I want out of Managed Funds >>> into trading!

[SimonSaysTrade]

Hello all, just wanted to say hi and I hope to be an active member of this forum..looks like lots of great info and knowledge abounds here!

My situation at present is:

I have had $150k in an MLC managed fund (conservative portfolio "Horizon 3"...see pie chart attached) for a while now as I was told it would be a safe place until I was ready to move onto bigger and better things.

Did well for a while...then GFC...weathered it not too badly...but still about 15% away from my starting point Jan 07).

I want to get this money working harder for me, I get the feeling I can do better than this managed fund and hopefully make myself some decent pocket money to wean me away from working for the man...

I suppose what I'm wanting to do is trade for a living eventually. I'm finding the stockmarket more and more interesting the more I discover, and am ready to jump in and learn as much as I can to make it work for me, perhaps even move to part-time employment to facilitate this..? But I want to be realistic about it too.

So, some questions:

Assuming I can grasp the basics and get to the point where I have a good understanding of how it all works, is $150k a decent starting figure to potentially generate a humble annual income for me? Say around $40k?

What is the safest place to start for a beginner...is it just plain old share trading?

Am I better off starting up through a broker or just jumping in with an online account and testing the water?

Cheers for any info in advance and apologies for the naive nature of my first post!

 

[brty]

Ahhh good, another lamb for the slaughter

Maybe I should explain..

The market is one giant ongoing ponzi scheme, only the new money that comes into it is available to all the current participants. There are professionals with vast resources, knowledge and experience that you will be competing with to eke out a living.

Assuming I can grasp the basics

Most of what you read will only confuse, here are the real basics....

If there is more buying pressure from ever more desperate buyers than supply from anxious sellers, then the price is going to rise. If the converse happens then the price is likely to fall.

Telling how desperate are the buyers and how anxious are the sellers, is where the knowledge and experience comes into play.

Your best hope of success is finding a successful trader to mentor you, while using only a tiny fraction of your account to play with early on. Lock the rest away in a term deposit for a year or three.

brty

 

[Wysiwyg]

First of all I have been trading on and off for 4 years so my experience is not comparatively large. Securities trading has a broad structure that encompasses various instruments such as Shares in listed companies, Futures Contacts, Foreign Currency Exchange, Options, Warrants and Unit Trusts.

Each instrument is unique with volumes of literature available on each that would take many many years to absorb. This book helped me become more aware of the intricacies involved with trading financial markets. My main hurdle initially with reading was comprehension as there is a lot to absorb and only after absorption and understanding can the knowledge be applied correctly.

Then there is the experience side of this art. Like everything we learn it takes knowledge, experience and consistently correct application to become proficient. Not knowing becomes knowing and the way this is arrived at is infinite.

Peace. W. http://www.moneybags.com.au/default.asp?d=0&t=1&id=5198&c=0&a=74

 

[Tukker]

Ahhh good, another lamb for the slaughter

Your best hope of success is finding a successful trader to mentor you, while using only a tiny fraction of your account to play with early on. Lock the rest away in a term deposit for a year or three.

brty

Great reply. Bare in mind you usually get charged a big fee for withdrawing early. Assuming you do it anyway.

• First thing: Do A Course! It will teach you technical analysis, the risks of trading, limiting risk, systems and more.

• Then you paper trade - pretend trading from the knowledge you earned from the course/books and see how you do.

• Then you trade for real and continue learning while getting burned and rewarded - your goal is survival.

Failing that, hire a full service broker (not wealth management) and get him to advise you. Be real picky about who you hire.


Quitting work sounds nice but in actuality you will probably get bored. Instead maybe change your workload. Instead of working 10 hours each day, find another opportunity, work less and supplement 10k/year with trading. Perhaps trade 50k, term deposit 100k and work less. To me multiple small income streams are better than one big one. This way you get paid three times. Fully concentrating on one activity is often not efficient.

8% return annually for an educated trader is not unrealistic. Many of our experienced members here could be more than quadrupling this (not me).


I went to HomeTrader to learn how to trade and started out with 30k trading CFDs. 5 years later I now work for less than 24k have huge flexibility with my time and supplement the rest of my income with trading. Bare in mind my particular circumstances may not be anything like yours so don't make a decision based on this.
E.g. I don't have debt, children, spouse, or significant illiquid assets. My lifestyle is very simple and I intend to keep it that way.

Hope this helps.

 

[Calliope]

What is the safest place to start for a beginner...is it just plain old share trading?

Unless you are prepared to to go through many sleepless nights worrying about your investments, forget about it. It's all about mood swings between highs and lows. Remember that every time you buy a share someone is selling that share, and he is probably smarter than you.

 

[bigkev]

First, I wouldn't give up the day job. Take trading on as a sideline.

Second, I would go over to thechartist.com.au and have a look at Nick's growth portfolio, yes it will cost you a bit to join but the advice is invaluable, have a look at some of tech/a's posts in the forum. Follow the growth portfolio and you will be off to a good start. Nick, as may will atest, knows his stuff and is quiet happy to explain concepts to people who are learning.

Third, never forget the stop loss.

Should be as easy as that.

 

[lasty]

Do yourself a favour.
Go to the casino and stick it all on black.
If you lose, just think about all those days you didnt have to study charts, read through market cr@p and gaining an ulcer.
If you win, well very few get 100% return on their money in 1 year, so that will make you the best of the best (topgun).

 

[Mr J]

Unless you are prepared to to go through many sleepless nights worrying about your investments, forget about it. It's all about mood swings between highs and lows. Remember that every time you buy a share someone is selling that share, and he is probably smarter than you.

Except that you don't know why he selling it, he's not always right, and it may not be because he thinks the share will decrease in value. Even if he is smarter, it doesn't mean it's a bad buy. Many participants playing different games.

 

[treeman]

$150k a decent starting figure to potentially generate a humble annual income for me? Say around $40k?

As a beginner be prepared to be down that much in your first few trades

 

[Calliope]

Except that you don't know why he selling it, he's not always right, and it may not be because he thinks the share will decrease in value. Even if he is smarter, it doesn't mean it's a bad buy. Many participants playing different games.

Of course, but it will be a long time before you, as a beginner, will be on equal terms. The seller will certainly have been around the traps a lot longer than you. He is ahead of you on the learning curve. The key word should be caution.

 

[Wysiwyg]

Of course, but it will be a long time before you, as a beginner, will be on equal terms. The seller will certainly have been around the traps a lot longer than you. He is ahead of you on the learning curve. The key word should be caution.

Yes the dollar cost for experience needs to be kept to a minimum. $20,000 lessons are too much.

 

[Kalvin]

What is the safest place to start for a beginner...is it just plain old share trading?

Am I better off starting up through a broker or just jumping in with an online account and testing the water?

Cheers for any info in advance and apologies for the naive nature of my first post!

The first thing you need to do is get some decent books and advice on risk management. Once you understand the principles of this is doesn't matter much where you invest, you at least will limit your losses. You should also not invest any more than you are prepared to lose, as likely you will.

 

[Julia]

Kalvin, Joe has done a very useful thread about how to use the Quote Tags.

Unless you use these, it's almost impossible to know what you are quoting and what is your own response, particularly as you haven't even put quotation marks around what is quoted.

 

[Mr J]

Of course, but it will be a long time before you, as a beginner, will be on equal terms.

Sorry, I forgot we're talking about beginner trading.

As for 150k to start and aim to pull in 40k, forget that for the moment. Take a as small an amount as possible, trade with a low cost brokerage, and just aim to be profitable. Be prepared to lose this amount.

What is the safest place to start for a beginner...is it just plain old share trading?

In my opinion, the safest place for a beginner is where you can trade the smallest amount while still keeping fees practical. If you're trading over a long timeframe, I don't think it matters too much, and you may as well start in the ASX. I prefer forex myself, as the costs are lower, but expect most people to object and suggest shares.

 

[SimonSaysTrade]

Thanks for all your responses guys. I must admit I don't feel as confident as I did 24 hours ago...probably a good thing though. I just think I will play it safe for the moment and just do some play trading until I understand the game alot better.

Brty, with regard to your statement below, is it possible that there can be a situation where as a buyer wanting to buy shares, that there is no seller to buy from? Or conversely as a seller, perhaps wanting to get rid of a falling share but there is no buyer?

If there is more buying pressure from ever more desperate buyers than supply from anxious sellers, then the price is going to rise. If the converse happens then the price is likely to fall.

Telling how desperate are the buyers and how anxious are the sellers, is where the knowledge and experience comes into play.


brty