Sincerely looking for help and advice on starting in stocks

[mjp]

Re: sincerely looking for help and advice.

Make sure you learn about risk management first - limit the amount of capital you are prepared to loose between your buy price and your initial stop for every trade. 2% of your capital at risk per trade is commonly talked about, but plenty of traders will be more comfortable operating at 1% or less. Track how you are going over a number of trades and bail out and rethink at or b4 you are down 6% of your initial capital. Better yet as soon as you have had a loss, cut your trade risk down, and with further losses cut your risk per trade again. Let your trading earn it's way back up to positive territory before you allow yourself to increase your trading risk back up to 2%. If you can get back to positive territory there is some hop eyou have a trading approach that might be working.

That'll give you time to learn without blowing your capital and also give you an idea of how much capital you might need to be able to trade sensible sums allowing for brokerage costs every trade. If brokerage is a big part of your 2% then you ain't got enough capital and you'll be trying to set stops too tight. Van Tharp has something to say on this, as does Nick Radge and others.

Once you've got that sorted you need to find your "edge" - a combination of a style of trading that you are psycologically able to trade and that has a positive outcome over time. That involves reading the books and paper trading and real trading trying approaches that appeal until you are onto something.

Happy reading. As TechA says expect three years+ trading b4 you are consistently trading well. If that doesn't suit then save some of your income every year and watch it compound in the bank till you have the time to take this on.

Good luck!

 

[coyotte]

Re: sincerely looking for help and advice.

Interested Coyotte how YOU do this?
IE Keep the edge your way.

Do you think having the information below is important?

If so
Whats your longest string of losses?
Whats your average win rate?
Whats your average loss?
Whats your average hold time?
Whats your expectancy?
Whats your biggest winning trade?
Whats your biggest losing trade?
Whats your longest string of wins?

Tech/a
was under the impresson that most of you guys would be doing this anyway with back testing a method ----something I've never bothered with as it's to akin to horse racing systems -- which never work because of the consistanly changing variables -- as compared to a casino system which is constant envirement.

Q1: imaterial
Q2: imaterial
Q3: The Most Important part --- over the last 3 years 5% --mainly due suprise moves like OXR last week (I was SHORT)
Q4: Varys -- eg: yesterday used the old method of selling to the " lunch time crowd ) Long OXR around 11 closed around 12.30.
Current : Short OXR last Thurs -- Long Hedge Fri --- Close Long Mon (minor profit) ----- Long LHG Tues (last week) added to position Mon will Close today if Close looks like < 2.75 Loss 4% at 2.75 from the top up, even on inital.
no looks like I'm still in at at 4 pm
Q5: Prediction , not into that

Q6:MCL O.05 TO 0.70 years ago --fluke ', over the past 2 years OXR -- have ridden it LONG/SHORT since Aug last year

Q7: GYM 100% mine flooded on a xmas day NTG several years ago 95% loss -- buy hold & pray.
Over the last 2 years OXR --- 15% after the manipulated move Mon last week --- was able to bail out during the day but the price got away to quickly.

Q8: Not applicable


I go along with what Nick Radge ideas on Profit/ Loss Ratio vs Win%


As the bulk of my trades are initated by Triangles or Flags I,m in the 70/80% S/R area , hence the edge is my way --- but with the S/R falls away with the tighter stops -- but this leads vasty improved Profit/Loss Ratios --- hence pushing the edge further my way

Basic stuff really

Cheers

 

[coyotte]

Re: sincerely looking for help and advice.

Will get into calc odds later on


Cheers

 

[barney]

Re: sincerely looking for help and advice.

hie.
I'm a beginner in stocks and basically dont know much about the going ons. I just started reading some basic books and articles online and i find it hard for me to actually cross the stage of actually practising what i read. I understand that i am new and still very much green in this area however i would really like to be more active. However, i dont know how to go about as i dont know anyone within my social circle tt does this sort of things. ( i have also just begun to join community clubs). I dont feel i am learning as much as i ought to be as most of the books i am reading are mostly introductory. I would really like to take a leap to the next level but dont know where to go.
I even considered signing up for a course but after reading soem posts on the forum i realised that the majority thinks that those are just a waste of money. I would really love to hear how most of you started. (any books that are suitable to read ?)
Please advise me on how to proceed. I am really interested to learn and not just to gain a quick buck from the market.

Hi Debaron, I'm not gona try and give you specific advice, cause I'm still doing all that learning stuff myself, and besides, I've probably lost more in the last few months than you've earned in your whole life!!!!......but in a sense, that gives me credibility in some strange way..........There are so many people on this forum you can learn from, but its a funny thing about learning; you can't really appreciate good information until you understand/learn each part of the puzzle for yourself..................My advice (for what its worth) Start from the very beginning......Assume you know absolutely nothing..........and simply read anything and everything you can get your hands on, from wherever and whoever you can get it...........Don't believe its true until you prove it to yourself (PS Most of what you will read from good sources will in fact be true, but you need to understand it; thats the hard part). Don't bother trading until you at least have some grasp of how technical analysis works, and how the buyers/sellers "work" the share price of a given stock up or down..........Exit levels are far more important than entry levels (ie money/risk management etc etc.)...........there is just too much stuff to take in, in one go............So my main advice is; Do what I'm doing...........Learn, learn, and then learn some more......DON'T be impatient (I was and lost heaps!) .............Understanding how the market works and operates is the key..........If you make a choice to buy/sell a stock, you MUST believe (through knowledge) that your decision is/was correct (even if you got it WRONG), because if you are unsure about why you chose to invest your money, then you shouldn't have invested/traded it in the first place..............Long winded YES, but I speak from the experience of "doing it wrong" the first time..............I intend to get it right this time (and I'm doing much better atm!!)...........
So in brief ..........
"Education"......
"Technical Analysis"....
"Money Management"..................
"Patience".....
"Discipline"..... and
"Luck"...........There are lots more but I don't want to bore you too much, All the best, Barney.

PS Read all the threads from the "smart" people around here, and then re-read them every couple of weeks as you learn more, and it will all make more sense

 

[MichaelD]

Re: sincerely looking for help and advice.

Anyone who thinks it is gambling should not be trading.

Anyone who DOESN'T think it's gambling should not be trading.

One difference, though - with trading done correctly you get to be the house and have the edge in your favour.

 

[wayneL]

Re: sincerely looking for help and advice.

Anyone who DOESN'T think it's gambling should not be trading.

One difference, though - with trading done correctly you get to be the house and have the edge in your favour.

In isolation I couldn't live with your first sentence, though trading certainly shares some charactaristics with gambling.

With the addition of the second sentence though, I can.

So is Crown Casino a business or a gambling outfit?

 

[coyotte]

Re: sincerely looking for help and advice.

In isolation I couldn't live with your first sentence, though trading certainly shares some charactaristics with gambling.

With the addition of the second sentence though, I can.

So is Crown Casino a business or a gambling outfit?

The Poker machine side, along withTAB, Keno , Lotto, Lotteries, etc are a business as the operater is taking a fixed percentage out of the pool ---there is no risk to operator, they are acting as a agent or broker.

The Gaming Tables side --Gambling , the long term edge is with the casino eg:
Roulette -- 18 /18 = breakeven But we have either 1 or 2 zeros which belong to the Cansino --- if all bets where evenly placed and zero was not coming up
the casino/ players would be in a neutral position.
But if you had a period where players are consistantly winning against the table, the table in theory would go broke.


If anyone thinks that just because they have hitech charts and heaps of overated theories on T/A, sorts of puts them above the league of Punters, they should do their homework --- these Guys sent the old style Bookies broke ---- the avg Pro Punter would have put more work into analysing a field than the avg Trader and would probably have had more resoures available.

If you are achiveing a overall S/R of 80% with a Profit on turnover of 10% with around 5 trades each and every week, then you're in the same league as these guys were --- otherwise just another mug punter only in a different field.

Cheers

 

[tech/a]

Re: Sincerely looking for help and advice

coyotte

Your trading CFD's are you using the full 10:1 leverage?

 

[coyotte]

Re: Sincerely looking for help and advice

coyotte

Your trading CFD's are you using the full 10:1 leverage?

NO !

I treat them the same as a broker 20% max on a signal trade

If doing a $5000 trade (total value $5000 margin $250) that $5000 is sitting in the Trading account.

as I trade short term both L/S interest is not a problem
But I love the ease of trading --- live feed , INSTANT ORDER , good Graphs.

Except for LONGGG TERM INVESTMENTS I could not go back to trading with Comsec --- its just to damm hard compared to IGM --- its trading platform is set up for traders , ComSec for Investers




Cheers

 

[coyotte]

Re: Sincerely looking for help and advice

The major Problem I'm confronted with is the Trading Bank

This has to be readily accesable --- But it is idle Cash

Hate the set up --- but don't know what to do about it

Any surgestions ?

Cheers

 

[tech/a]

Re: Sincerely looking for help and advice

NO !

I treat them the same as a broker 20% max on a signal trade

If doing a $5000 trade (total value $5000 margin $250) that $5000 is sitting in the Trading account.

as I trade short term both L/S interest is not a problem
But I love the ease of trading --- live feed , INSTANT ORDER , good Graphs.

Except for LONGGG TERM INVESTMENTS I could not go back to trading with Comsec --- its just to damm hard compared to IGM --- its trading platform is set up for traders , ComSec for Investers




Cheers

Cant work out your maths.
20% of $5000 is $1000 wheres the $250 come from?

If you have $5k with them does that not give you control over $50000 of stock?

If you are achiveing a overall S/R of 80% with a Profit on turnerover of 10% with around 5 trades each and every week , then your in the same leaque as these guys where --- otherwise just another mug punter only in a different field

Hmm interesting numbers.

4 10% wins
1 100% loss

 

[coyotte]

Re: Sincerely looking for help and advice

Tech/A

ie : Trading Account $25,000
Max Pos 20% of Trading Account
= $5000 max position size

$5000 worth of stock gives U control of nothing --- its meerly a contract / bet between U and the CFD dealer --- but with IG at the underling price

Margins required by CFD Provider --3% to 25% of total Position

The $ 250 is generally around my avg margin (deposit)

The fiquers quoted for Pro Punters are real --- I was involved in it at the time
You had to attend the Track to obtain a fixed price -- Betting on Saturdays 3 to 4 races and Wendsdays 2to 3 races .


What U was doing though was taking overlays (over the Odds ) at a fixed price on up to 3 horses per selected race --- generally for one of these to beat the pulic Favorite , which by its very nature would be under the Odds --- during the course of betting one your selections could end the starting Fav -- But U should have obtained overs on it earlier in the betting ---- Great Stuff !


Cheers

 

[MichaelD]

Re: sincerely looking for help and advice.

So is Crown Casino a business or a gambling outfit?

The house is in business, the same as trading when done properly.

Most participants at either sport, however, are gambling.

 

[RichKid]

Re: Sincerely looking for help and advice

The major Problem I'm confronted with is the Trading Bank

This has to be readily accesable --- But it is idle Cash

Hate the set up --- but don't know what to do about it

Any surgestions ?

Cheers

Hi Coyotte

(Assuming 5% margin for following examples)

MacquarieCFD (trying them out atm) pay you 5.5% for 'available funds' (ie for the money that is not being used for collateral/margin). If you use a GSL you only put up the GSL % as margin and you need not worry about extra funds (but the GSL's can be expensive on some stocks, it's basically the cost of a closing order plus a premium). If you were exposed* to a $5k position then having $5k in the ac would only be of use if the stock fell to near $0 right?

*(As opposed to using $5k as margin- then exposure would be $100k at 5% margin. 20:1 leverage)

Wouldn't the CFD provider make a call and close out the position once you ran out of $$$ in your ac anyway, but may incur fees for that, (eg CBA CFD's (say 107 shares at 46.80= approx $5k) with MacCFD's require 5% of exposure as collateral, so 5% margin of $5k is $250 plus $x for your stop loss distance, it's good to have extra $$$$'s in the ac too to cover slippage, interest and the like but do you really need to have the full exposure in cash sitting in the ac?).

If your stop loss order was say 5% from entry that would be another $250 so you'd need $500 (250+250) minimum plus extra $$$$'s for brokerage, interest (if going long) and slippage in your account, so let's say about $1k to $2k deposited in the ac for that single position.

Tech/Wayne etc, you guys are experienced in trading on margin, does my math make sense?

Not sure if I follow this CFD margin system properly......Is this what you were querying or was it something else Coyotte? At least you get about the cash rate for your 'available' $$$'s with MacCFD, I understand some CFD providers give you nothing. I wonder if it's been covered in the general Question on Margin Lending thread....I am still learning about this so please be skeptical when reading my posts and seek expert advice!

PS Another good thread with some great posts by Ageo: https://www.aussiestockforums.com/forums/showpost.php?p=68411&postcount=14

 

[happytrader]

Re: Sincerely looking for help and advice

Hi Debaron

I would suggest you focus on the movements of one stock preferrably a bluechip - for instance after two quarters down it would be time to look at say banks.

No one can do the work for you because you need to feel safe about where you put your money in your own mind.

BTW, there is a big difference between the mindsets of an investor and a trader. Definitely some similarities to small business owners and employees.
So know who you are. The patterns of your life regarding, attachment and decision making style will give you clues.

Cheers
Happytrader

 

[Julia]

Re: Sincerely looking for help and advice

Hi Debaron

I would suggest you focus on the movements of one stock preferrably a bluechip - for instance after two quarters down it would be time to look at say banks.

No one can do the work for you because you need to feel safe about where you put your money in your own mind.

BTW, there is a big difference between the mindsets of an investor and a trader. Definitely some similarities to small business owners and employees.
So know who you are. The patterns of your life regarding, attachment and decision making style will give you clues.

Cheers
Happytrader

I agree with these comments, and those from Kennas and Ghoti.

Debaron, Ghoti asked you specifically how you saw the difference between being an investor and a trader and how you would do things differently in one or the other capacity? This is a good question and I'd be really interested in your answer.

Even the ATO doesn't have specific guidelines to define the difference.

Julia

 

[nioka]

Re: Sincerely looking for help and advice

I agree with these comments, and those from Kennas and Ghoti.

Debaron, Ghoti asked you specifically how you saw the difference between being an investor and a trader and how you would do things differently in one or the other capacity? This is a good question and I'd be really interested in your answer.

Even the ATO doesn't have specific guidelines to define the difference.

Julia

The difference ,in my mind (and one which influences the tax man)is simple: An investor looks to have shares for a reasonably long term in a successful company.A trader doesn't NEED a company to be successful but to have price swings. I have traded ,with good results, in some very unsuccessful companies., especially when they have a habit of using spin to keep the shareholders happy.

 

[Julia]

Re: Sincerely looking for help and advice

The difference ,in my mind (and one which influences the tax man)is simple: An investor looks to have shares for a reasonably long term in a successful company.A trader doesn't NEED a company to be successful but to have price swings. I have traded ,with good results, in some very unsuccessful companies., especially when they have a habit of using spin to keep the shareholders happy.

Thanks, Nioka. That's interesting.

What I was actually looking for is Debaron's own understanding of how he /she saw the differences, as originally asked by Ghoti. I'm curious as to
why he/she would regard trading as a more appropriate start than investing.

Julia

 

[swingstar]

A trader usually has no vested interest in a company. They only care about short-term price action and trends.

 

[Buster]

Re: sincerely looking for help and advice.

Hey Debaron..

I like you am a complete noob when it comes to the sharemarket.. I've actually been dabbling in the market for about ten years now, you know 2K here and 5K there, and over that time missed some fantastic opportunities, but also avoided (well mostly.. anyone remember OneTel?? ) absolute disasters looking for the quick buck that everyone seems to associate with the stockmarket..

You'll find lot's of great advice here (certainly I have..) and witness some great debates about the why fors and why nots of particular styles of investing trading in the market..

I've really only put what I call significant amounts of money (250K is probably chicken feed for most of the posters here) in the last 12 -18 months after paying off the mortgage etc etc..

However, the lesson's I've learnt over the earlier years are quite neatly summed up in Kenna's post..

Invest in something solid for a start. Blue chip. Then buy something else solid. Then something else. Diversify a bit. If you haven't lost all your money you could buy a managed fund with a regular investment. When you've accumulated about $30-50K I'd get a margin loan and start borrowing to invest in some more good stocks and managed funds. If you haven't lost all your money, think about putting some of that harded earned aside to 'trade' with. Paper trade for a while, develop a system, and then put it to practice. You'll lose some money so never bet the house on anything. The money you lose are your trading lessons. They don't come cheap. Plus, read, read, read, and maybe join a tip sheet or two to get ideas and join a forum to ask people questions and get other ideas.

I'm not totally keen on the managed funds aspect as personally it burns me that some spruiker pulls in 2-4% of my hard earned money every time I dump some in on a 'trailing commission'.. But certainly Blue chip (I also personally prefer companies that have dividend reinvestment) and build yourself a nice diversified portfolio.. it will take some time, but that's a lesson I learned the hard way also, which is you generally have to be quite lucky (or have inside information)to hit a big time winner in the small caps..

After some time in the 'investing' game you can move onto the 'trading' game as you will have a whole new perspective about the sharemarket.. I've not yet progressed to the 'Trading' game.. but I don't think is too far off in the future..

A quote that really brought it all home from a book I read some years ago about the stockmarket and a passage about losing money in the market goes something like this.. 'Do you know a professional Golfer who hasn't lost a golf ball??' The point that matters is that you learn from it..

Good luck to you and look forward to reading about your success and (Lesser) failures here on ASF..

Cheers,

Buster.