wasn't for Nick's teachings i wouldn't have even seen it coming. VSA has taught me to pay attention to the volume. To me, Friday was a giveaway. I'll try to post a chart later.

Cheers,

CanOz said:

Thanks Mag....now, wheres that bottom?

If it wasn't for Nick's teachings i wouldn't have even seen it coming. VSA has taught me to pay attention to the volume. To me, Friday was a giveaway. I'll try to post a chart later.

Cheers,

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Yup, CanOz,


Good T/A skills will help with that.

Working on the pattern now for the bear campaign.

I suspect a 1-4 day bullish counter trend, then…


Should be an interesting ride.


Mag

Magdoran said:

Yup, CanOz,


Good T/A skills will help with that.

Working on the pattern now for the bear campaign.

I suspect a 1-4 day bullish counter trend, then…


Should be an interesting ride.


Mag

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Not sure this is the right thread Mag, anyway heres what i saw. After this i was watching everything to see where the spark would come from.

For me to pick the bottom, i'll need to see some accumulation, like a selling climax. It may be difficult though. I'll be keeping an eye on your posts too!

Re: Can we quit job and invest in stock full time?

Some very smart posts on the first couple of pages of this pre GFC crash thread from early 2007.

nizar said:

You need to broaden your understanding of RISK. You need NOT take on more risk if you invest in specs. In fact, specs probably increase the return side of the equation, while the risk can be kept constant.

In my opinion, those safe bluechip buy and hold, never use a stop, permabull types take on HEAPS amounts of risk.

But of course i remind myself daily: Dont confuse genius with bullmarket.

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Julia said:

Nizar

I'd be interested in the rationale behind your suggestion that buy and hold of blue chips involves "HEAPS" of risk. Don't know why you would imagine that people who buy blue chips and who prefer to hold for the medium or long term, would never use a stop, and are "permabulls" as you put it.

Julia

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sails said:

Hmmm, interesting. Topping markets always seem to bring out the newbies wanting to give up full time jobs and throw their savings at trading

I guess the big boys need plenty of new buyers so they can sell. Not saying the top is in place (unfortunately I don't have a crystal ball), but there's been a few of these types of posts lately - just interesting!

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Re: Can we quit job and invest in stock full time?

Thanks for digging this up So_C very interesting read!

quick question, has the site reefcap relocated?