If you're just starting out: reiterating a point

boofis · 8 June 2012

Hello all,

If you're just starting out I want to reiterate a point for you that people have been reiterating to me from the beginning. In the big scheme of things I am also just starting out, but I'm hoping this will save you some heartache, possible delusions of grandeur and hopefully help you increase your odds of 'making it'.

If you're starting capital is:
Less than $1000 = Keep saving
$2000 = Keep saving.
$5000 = Keep saving.
$10,000 = You're getting there, don't lose hope.
$20,000 = Commissions won't be the end of you.

I hated hearing this when I first came to the markets, but one needs to hear it:
If you don't have enough money to approach this as a cut throat business, keep your money in the bank and LEARN before you lose your first lot of savings. Between commissions and just being a general noob and making mistakes, statistically you stand a very small chance of survival with small amounts of money! Note* even 20k isn't ideal, but it's more reasonable.

If you want to be a 'day trader' there are a lot of free simulators available so that you don't have to lose EXCESSIVE amounts of money learning, in what will inevitably be a steep learning curve.
Be patient and persistent.
My 2c.
Take it or leave it, just felt I should share it.

qldfrog · 8 June 2012

+1
100% true and I would add : to not borrow to reach the required minimum!!!

TMC93 · 8 June 2012

I have to disagree. Most beginners will "probably" lose some money. If you're going to lose money in the market at all, i would rather lose $1000 compared to $20,000. I think there is only a certain amount of information you can gather from a book before you have to actually put it all into practice. If the stock market was purely theoretical then there would be a lot more millionaires in the world.

For those that want to start small, look at this good thread that nioka hijacked.

https://www.aussiestockforums.com/forums/showthread.php?t=19955&page=2

boofis · 8 June 2012

TMC93 said:
I have to disagree. Most beginners will "probably" lose some money. If you're going to lose money in the market at all, i would rather lose $1000 compared to $20,000. I think there is only a certain amount of information you can gather from a book before you have to actually put it all into practice. If the stock market was purely theoretical then there would be a lot more millionaires in the world.

For those that want to start small, look at this good thread that nioka hijacked.

https://www.aussiestockforums.com/forums/showthread.php?t=19955&page=2

The reality is though mate, the key part is in learning whilst saving your dollars. You will be in much better stead due to time invested in learning and practising without being emotionally involved e.g. just wanting quick money, big money and the holy grail; all of which no beginner will achieve/find.

That threads got some good ideas for what to do with 1500, but imo those skills aren't going to help you if you one day plan to manage in the hundreds of thousands. You may disagree again!

burglar · 8 June 2012

boofis said:
The reality is though mate, the key part is in learning whilst saving your dollars. You will be in much better stead due to time invested in learning and practising without being emotionally involved e.g. just wanting quick money, big money and the holy grail; all of which no beginner will achieve/find.

That threads got some good ideas for what to do with 1500, but imo those skills aren't going to help you if you one day plan to manage in the hundreds of thousands. You may disagree again!

That thread is for those who want to start, have $1500 (and for many reasons, not more than $1500) and are unwilling to wait.
Not all of us are chasing a dream, just putting ourselves in the path of opportunity.

Tyler Durden · 8 June 2012

Was this written with short term investing in mind?
I'd like to think a long term investment could begin with $1000.

Joules MM1 · 8 June 2012

boofis said:
That threads got some good ideas for what to do with 1500, but imo those skills aren't going to help you if you one day plan to manage in the hundreds of thousands.

that implies you do have skills to help us manage 'hundreds of thousands'.....care to share ?

Joules MM1 · 8 June 2012

Tyler Durden said:
Was this written with short term investing in mind?
I'd like to think a long term investment could begin with $1000.

agree...appears the question is not (directly) a stake size, rather, a knowledge basis.......

initially costs eat and at the other end of the scale moving 300g's is easier to move than 3m ...still, the underlying management need not be any different.......

boofis · 9 June 2012

Should've clarified. Short term investment definitely in mind as well as mechanical systems trading.

Yes, Joules, I'm biased and believe systems are by far the best management. Would gladly post results of just one year of a backtest of one of the first systems I tried trading with a positive expectancy that takes a loss for that year cause of commissions (especially when smaller capital amounts are used) but takes a profit if lower commission rate is used, just to try and exemplify what I'm saying.

Joules MM1 · 9 June 2012

boofis said:
..I'm biased and believe..... ... one year of a backtest.

ok, thanks

now show the forward test......with positive outcome.....you could have the dosh and kudos

boofis · 9 June 2012

I know what you're inferring that's why I underlined back test
But will be happy to post outcomes at the end of the period I've designated to trade it (4 years).

tech/a · 9 June 2012

Joules MM1 said:
ok, thanks

now show the forward test......with positive outcome.....you could have the dosh and kudos

I agree re systems.
My first turned $30k to $360k in 5 years.
All traded live --- realtime---and still on the net for those interested over at " The Chartist "
Has a few pages in Nicks latest book " Un Holy Grails "

Enjoy.

StumpyPhantom · 9 June 2012

tech/a said:
I agree re systems.
My first turned $30k to $360k in 5 years.
All traded live --- realtime---and still on the net for those interested over at " The Chartist "
Has a few pages in Nicks latest book " Un Holy Grails "

Enjoy.

Tech/a - Everything I've read on ASF over the last couple of months on ASF tells me you're going about this with real skill.

So link us in to your online teachers referred to above, please. And also to ASF threads where you've applied your thinking and your systems.

qldfrog · 9 June 2012

tech/a said:
Has a few pages in Nicks latest book " Un Holy Grails "

Enjoy.

I do not regret purchasing this book: are you one of the interviews?
I have built a basic system and am ready to follow it, but the rules I ended up choosing are preventing me from buying anything this months.
And probably for the best..

boofis · 9 June 2012

StumpyPhantom said:
Tech/a - Everything I've read on ASF over the last couple of months on ASF tells me you're going about this with real skill.

So link us in to your online teachers referred to above, please. And also to ASF threads where you've applied your thinking and your systems.

Just google thechartist and it's the australian website not international.
The forum on system design is a wealth of information.
*Note, it seems I can't post a direct link to the website?

Boggo · 9 June 2012

Seems like the more money people have the sillier they become.
Then again though these people are "investing" other peoples money I suppose.

There is a lot more to be learned both on here from some of the overactive stock threads and from examples such as the one below of what not to do rather than trying to learn what to do.

Below is an extract from a QAN investor report to the ASX yesterday, the shares referred to closed on $0.97 yesterday (run that by your calculator !).
Admittedly it may be part of a bigger plan that will eventually unfold but it seems like they are hitching a ride in the wrong direction.

qldfrog · 10 June 2012

Boggo said:
Seems like the more money people have the sillier they become.
Then again though these people are "investing" other peoples money I suppose.

There is a lot more to be learned both on here from some of the overactive stock threads and from examples such as the one below of what not to do rather than trying to learn what to do.

Below is an extract from a QAN investor report to the ASX yesterday, the shares referred to closed on $0.97 yesterday (run that by your calculator !).
Admittedly it may be part of a bigger plan that will eventually unfold but it seems like they are hitching a ride in the wrong direction.

Probably some tricky off market transfer for tax minimisation purpose; I would not make too much of these

TMC93 · 10 June 2012

boofis said:
The reality is though mate, the key part is in learning whilst saving your dollars. You will be in much better stead due to time invested in learning and practising without being emotionally involved e.g. just wanting quick money, big money and the holy grail; all of which no beginner will achieve/find.

That threads got some good ideas for what to do with 1500, but imo those skills aren't going to help you if you one day plan to manage in the hundreds of thousands. You may disagree again!

How does having more money help you exactly? Essentially what your saying is if i gave $20,000 to one person and $1,000 to another, the person with $20,000 will have more success?

Personally as long as you meet the minimum requirement for your broker and you have worked out your appetite for risk then IMO no sum of money is too small to invest. Hell, i'm glad i started investing with small amounts , I don't think theres a substitute for putting real money on the line, paper trading only gets you so far.

Trembling Hand · 10 June 2012

TMC93 said:
How does having more money help you exactly?

So you don't have to aim for stupid % returns just to cover cost and survive.

TMC93 said:
I don't think theres a substitute for putting real money on the line,

Yes there is. Knowing before you do that you will be profitable and under what situations you will not be.

TMC93 said:
paper trading only gets you so far.

How has that worked out for you?

Joules MM1 · 10 June 2012

TMC93 said:
How does having more money help you exactly? Essentially what your saying is if i gave $20,000 to one person and $1,000 to another, the person with $20,000 will have more success?

+1 to TH

the easy and quick answer is; if both strategies are equal the larger account can take more hits and not have the cost of doing business shred the profits or add to losses

....and the reason scared money is called scared money is the level that scared money lays out for their expectant return, the larger the capital the smaller is your risk exposure in terms of time to benefit from the same price travelled and larger accounts can negotiate discounts in transaction costs.....most importantly capital size reduces risk due to less time in a transaction......a 1 lot trade on a 1g account cannot be scaled out as a 5 lot trade on a 20g account and keep the same risk all of which comes long before strategy.....

TMC93 said:
no sum of money is too small to invest..

again, add in costs and this is not true....recall, even if youre talking about stocks alone, buy a stock with a $1,000 and the value needs to rise relative to how you divide the stock itself otherwise you cannot scale the stock without costs eating heavily into the divisor ....if you were to take advantage of yield, buy the stock and exit on post divies the cost you incur on 1g is heavier than the yield you gain on 20g even tho the yield itself doesnt change

underfunded is one of the leading reasons traders get beaten up then beat themselves up......

If you're just starting out: reiterating a point

boofis

qldfrog

TMC93

boofis

burglar

Tyler Durden

Joules MM1

Joules MM1

boofis

Joules MM1

boofis

tech/a

No Ordinary Duck

StumpyPhantom

qldfrog

boofis

Boggo

Attachments

qldfrog

TMC93

Trembling Hand

Can be found on the bid

Joules MM1

Similar threads

If you're just starting out: reiterating a point

No Ordinary Duck

Attachments

Can be found on the bid

Similar threads

Privacy & Transparency

Privacy & Transparency