Jumped in the trading deep end - thoughts on getting out and learning to swim

[Enroth]

Hi all,

As with most of the people in this part of the forum, I'm new to trading. After doing some reading I think I kicked off on the wrong foot, and would like to do a bit of damage control (granted my risk of loss is small but still).

A bit about me: I'm in my mid-twenties, make a decent salary for my age, and I'm looking to use the stock market to grow my savings at above bank interest rates. Nothing too risky, but I'd like a good return.

I've only been watching the market for a bit less than a month, and I foolishly started trading straight away! I didn't have an investment strategy, I just did a bit of research and leapt right in. Thankfully I had the presence of mind not to invest too much, so currently I only have $1k invested. Compared to a lot of you, this is chump change.

My plan now: try to cut my losses and get out of the game, then go away, run a demo stock trade for 3-4 months, read lots, watch lots. Once I have a bit more capital to invest, say 6-8k, then I'll start trading for real. I think part of the problem is that I was looking for short term gains, as with small investments you need big percentage increases to even break even.

I've only bought two stocks: USD and QFX. USD seems pretty stable, so it might just be better to keep this. Though given the small investment and me using CommSec, it'd have to raise quite a bit for me to even break even. QFX was a silly buy - I know that now. I seem to have bought on the top of a rise, and I wonder if it's reached its peak. I figure I'll keep the USD, try to sell the QFX and make back some of the brokerage. Would you advise another strategy to cut my losses and start the learning process?

Advice? Comments? Whippings?

 

[tech/a]

Take your loss.
Then spend the 10000 hrs educating yourself.
Then invest in software that will allow you to prove that your trading plan is profitable.
You'll be able to do this as it's part of your 10000 hrs of education.
By then you should have over 20 k to give yourself a half reasonable chance of some strategic investment which " could " lead to a bright future.

 

[KurwaJegoMac]

Take your loss.
Then spend the 10000 hrs educating yourself.
Then invest in software that will allow you to prove that your trading plan is profitable.
You'll be able to do this as it's part of your 10000 hrs of education.
By then you should have over 20 k to give yourself a half reasonable chance of some strategic investment which " could " lead to a bright future.

I wish i had this advice when I started. So very true

 

[Billyb]

Hi all,


My plan now: try to cut my losses and get out of the game, then go away, run a demo stock trade for 3-4 months, read lots, watch lots. Once I have a bit more capital to invest, say 6-8k, then I'll start trading for real. I think part of the problem is that I was looking for short term gains, as with small investments you need big percentage increases to even break even.

I've only bought two stocks: USD and QFX. USD seems pretty stable, so it might just be better to keep this. Though given the small investment and me using CommSec, it'd have to raise quite a bit for me to even break even. QFX was a silly buy - I know that now. I seem to have bought on the top of a rise, and I wonder if it's reached its peak. I figure I'll keep the USD, try to sell the QFX and make back some of the brokerage. Would you advise another strategy to cut my losses and start the learning process?

Advice? Comments? Whippings?

You have done well to come to the realization that you need some time out of the market to study and learn before you jump back in. $1000 is not a lot considering how many more years you will have in your life to invest, so do whatever you want with those stocks, but don't waste any more energy worrying about it.

I agree with techA. The market sucks right now and even the most experienced are losing money. There is no better time than now to stay out of the market, put your money in Ubank at 6.51%, and just learn heaps. Buy some books, talk to people, use these forums. In addition, you'll be able to build up enough capital to form a money management strategy. It sounds cruel, but the less capital you have, the more likely you are to lose it, you just don't have enough to play with and you lose a lot of your returns to brokerage.

 

[Enroth]

Thanks for the good advice. I think if I want to make a go of it I do need to take more like a year out to learn. And yes, that way I'll have a decent amount of capital to work with.

Cheers,
E

 

[Frankie]

When learning, I look for strategies that could work in the market I’m faced with.

Example: steady market (trend trading), choppy market (day trading), bear market (short selling).

I believe in learning but I want to learn what can work sooner rather than later.