Is this a fools game?

fallenangel22 · 21 October 2008

I am a newbie ( otherwise why would I be here). I Have been trading from around May, doing ok by only going long and not staying in the market for too long and profit taking often and only trading blue chips. Now I have been caught on this last down leg ( Stupidly I thought congress would sign the first time and so wanted to wait for the spike duhhhhh). Anyway I don't need the money that is tied up and am only sitting on around a approx 20% loss, and because they are blue chips and great companys with great futures etc I am not worried and happy to invest. But what I have been doing lately is intra day trading and not holding overnight either taking a loss (stop loss) or taking my profit. Now I come from a family where my dad has held BHP from around $3.50 (god love him) when I told him what I have been doing He told me you are playing with fire girl you got to hold them and dont trade with money you don't have. My question can any one see why I cant buy orica today at open and sell at 18.00 and make around $400 dollars on money I dont have if I am prepared to pay for a loss of $100. and get out if it comes to that? A really stupid question I know but all my contacts say I am a fool.

mayk · 21 October 2008

Re: Is this a fools game

Not sure if you are a bot but anyway.

Without plan it is more or less gambling. Still the good thing is you are using stop loss. It is your friend. I might dare say that you have not used that in you previous investment (the reason why they are 20% down).

Also note if you are not careful you can lose more, sometimes there are gaps and you might lose more than $100.

Trading with a plan, with strict position sizing and risk profile is not a fool's game. The trading plan has to be tweaked according to the market condition though (e.g. shorting in bear market or long in bull).

fallenangel22 · 21 October 2008

ok yes I do understand about the gaps that is the main and only reason I don't hold overnight. I also understand the risk profile ie: usually a 3 to one risk although i did better than expected today. Do you mind me asking how do you determine your personal position size?

fallenangel22 · 21 October 2008

When you say you don't know if I am a bot? do you mean a trading bot ie machine? is that a joke? or a slur on my stupid question? lol

awg · 21 October 2008

I see only one thing wrong with intra-day trading as you have outlined.

You appear to have a plan, are using stop-loss, R/R.

the only problem is you mentioned u r using money u dont have?

does this mean u cant settle?...or just that u dont have much money to lose.

trouble arises if the company goes into a trading halt...then u would be stuffed if u have bought but cant sell within the 3 days and have to settle.

this happens occasionally. ( ABC learning for example)

it would be a good thing if you have a degree of knowledge about the market.

I did around 80 intra-day trades in 3 months to immerse myself into the market and learn.

I was profitable, even though the market fell 10%.

I stopped due to time constraints.

there are previous threads on similar topics, search them

fallenangel22 · 21 October 2008

Trading Halt. thank you so much ,that is one senario I did not factor in, and thanks for your advice. I am thinking maybe I should look at CFDs that might be a bit less risky than what I have been doing.

Boggo · 21 October 2008

Probably worth reading this thread, numerous responses to a similiar question.
https://www.aussiestockforums.com/forums/showthread.php?t=12918

Don't forget that in any learning process the only stupid question is the one that you don't ask, so keep asking!

fallenangel22 · 21 October 2008

Thanks boggo, read the thread ..you saved my ****. Back to investing for me.. more education needed.

Grinder · 21 October 2008

fallenangel22 said:
Trading Halt. thank you so much ,that is one senario I did not factor in, and thanks for your advice. I am thinking maybe I should look at CFDs that might be a bit less risky than what I have been doing.

CFDs. Little less risky?! All vehicles can be risky if you have'nt learnt to drive yet. Im not having a go, just saying take your time & practice as much as posisible in the parking lot before hitting the road.

Boggo · 21 October 2008

I have got a print of this on my wall, every so often I have to tell myself that I am a Woodchuck (whatever the heck that is!)

mayk · 21 October 2008

fallenangel22 said:
When you say you don't know if I am a bot? do you mean a trading bot ie machine? is that a joke? or a slur on my stupid question? lol

A bot is an old term for spammers on chatting softwares.

For example they will ask a simple question with a ramp for a stock or promotion of their investment strategy/website.

There are numerous threads on risk management and position sizing. Please search and read and if possible ask further questions in those threads.

CFD's are not safe for starters, please be very careful with them especially in this bear/volatile market.

korrupt_1 · 21 October 2008

mayk said:
CFD's are not safe for starters, please be very careful with them especially in this bear/volatile market.

don't understand why people keep on saying cfd's are not safe... trading cfd is no riskier than trading fully paid stocks.

as long as you keep cfd leverage to a minimum, the trading strategy is exactly the same as stocks. same risk. same capital management.

Say you had $10K to invest in XYZ at $1...

you can either...
a) outlay $10K of your capital to acquire 10,000 XYZ fully paid

or... if your CFD provider requires a 10% margin on XYZ

b) outlay $1K of your capital to acquire 10,000 XYZ... keeping $9K in your bank.

Where is the risk? It is only more risky if you went and outlaid $10k of capital to acquire 100,000 of XYZ from CFD...

Garpal Gumnut · 21 October 2008

korrupt_1 said:
don't understand why people keep on saying cfd's are not safe... trading cfd is no riskier than trading fully paid stocks.

as long as you keep cfd leverage to a minimum, the trading strategy is exactly the same as stocks. same risk. same capital management.

Say you had $10K to invest in XYZ at $1...

you can either...
a) outlay $10K of your capital to acquire 10,000 XYZ fully paid

or... if your CFD provider requires a 10% margin on XYZ

b) outlay $1K of your capital to acquire 10,000 XYZ... keeping $9K in your bank.

Where is the risk? It is only more risky if you went and outlaid $10k of capital to acquire 100,000 of XYZ from CFD...

Ask the poor bastards who lost money in Opes. There is the same faint whiff of decay with cfds at present.

There is only market risk if they stay solvent. Otherwise , if they go under no matter how good or lucky you are, you have lost the lot.

gg

Trembling Hand · 22 October 2008

korrupt_1 said:
don't understand why people keep on saying cfd's are not safe... trading cfd is no riskier than trading fully paid stocks.

as long as you keep cfd leverage to a minimum, the trading strategy is exactly the same as stocks. same risk. same capital management.

Say you had $10K to invest in XYZ at $1...

you can either...
a) outlay $10K of your capital to acquire 10,000 XYZ fully paid

or... if your CFD provider requires a 10% margin on XYZ

b) outlay $1K of your capital to acquire 10,000 XYZ... keeping $9K in your bank.

Where is the risk? It is only more risky if you went and outlaid $10k of capital to acquire 100,000 of XYZ from CFD...

XACTLY.

Garpal Gumnut said:
Ask the poor bastards who lost money in Opes. There is the same faint whiff of decay with cfds at present.

GG i would bet with a cfd provider surviving more than I would on a cowboy broker. CFD providers make money off volatility. Brokers just need bull markets. There is a fundamental misunderstanding about how cfd mm make money. Just like a casino, they get lots of punters through the door and get them playing. The few that win big are far outweighed by the vast majority that lose everything.

mayk · 23 October 2008

korrupt_1 said:
Where is the risk? It is only more risky if you went and outlaid $10k of capital to acquire 100,000 of XYZ from CFD...

And you think most people will only stick to 10K. If people live within their means then we would not be having this global meltdown.

Leverage is a lover which can stab you in the back, if you are not careful.

Nick Radge · 23 October 2008

And you think most people will only stick to 10K. If people live within their means then we would not be having this global meltdown.

Leverage is a lover which can stab you in the back, if you are not careful.

Well its not the CFD's is it - its the users. If you don't have the discipline or education to trade them correctly then, yes you will get into trouble. No different to driving a car or playing with guns. It's not the instrument, its the idiot behind it...

mayk · 23 October 2008

Nick Radge said:
Well its not the CFD's is it - its the users. If you don't have the discipline or education to trade them correctly then, yes you will get into trouble. No different to driving a car or playing with guns. It's not the instrument, its the idiot behind it...

It is the idiot, but CFD gives that idiot the easy opportunity. Greed does not effect your driving or control of gun (unless you are robbing a bank ).

O/T Do you guys seriously want the original poster to start trading CFDs in this environment?

Is this a fools game?

fallenangel22

mayk

fallenangel22

fallenangel22

awg

fallenangel22

Boggo

fallenangel22

Grinder

Don't feed the bear!

Boggo

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