Questions from noob about trading from home!

[Trembling Hand]

I am strongly considering trading from home full time. Going for jobs at the moment, but none seem to be working out. Am very tempted to get job in hospitality so i can trade Aussie Stock Exchange during day, so my question mainly relates to trading on the ASX on a full-time, daily basis.

I understand what a trading plan is. I don't necessarily have one,

What is a positive expectancy? I think i'll Google it later, but some insight would be good

How would i formulate a trading plan?

And people wonder why I am grumpy.:flush:

 

[nunthewiser]

LOL nah totally understand actually long live calling a shovel a shovel

 

[Aussiest]

Aussiest,

STOP "TRADING" IMMEDIATELY

You are not trading. You are gambling. Gamblers lose.

Yeah, i'm hearing you.

No offense taken, i promise.

Have Louise Bedford's Trading Secrets...

Forex, here i come.

Only joking .

 

[DennisTheTrader]

Hi Pro Frink :

I am strongly considering trading from home full time. Going for jobs at the moment, but none seem to be working out. Am very tempted to get job in hospitality so i can trade Aussie Stock Exchange during day, so my question mainly relates to trading on the ASX on a full-time, daily basis.
Martine

Hi Aussiest

Just keep in mind that if you're relying solely on your trading profits to pay for this weeks rent, then that could really influence the way you trade. ...in a very bad way

If you're in a job, and your trading system only requires a small amount of time in the day, then you could always trade during your lunch break? and ask the boss if you can move that lunch break to later in the afternoon or whenever you need to trade. All you would need then is a el-cheapo laptop and a 3G mobile to connect it to the internet and you're away.

 

[white_goodman]

Hi Aussiest

Just keep in mind that if you're relying solely on your trading profits to pay for this weeks rent, then that could really influence the way you trade. ...in a very bad way

If you're in a job, and your trading system only requires a small amount of time in the day, then you could always trade during your lunch break? and ask the boss if you can move that lunch break to later in the afternoon or whenever you need to trade. All you would need then is a el-cheapo laptop and a 3G mobile to connect it to the internet and you're away.

i keep an eye on my trades every day at work, i execute all my buy and sell orders the night before and keep an eye on the progress at work... its not hard , i suggest playing the market for atleast 5 years before attempting it as a full time income earner

 

[white_goodman]

And people wonder why I am grumpy.:flush:

its not you job to stop people from financial suicide...

 

[Aussiest]

Hi Aussiest

Just keep in mind that if you're relying solely on your trading profits to pay for this weeks rent, then that could really influence the way you trade. ...in a very bad way

If you're in a job, and your trading system only requires a small amount of time in the day, then you could always trade during your lunch break? and ask the boss if you can move that lunch break to later in the afternoon or whenever you need to trade. All you would need then is a el-cheapo laptop and a 3G mobile to connect it to the internet and you're away.

I have been reading up on "money management" techniques. Interesting about the 2% rule and money management. Michael is right, i have been gambling to a certain extent. I seriously need to review my strategy...

1. Determine entry point / price: trend, candlesticks, support levels, volume (not sure how this works yet), market news, economic data, overseas economic events, market sentiment (?), sector sentiment (?)

2. Determine risk level: how much capital prepared to lose (should do this first)

3. Determine position size: this depends on capital, allocate no more than 20% of my capital to any one trade

4. Determine stop loss levels (still need to research this, not strong)

5. Apply trailing stop losses (need to research, weak point)

6. Other things like estimated time in trade

It'll take a while to do, but i'll get there.

 

[korrupt_1]

can someone explain to me the idea behind 2 monitors?

whats so hard about minmising and opening another window on the same monitor?...ive always been confused by this

I use to day trade (scalp) on a single 19"... it was tough work sometimes with all those charts, trading platform, firefox, outlook, etc all overlaping each other.

Now on a dual 22", I can have 1sec, 1min, 5min, 10min and 1hr tick charts running simultaneously. It's amazing that this extra information at hand has given me the slight edge to be successful in scalping points off the index.

It really depends on your trading style... if you are like some of us scalpers, we can be in and out of a trade within seconds. If you're a positional trader where things move much slower, then yeh I agree with you, all those extra charts, windows, etc isn't necessary.

 

[Aussiest]

It really depends on your trading style... if you are like some of us scalpers, we can be in and out of a trade within seconds.

Can i ask you Korrupt, by being in and out within seconds, do you mean you buy large quantities using high leverage, eg, many thousands of XYZ share on a low margin?

 

[Paladin]

Hi Aussiest!

Like you, I'm trying to get my head around some of the TA fundamentals.

Trailing stop losses seem a godsend.
And yep, definitely spend some time working out the relationship between price and volume as indicators. This has really helped me make sense of trends. I'm actually playing by printing out charts from a few months back and making guesstimates of where the stocks will head, then comparing them with the historical result (as an exercise in pure TA, which I don't strictly believe in).

 

[Aussiest]

Well, the current market shows that you cannot rely on TA alone. Seeing how the 'credit crisis' and the U.S stock market has influenced ours is highly indicative of that.

It seems to me that news really does influence people's perceptions of the market, or makes them wonder about what others are doing, at the very least.

For example, bad profit report for U.S. bank. Everybody starts panicking. Investors pull out due to possible lower dividends. Traders realise this and hypothesize that other traders will pull out due to lower prices. So, as some traders pull out, prices drop, thus causing other traders to dump shares. And boom... you have the downward slide.

Really, the profit downgrade may not have been that bad, but we, as human beings, catastrophise everything. So, my point is, that news effects the psychology of the market. I am going to use a combination of technicals and fundamentals. News really does effect the market, it's incredible.

 

[Paladin]

Well, the current market shows that you cannot rely on TA alone. Seeing how the 'credit crisis' and the U.S stock market has influenced ours is highly indicative of that.

It seems to me that news really does influence people's perceptions of the market, or makes them wonder about what others are doing, at the very least.

For example, bad profit report for U.S. bank. Everybody starts panicking. Investors pull out due to possible lower dividends. Traders realise this and hypothesize that other traders will pull out due to lower prices. So, as some traders pull out, prices drop, thus causing other traders to dump shares.

Really, the profit downgrade may not have been that bad, but we, as human beings, catastrophise everything. So, my point is, that news effects the psychology of the market.

Absolutely. The irrationality of the market is such a big part. For my uninformed 2c - one needs to be on top of FA, TA and also mental analysis (of the self as much as of the market). A great book which I picked up on a recomendation here is "Trading in the zone" by Mark Douglas, which is entirely about the latter.

 

[Aussiest]

But, having said that though, sometimes news is just good luck or bad luck. If you're already in the position, there's not really much you can do about it. Perhaps the trick is to monitor what news is coming up, so you will buy with the knowledge that it can go against you or for you.

I'm still working all this mumbo jumbo out... It will be part of my trading plan.

Keep an economic diary too Paladin.

 

[Aussiest]

Absolutely. The irrationality of the market is such a big part. For my uninformed 2c - one needs to be on top of FA, TA and also mental analysis (of the self as much as of the market). A great book which I picked up on a recomendation here is "Trading in the zone" by Mark Douglas, which is entirely about the latter.

Ah yeah, thanks for the recommendation. That'll be next on my list.

Self analysis is definately important. I recognised a shortfall tonight and am thinking about it. Then i will work on it.

How about you? What do you think your limitations / shortfalls are? If you dare to tell .

 

[professor_frink]

Well, the current market shows that you cannot rely on TA alone. Seeing how the 'credit crisis' and the U.S stock market has influenced ours is highly indicative of that.

I don't necessarily agree with that, and I'm quite certain that there are more than a few here that use TA exclusively that are doing just fine trading off it alone.

Having said that, my trading hasn't gotten any worse as I become more and more familiar with the way the financial markets work outside of TA(and I really only know enough to be considered a danger to myself). But it could also be argued that it has just as much to do with the fact that I'm getting better at trading via TA that is the main reason for improvement. It could really be either, I dunno!

There is also the grey area where you start analysing related markets to a company you are thinking of trading, ie you could be looking to get long on a certain company here, and then turn around and also analyse the sector it trades in, and similar companies in the same sector the in different markets looking for any other information you can to help make a more informed decision. Still TA in that you are analysing charts, but not in the classical sense where you wake up and short BHP because of some weird named pattern you read about in a book has shown itself on the chart(which may or may not have something to do with how well you slept the night before or how much coffee you had that morning).

Absolutely. The irrationality of the market is such a big part. For my uninformed 2c - one needs to be on top of FA, TA and also mental analysis (of the self as much as of the market). A great book which I picked up on a recomendation here is "Trading in the zone" by Mark Douglas, which is entirely about the latter.

Have a look at Steenbarger's enhancing trader performance. One of the best books I've ever read, and one I now wish I had of read the moment it came out. You won't regret it for a moment

 

[Paladin]

Ah yeah, thanks for the recommendation. That'll be next on my list.

Self analysis is definately important. I recognised a shortfall tonight and am thinking about it. Then i will work on it.

How about you? What do you think your limitations / shortfalls are? If you dare to tell .

Ha! I dare tell.

Firstly, I'm being silly enough to enter the market (properly - like most I've had one or three obvious stocks in my bottom drawer for a while, but my interests have mostly been in property) at a stupidly bad time. I'm only doing so in a small way, though, really trying to learn at this stage.

I have the problem of EVERYTHING I read making sense in one way or another. So it's a case of trying to aggregate information, to make my own mental model, to try on different hats and find out which fedora fits me - again, as you rightly pointed out, made more complicated by the current market.

I have a little too much exuberance at the moment. I get really excited about new hobbies, and so I have to be really careful not to be too enthusiastic, and just to keep playing with a small pot (and strict stop losses) and trade on paper until signs are clearer.

Finally, ignorance. is a lot I don't know. Before I am able to take this half seriously, I need to learn a lot more (recognising also that learning on the market as opposed to from books alone can be valuable). This forum has been gold in that respect. My main challenge at the moment is trying to prioritise my learning, to accurately assess my knowledge gaps and work out which ones are the most critical.

 

[Trembling Hand]

(and I really only know enough to be considered a danger to myself)

Hah you sound like my old man!

Have a look at Steenbarger's enhancing trader performance. One of the best books I've ever read, and one I now wish I had of read the moment it came out. You won't regret it for a moment

Yes its a ripper. Not only that it bunks the Bullsh!t about trading being mainly psychological. From a trading Psyc!!

 

[fordxbt]

dont worry about your hardware, software is the important issue
you need enough power to run some GUI's not play games (but i would say bare minimum 1GB memory)
also internet bandwidth is the key, no use having a demon setup if you cant get your feeds streaming

 

[Paladin]

Have a look at Steenbarger's enhancing trader performance. One of the best books I've ever read, and one I now wish I had of read the moment it came out. You won't regret it for a moment

Cheers, Prof! I really respect your opinion from what I've read of your posts, so I'll nab a copy. Hopefully they sell it via the bookshop here

 

[professor_frink]

Hah you sound like my old man!

Yes its a ripper. Not only that it bunks the Bullsh!t about trading being mainly psychological. From a trading Psyc!!

yep top read. Am just starting on it for a second time now. And am stinging for the 3rd to come out. Can't say I've ever really really been waiting for a new book by a trading author before!

There's an interview with him in the latest issue of YTE FWIW. Always good to read something from him. If you can get past all the Gann and CFD promo's that is!