New trader: Where to start!?

[J.Baker]

I'm fairly new to trading. I hold some shares in QFX and AIZ.. I also trade futures with Traders int ( keep negative comments to yourself ) But I really want to try speed things up a little. My holdings are going no where, which is fine because I don't intend to sell them anytime soon. And I'm generating little profits from futures ( only just started ) which is also irrelevant because I am working on a compound strategy until I build my acct up over a year or two... Basically I'd like to get into something like options thou I don't have a whole lot of cash to outlay, would $5,000 get me started? I don't want to borrow until I am confident it will work for me... Can anyone suggest something I may be able to get into with little cash outlay. Not necessarily something that's going to generate huge cash flow. But a little to speed up the process would be great!

I know what I can look for, Just want opinions from people who have been thu this.

 

[Tradesurfer]

Your first steps might be to outline your investing plan

what you will trade
how or why you enter (what is your entry strategy)
how you will exit (both to protect losses and protect profits)
how will you size your positions
how will you measure success
what tools/platforms will you use
And can you remain disciplined to these very things

 

[Timmy]

Yep, Derek is on the right track.

Just a few questions for you too.

You want to speed things up, so we need to know where you are coming from first so maybe we can see if you are being realistic.

Your share trading: how much have you made %pa?
Your futures trading: how much have you made %pa?
Given those results, what sort of results do you want to achieve?
Be specific.

 

[J.Baker]

In answer to your Q's, I really don't have specifics.. Im simply looking for strategy recommendation's (options, futures, forex etc etc).. As for my profits so far, they are minimal. I've only just come from trading Sim with options and my strategy is to trade the SP mini, grab about 5pts per week, compound the results trading more and more contracts as my portfolio increases over a year or so. The idea is to be able to trade 10 contracts with the same strategy. So I won't be taking profits until that works, or fails and I come up with a new idea... If things work perfectly that would take 35weeks. But they never do so Im going to try for one year... The stock I hold, QFX and AIZ doesn't look to be going anywhere fast, qfx have just signed up with Harvey Norman but I'm not sure that that will boost prices in a hurry. I bought in @ 2cents and they are currently trading at 5... I want to hold out for 10cents, sell 50% of my stock and leave the rest for whatever I think might be feasible at the time... AIZ, I really don't know. I don't hold enough stock to really worry about it, 250odd shares. I will leave those for a few years at least.. Really I just want to find a strategy that could make me an extra $200 or so per week.. And eventually once I get the hang of futures I will do that rather the 9-5 thing...

 

[Semillon]

The stock I hold, QFX and AIZ doesn't look to be going anywhere fast, qfx have just signed up with Harvey Norman but I'm not sure that that will boost prices in a hurry. I bought in @ 2cents and they are currently trading at 5... I want to hold out for 10cents, sell 50% of my stock and leave the rest for whatever I think might be feasible at the time...

If you feel that more than doubling your money in 6 or so months is not an amazing return then you may need to lower your expectations

 

[J.Baker]

If you feel that more than doubling your money in 6 or so months is not an amazing return then you may need to lower your expectations

lol, I was lucky with that one.

 

[Julia]

The stock I hold, QFX and AIZ doesn't look to be going anywhere fast, qfx have just signed up with Harvey Norman but I'm not sure that that will boost prices in a hurry. I bought in @ 2cents and they are currently trading at 5... I want to hold out for 10cents, sell 50% of my stock and leave the rest for whatever I think might be feasible at the time... AIZ, I really don't know.

You bought QFX at 2c. It went to 8 c before flattening and falling.
Did you consider selling when your original investment was x 4?

What makes you think they will necessarily go to 10 cents?

ALZ is typical of the stapled property trusts. If you believe they will actually pay the 18% yield that's currently quoted, and it remains flat, I suppose you could do worse.

Lots of other much better stocks.

 

[J.Baker]

You bought QFX at 2c. It went to 8 c before flattening and falling.
Did you consider selling when your original investment was x 4?

What makes you think they will necessarily go to 10 cents?

ALZ is typical of the stapled property trusts. If you believe they will actually pay the 18% yield that's currently quoted, and it remains flat, I suppose you could do worse.

Lots of other much better stocks.

I did contemplate taking profits at 8 cents but I had already made up my mind 10 was the target. Plus they dont owe me a whole lot. I own 139,115 at a cost of $2,800... If they hit that area again and start to drift I may consider lower profits... If I remember right these were up at 28 cents a few years back ( without looking at the chart ).... Like I said tho, I am new and its all learning to me. I know to most of you it might not seem logical.

 

[wtang89]

J.Baker,

Few points,
1) You mentioned that you want $200/week extra yet you also mentioned that you want to start with 5000. That's over 10k a year....which means you are essentially tripling your portfolio in a year. I think you need to revise that because that is very hard to achieve unless you are investing in micro-stocks such as BUY or one of the other oil/gas explorers and pray for the best.
2) Another way you can achieve that target would be marginal lending, something you might want to look into. Although, beware, with greater leverage comes greater risk (maybe you don't mind).
3) Options are another way to go..but i suggest you read some books before you dabble into those.

Good Luck, and Trade with intelligence

 

[J.Baker]

J.Baker,

Few points,
1) You mentioned that you want $200/week extra yet you also mentioned that you want to start with 5000. That's over 10k a year....which means you are essentially tripling your portfolio in a year. I think you need to revise that because that is very hard to achieve unless you are investing in micro-stocks such as BUY or one of the other oil/gas explorers and pray for the best.
2) Another way you can achieve that target would be marginal lending, something you might want to look into. Although, beware, with greater leverage comes greater risk (maybe you don't mind).
3) Options are another way to go..but i suggest you read some books before you dabble into those.

Good Luck, and Trade with intelligence

What Books could you recommend? I have watched some of those 21st ca DVD's ( I'm a member, waste of time IMO ) which outlines a few strategy but all their stuff does it seemingly try to suck you into buying their products. At 5k a pop it doesn't seem very feasible.

I have an asset which I could sell for around 3grand.. As a long term thing would it be a good idea to do a bit of research and invest in a few cheap stocks, around the 10cent and below mark?.. A few people I know personally have suggested this, one of which is a millionaire. The rest, just dudes who Im pretty sure hold no stock at all. And if so, is there a certain criteria to look for with lower end of the scale stock?.. Obviously if I could get a few of them to work as well as my QFX holdings did I'd be happy. But chances are slim...

With Options trading, Perhaps I could find a good full service broaker to help me out? I have no idea what the fees and commissions are, by the time I give them their cut I might not make much with such a small outlay?

 

[nunthewiser]

no offense intended

my suggestion is to save your cash , buy a pen and paper and watch watch watch , start with a few dummy trades in areas that intrest you be it small caps , indicies or whatever . but above all dont be in such a hurry to pass over your cash ............watch and learn from it

market will still be here later ............your cash might not be

 

[mazzatelli]

With Options trading, Perhaps I could find a good full service broaker to help me out? I have no idea what the fees and commissions are, by the time I give them their cut I might not make much with such a small outlay?

Time is required to accumulate knowledge on options.
There are many risks the unaware trader could expose themselves to.

Use the search function for threads on option books if you decide to follow that path. WayneL and sails are the posters you will also want to read for more on options.

 

[wayneL]

With Options trading, Perhaps I could find a good full service broaker to help me out? I have no idea what the fees and commissions are, by the time I give them their cut I might not make much with such a small outlay?

Time is required to accumulate knowledge on options.
There are many risks the unaware trader could expose themselves to.

Use the search function for threads on option books if you decide to follow that path. WayneL and sails are the posters you will also want to read for more on options.

YES, and just to add. There are not many brokers that know much about options. They can't really help you a lot apart from execution.

Read and grasp McMillan, Natenberg and Cottle (and/or a few others) and you'd probably know more than most of them.

 

[nomore4s]

market will still be here later ............your cash might not be

lol, I like that nun. Some very good advice.

 

[nomore4s]

Set goals
Build a plan to achieve goals
-Find a strategy
-Make sure strategy will work
Implement your plan

Why do most people get into share trading? For most of us it is to build wealth and/or create extra income. I feel too many beginners get lost in the short term aspects of trading and should actually start with a long term investment strategy first. I know I wish I had, I would be probably 5+ years in front of where I am at now.

As an example I will explain the various portfolios I run and the ideas behind them (this might take a few posts).

1. Income portfolio
My aim with this portfolio is not so much capital growth but creating an income stream I can eventually retire on. Most of the stocks that end up in this portfolio will never be sold as long as they keep producing & increasing d/e payments which also keeps fees to a minimum and my tax requirements low. 10% of all income & trading profits go into a fund for this portfolio which is then used to buy stocks that meet my criteria for this portfolio when they reach a desired price level.
The criteria for this portfolio is pretty simple - basic fundamental requirements to be applied to each stock. Obviously paying a d/e, as well as low debt levels, good earnings growth potential, a basic solid company history, I will also prefer a low d/e payout ratio and ability to continue to grow and increase d/e payments year on year but as I'm a chartist at heart I also use some basic T/A to filter stocks.
The only exception is the big four banks which I purely enter once or twice a year based on T/A levels.

This is where I believe most people should start with investing in the stock-market especially when they have limited knowledge, as they can begin to set up a decent long term strategy while still educating themselves on the various ins & outs of the market without exposing themselves to excessive risks in the market.

 

[nomore4s]

This is a commonly asked question we see on the forums from newbies and I thought I would try to answer it in a bit more depth then we normally see but it will take me a few posts and quite a bit of rambling so you will need to be patient

The first thing that needs to be decided is how much time and energy is to be devoted to learning, devising and implementing strategies to start extracting returns from the market. This will then help determine what type of time-frame and strategies to devote time too.

The next stage is to set some goals, what do you want to achieve from investing/trading? And do the goals then match up with the amount of time you are willing to put into your trading. I'll give a bit of a hint here - probably the most important goal in trading is to control your risk and minimize your losses.

Alright we have covered the easy bits, this is where it now becomes slightly more difficult for beginners - building a plan to achieve your trading goals that also fits in with the time you are willing to commit to trading. Building a plan for a beginner can be very difficult due to the fact they don't know what they really need to know to build a good profitable trading plan. So that means the first goal and first step in a plan should be based around education, which is why they probably have ended up on this forum in the first place.

As the more experienced know it can take quite a few hours of study and then plenty of trading mistakes to finally formulate a understanding of how to be profitable. This is why I feel too many beginners (and some of us more experienced) get lost in the short term aspects of trading and should actually start with a long term investment strategy first as this gives time to study and learn other strategies while also giving a feel of how the market works. I know I wish I had, I would be probably 5+ years in front of where I am at now.

This is all I have time for atm but will look to do a post on the power of long term investing in the markets using dividends to create an income stream, while also outlining some of my long-term investment strategies.