Newbie Lessons - All your questions answered

[Sir Osisofliver]

Hello Sir O. I have a question regarding property strategies

Say Mr. X bought 2 investment properties. take into account that he has no PPR.

Is it legal for him to live in one of his own investment properties and use " negative gearing" strategy for taxation purpose?

How Mr X purchased those properties makes a huge difference. Did Mx X purchase them under a trust structure with a corporate trustee?

If so then the answer could be that yes he might live in one of his investment properties and pay rent to the company that owns the assets. (You'll find a proviso that he needs to pay a market rate of rent).

If he owns them in his own name....then my understanding is that no it would then cease to be an investment property and become his PPR for taxation purposes.

Seek specialist advice from a tax lawyer for more details.

Cheers

Sir O

 

[FelixLazard7]

Thanks Sir O for the info.

 

[TMC93]

Hi, Toby here, I'm 18 years old and have always had a head for money, been investing in the stock market for about 6 months after I had paper traded successfully after a year. I would be lying to say I have made money but that's to be expected in this market I guess, I'm just breaking even. My main question was, for someone as young as I am and inexperienced, is such a volatile market a good place to start? My dad always told me when the going gets tough the tough gets going and I wondered if it's the same with shares. I currently only have $5000 in the market and 80% in small caps and heavy in resources. I have $10,000 in a term deposit which matures with another $1000 interest in September. I have $6000 in cash sitting in a high interest account and am considering adding it on the my term deposit. Currently I use E*trade which I find is suitable and stock market eye for non web based program. I use bloomberg for my iPad. Any help/suggestion would be appreciated, have only been reading this forum for about a week and have already doubled my watch list for future picks.

Cheers, Toby

 

[KurwaJegoMac]

Hi, Toby here, I'm 18 years old and have always had a head for money, been investing in the stock market for about 6 months after I had paper traded successfully after a year. I would be lying to say I have made money but that's to be expected in this market I guess, I'm just breaking even. My main question was, for someone as young as I am and inexperienced, is such a volatile market a good place to start? My dad always told me when the going gets tough the tough gets going and I wondered if it's the same with shares. I currently only have $5000 in the market and 80% in small caps and heavy in resources. I have $10,000 in a term deposit which matures with another $1000 interest in September. I have $6000 in cash sitting in a high interest account and am considering adding it on the my term deposit. Currently I use E*trade which I find is suitable and stock market eye for non web based program. I use bloomberg for my iPad. Any help/suggestion would be appreciated, have only been reading this forum for about a week and have already doubled my watch list for future picks.

Cheers, Toby

I started live trading about 3 months into the start of the GFC stockmarket plunge. The volatility was phenomenal, with wild erratic swings every day. It was a difficult period to start in but I'm glad I started then - it really tested my emotions and discipline and punished me hard and fast whenever I made a mistake. When you start as a noob and lose $2500 in one day (20% of total capital at the time) it teaches you many valuable (and expensive!) lessons.

Of course it would be best not to lose that money in the first place, but that event and many others, refined my trading and risk management considerably. Perhaps the best piece of advice I can give you is to ensure you review each of your trades and determine whether you stuck to your plan, didn't sell/buy on emotion and that you had appropriate risk strategies in place. Ask yourself what should you have done differently and identify any gaps in your knowledge and then go out and learn more.

Never stop learning!

 

[Sir Osisofliver]

Hi, Toby here, I'm 18 years old and have always had a head for money, been investing in the stock market for about 6 months after I had paper traded successfully after a year. I would be lying to say I have made money but that's to be expected in this market I guess, I'm just breaking even. My main question was, for someone as young as I am and inexperienced, is such a volatile market a good place to start? My dad always told me when the going gets tough the tough gets going and I wondered if it's the same with shares. I currently only have $5000 in the market and 80% in small caps and heavy in resources. I have $10,000 in a term deposit which matures with another $1000 interest in September. I have $6000 in cash sitting in a high interest account and am considering adding it on the my term deposit. Currently I use E*trade which I find is suitable and stock market eye for non web based program. I use bloomberg for my iPad. Any help/suggestion would be appreciated, have only been reading this forum for about a week and have already doubled my watch list for future picks.

Cheers, Toby

Hi Toby,

I consider the current environment an excellent one in which to learn. I run a number of different systems with which I trade. I find that these trading systems perform better or worse in certain market conditions and need to be tailored to what kind of prevailing market exists at the time. This kind of market will expose you to numerous types of up/down and neutral trends in a short period of time...giving you a great opportunity to learn how to structure a system with which to tack money from the market.

I would personally always recommend that you paper trade before starting a new system, but appreciate that some people don't learn when there isn't real money on the table.

Cheers

Sir O

 

[TMC93]

Hi Toby,

I consider the current environment an excellent one in which to learn. I run a number of different systems with which I trade. I find that these trading systems perform better or worse in certain market conditions and need to be tailored to what kind of prevailing market exists at the time. This kind of market will expose you to numerous types of up/down and neutral trends in a short period of time...giving you a great opportunity to learn how to structure a system with which to tack money from the market.

I would personally always recommend that you paper trade before starting a new system, but appreciate that some people don't learn when there isn't real money on the table.

Cheers

Sir O

I confess, when I was paper trading I did less research compared to when I started trading with real money. Thanks for the advice, and this thread is great for someone like myself. I am still young so I can afford to lose a bit of money taking risks and I understand that buying small caps are risky but the rewards a high. My biggest mistake was buying FMS @ $0.20 as they are now down to 0.12 but am sticking with that one.

My main strategy has been if value falls 15% I sell and likewise on the rise. If I feel the stock is still good I buy back in with my initial capital and bank the difference for future trades. Not the best strategy In a yoyo market so I'm trying not to worry too much about the red I see daily. Was thinking about buying a few blue chips to diversify but after seeing blue chips can fall just as sharply I am now unsure.

 

[MrMomentum]

For me, the challenge is to find the right strategy for the market in front of me.

It gives me more confidence if I’ve paper traded the strategy before hand and drawn up some rules for myself.

Whether it be gaps, trend trading, pattern trading or news trading, if I’ve had some practice paper trading it first then I feel more confidence choosing the strategy I want.

 

[tech/a]

For me, the challenge is to find the right strategy for the market in front of me.

It gives me more confidence if I’ve paper traded the strategy before hand and drawn up some rules for myself.

Whether it be gaps, trend trading, pattern trading or news trading, if I’ve had some practice paper trading it first then I feel more confidence choosing the strategy I want.

As Ive said before Paper trading is not worth the paper its written on.

To be statistically significant I would argue that you need at least 500- 1000 trades over a wide range of market conditions.

Hardly practical if "Paper trading"

Just having a trading "plan" doesn't guarantee a positive expectancy trading methodology.

There is no easy or cheap way to develop a PROVEN trading method.

You need the software--the skill and the acumen to design and test systems.

 

[MrMomentum]

I believe that everyone approaches trading differently.

I also believe everyone approaches paper trading differently.

When I paper trade, I’m not at all interested in the “statistics” behind it.

I’m interested in the “experience” of applying a set of rules to the market.

I want to test my rules but also test my reactions in a safe environment free of risk due to having no money down.

The way I approach it is to set myself a paper trading dollar target.

I want to see if I can reach this target by applying my rules in a reasonable amount of time. This may be rules I’ve made up or rules I’ve read about from someone else.

If my rules aren’t working or if it is taking forever to reach my paper target then I can abandon the system quickly without any fuss or issue.

I feel I don’t have to do 500-1000 trades to work all this out.

Paper trading to me is about experiencing things for myself.

 

[tech/a]

A pointless exercise then
If you make a loss you have no idea if your throwing out a perfectly good method because you traded it in conditions that result in the method drawing down.

Or worse you pull a profit in market conditions which occur rarely and over long term you'll fail dismally.

You simply DON'T KNOW

To ignore statistics or choose not to record them means your just a " player" in the serious business of trading.

Still players have their place
They supply a lot of capital the those who run serious business

 

[MrMomentum]

Yes it is pointless....To think you might accept a different point of view to your own.

 

[tech/a]

Yes it is pointless....To think you might accept a different point of view to your own.

Sorry I dont understand.
Explain to me how and why trading a theory (Or plan) you have no idea whether it will return a profit is of any benefit.
It really is pointless.

I post here to show to people that theory such as yours is plain crazy.
Being comfortable and feeling warm and fuzzy because a couple of trades turn a profit or a couple of trades turn a loss and you discard the theory is just a waste of time.

SURE

If you have a RIGOROUSLY TESTED System (Plan) which you have run over as much data and time as you can AND it shows positive expectancy--THEN paper trade it to death and see if it performs as it has in testing!!
Its called Forward testing in Real-time.

 

[TMC93]

When i was paper trading, if something didnt work i wouldn't simply throw it out like you said i would keep it incase it suited different market conditions. I can see that an experienced trader may not use paper trading but this is a beginners post and i sure know it helped me understand the market better.

 

[Sir Osisofliver]

I confess, when I was paper trading I did less research compared to when I started trading with real money. Thanks for the advice, and this thread is great for someone like myself. I am still young so I can afford to lose a bit of money taking risks and I understand that buying small caps are risky but the rewards a high. My biggest mistake was buying FMS @ $0.20 as they are now down to 0.12 but am sticking with that one.

My main strategy has been if value falls 15% I sell and likewise on the rise. If I feel the stock is still good I buy back in with my initial capital and bank the difference for future trades. Not the best strategy In a yoyo market so I'm trying not to worry too much about the red I see daily. Was thinking about buying a few blue chips to diversify but after seeing blue chips can fall just as sharply I am now unsure.

HI TMC - Been busy hence the lateness of my response.

I refer to the bolded bit...I hope you realize that what you have effectively done is the following.

Limited your downside risk and limited your upside potential.

If you have a 50% win loss ratio (you get half of your choices correct) theoretically you will just break even. (In practice you won't because the expense of brokerage will mean you go backwards).

Can you see why this could create a problem?

Cheers

Sir O

 

[Sir Osisofliver]

As Ive said before Paper trading is not worth the paper its written on.

To be statistically significant I would argue that you need at least 500- 1000 trades over a wide range of market conditions.

Hardly practical if "Paper trading"

Just having a trading "plan" doesn't guarantee a positive expectancy trading methodology.

There is no easy or cheap way to develop a PROVEN trading method.

You need the software--the skill and the acumen to design and test systems.

Hi Tech,

You and I have had a discussion before about paper trading and my opinion is that I do find value in it. Of course I also do a statistically relevent number of test trades when paper trading.

One thing I have found useful which you may want to consider when paper trading (and I'm talking to everyone here not just Tech), in the last six months I've experienced a slight flattening of my equity curve, predomininantly caused by real world implications of scale and slippage. (Remember I wouldn't class any of my systems as High Intensity trading and I don't watch the market constantly, instead relying on contingency orders to automatically trigger in and out of my selected targets).

I'm in the process now of researching yet another system (I'm a glutton for punishment) and as part of the process I use I did around 100 test trades. In addition to the ordinary transaction costs I imposed a 5% discount to my exit price (to better reflect the slippage effect). It very quickly became obvious that the system still retained positive expectancy, despite the millstone I placed around it's neck.

I find this valuable...and relevant. But don't use me for an example everyone, unless you are like me...I will spend ~9 months in validating and finetuning a system before I live test it with minimal funds. Once validated (after a small sample and comparative to test data), I will then move appropriate funds to the system.

Cheers

Sir O

 

[TMC93]

HI TMC - Been busy hence the lateness of my response.

I refer to the bolded bit...I hope you realize that what you have effectively done is the following.

Limited your downside risk and limited your upside potential.

If you have a 50% win loss ratio (you get half of your choices correct) theoretically you will just break even. (In practice you won't because the expense of brokerage will mean you go backwards).

Can you see why this could create a problem?

Cheers

Sir O

I see, maybe if i increase my selling point to 30+% that might work better. I suppose my strategy only worked because i was lucky enough to pick the right shares at the right time but i have not been following it lately as everything is up and down, just the other day COK went up 25% and i didnt sell. Trying to diversify my portfolio as im nearly all resources and i dont want to be caught with all my eggs in one basket but am unsure about retail with the strong $. Energy and agriculture look ok to me for the longer term 5-10 years however agriculture shows very limited growth from what i can see.

 

[tech/a]

Sir O

Have you the facilities to systems test with software?

My view is one which has been set in stone due to the luxury of being able to test
Years of data and unlimited variants in a matter of minutes.
I can walk forward test unlimited markets in any set of market conditions in minutes.
I don't have to wait weeks and heave forbid months!

In the time it takes to gain statistical significance from paper trading I'll have tested 100s of variants over huge data sets.

The point I'm making is this

It's worth the time and effort.
You'll won't even come close to sound software produced systems testing.
You just don't have the flexibility to add or subtract conditions in "what if" senario's

If anyone is serious in this business they will learn more testing 1000s of ideas and creating 100s of conditions and parameters over a wide variety of markets and market conditions than you EVER will paper trading.
Most never come close to months of paper trading I'd say 50 trades would be massive to most and 20 considered significant.

One suprising thing WILL happen

You'll learn why a method will be profitable
You'll change your thinking and be able to knock up a profitable method quickly as you'll soon discover what works and why!

The amount of feed back your software--- if it's good will give you is priceless.
Not the sort of feed back you'll get with paper trading.

Paper trading----- it's not worth the paper it's written on!

 

[JayCutler]

Hi guys, newby here

Lets say someone had a $200k equity loan and put that into a 10 blue chips. The borrower can easily meet the interest repayments and has enough left over for other expenditures etc. When is the best time for that person to pay off the principal of the loan?(if ever).

Thanks

 

[Tyler Durden]

Hi all, just wanted to ask a really really basic question.

Let's say I place a sell order of 500 shares at $1 each. Five minutes later, someone else places a sell order of 500 shares at $1 each. So in total, there are 1000 shares offered to be sold at $1.

Then someone places a buy order of 500 shares at $1 each. Do my shares get sold, or the other person's shares?

A slightly related question (or it may be the same question) is, when I buy shares, I am surprised that the transaction always goes through. What I mean is, if I buy 500 shares, then it always goes through (at the right price). But what if there is only one person selling 1000 shares? Does that mean he has only sold half?

 

[tech/a]

Yes to both questions