Reality Check please...

[TriggerHippie]

Hi guys,

The more I read, the less certain I become! I had a plan, but have changed it several times as the information overload begins to kick in, so I wonder if someone who ACTUALLY knows what they are doing can offer a reality check on my underlying intentions, and perhaps a pointer to the path of least resistance...

While dabbling in various investments for some years, my primary strategy has always been to pay off the mortgage asap. Now in my mid 40's, I've just about done that - small outstanding on the house (about 10k), plus a freehold 6 acre weekender.

I'm only a blue collar worker (nearly 30 years in very specialised field), and am getting to the point where the "same old" is getting physically too hard, and a move to management (already declined once) would require an unwelcome personality transplant. Not motivated at all to drive a Beamer or live in a mansion by the sea. I do a lot of voluntary work in the evenings for a number of community organisations - and this is really where my passion is now days. If "investing" could generate sufficient income to enable the voluntary work to become my daytime activity, then I would be very happy.

My initial plan was to redraw a modest $X on the mortgage to "learn the art" of trading actively, while building that $X into a reasonable base from which to start deriving an investment income. I was initially researching fx day trading as the vehicle, but am much less enamoured with this option after learning more of the mechanics of how fx trading actually works.

I guess the big 3 questions are, 1) Which specific market would be most suitable for these goals? 2) How big should X be to start with? 3) How big should X grow to before one could be reasonable assured that the results would be sustainable in the longer term? Oh, and if anyone can suggest where to pick up a crystal ball in good working order, that may be handy as well?!

Thanks in anticipation,

Trigger

 

[Tukker]

Nothing in life is certain except death and taxes.

No matter how good you are the market will always throw you into a blender at one point or another.

"Consistent" returns are possible but a lot of experience is required, with a heap-full of guidance and 100% dedication.

I was told when i first started to learn about trading that I should never quit my job, but look at trading as a tool to retire early if things work out.

My first year was such a success i nearly quit my job and traded full time, i thought i had it made. Still at the age of 23 i obeyed my first instruction. The next year i lost 70% of my capital and the day job saved my heart from breaking.

Since then i have recovered much of it and endeavor to hone my skills and be more adaptive to what the market throws at me; experience (rather experience in technical analysis) would have saved the 70% loss.


This is my story, hope it helps.

 

[Space Invader101]

1) You can't expect me to tell you a specific market. That would be giving direct financial advice. It depends on risk verses reward. It's what you're comfortable with. You can invest in more than one asset class to diversify risk.

I've tried FX trading. I gave up because of sleep deprivation. It's a 24-hour market! I once went 2 nights in a row without sleep. There are Forex managed funds, but I've never tried them and can't guarantee them. You would have to do your own research.

I trade the ASX full time. On the ASX website you can try a share market game rather than jumping into the market and potentially losing you're money. There would be simulators out there for FX and other markets too.

2) Entirely up to you. It all so depends on how you trade the market and the type of market. For example, what time intervals will be on your charts, how much money you aim to make, and in what time frame? I personally wouldn't waste my time in the stock market with less than $20k, but that's just my opinion. Different people will give you different answers for this.

3a) Depends on your needs and lifestyle. For me, fully owning my own home, having some income investments to offset living expenses while still having leftover cash flow, and separately to that, having a stock portfolio to trade the market.

Consider mandatory expenses such as food, health costs, and dental, utilities and council rates. How much capital would you need for interest of say 5% to 10% to cover these per month or per annum?

3b) There is no crystal ball that I'm aware of that works 100% of the time. I won't tell you what to invest in, but I will say for me risk management is core. Regardless of their trading system, all professional traders understand position sizing, setting stop loses and the importance of diversifying risk.

A couple of books I have that discuss risk management:
The art of trading by Chris Tate
Mastering Risk by Mike Lally

I used to be a blue-collar worker. They always tell you to bend your knees to protect your back. Not much fun having arthritis in your knees years later.

 

[TriggerHippie]

Thanks... More reading is really exactly what I will one day recognise that I need!

Cheers