So what am I getting myself into?

LostMyShirt · 10 September 2011

nulla nulla said:
This little tirade comming from someone that has already admited the he lost his shirt.

Dealing with shares: To buy and sell shares you need to deal in marketable parcels with a minimum value of $500. For $1,000 you can buy two (2) parcels of shares of $500 ea or one parcel of $1000.
To cover the cost of brokerage, $19.95 in and $19.95 out, you need to make a profit of $39.90 per trade simply to cover brokerage. Buying and selling at this level you are going to be a long time in the market (if you are successful) building your fortune. Of course if the share value of your parcel drops below $500 you could be a longer time in the market waiting, hoping for it to recover so you can sell it.

In reality if you are starting with $1,000 the best you could do is to learn up on TA & FA and buy a share that has a yield of 10%, preferably fully franked. Each time you save up another $1,000 buy more of the same share or another one that pays close to 10% fully franked. Re-invest your dividends and keep slugging in those $1,000's and eventualy you will have a portfolio worth $50,000 and you will be in a better position to trade.

Also by that time you should have learned about risk assessment, money management and have identified the area you are comfortable buying and selling in. Good luck.

Lol - I'm a bit of a punter by nature, and I thought the name was clever But no I havent lost my shirt.

That advice sounds like a fairly decent strategy, it makes sense. With 1K, yeah you will be in the market for a long time - but over time, if you are confident with your stock and you see the potentials coming into fruition, you eventually top up.

Billyb · 10 September 2011

theartglasshouse said:
Another one I thoroughly enjoyed investing in recently was IVR. I put $850 in the pot for that one and sold out for $2,000 due to the good announcement they put out. All within 3 weeks

In other words you took a punt and it payed off. It's not all that different to gambling at the Casino. Yes Rob it might pay off if you're lucky, but all you are doing is GAMBLING but more importantly with $1000 there is no room to make errors and learn. And what's the point if you're not learning, thats what I think.

LostMyShirt · 10 September 2011

Hold on; why is it gambling if he has conducted research on the stock like any other trader would do? Now, if he just randomly picked off an index on the other hand, I'd agree with you.

barney · 11 September 2011

LostMyShirt said:
Hold on; why is it gambling if he has conducted research on the stock like any other trader would do? Now, if he just randomly picked off an index on the other hand, I'd agree with you.

Hi LM/Shirt,

I am actually surprised that some of the more experienced traders here are not a little more flexible with their analysis of your strategy. Only caveat would be, it should only be implemented in a BULL MARKET

Its true, ..... 1K ain't gona do it unless you get real lucky ........... however ......

1) Everytime you save up your 1K, you do your research/due diligence, and Invest it in a fledgling Spec with "potential"

2) Stop Loss is set at .......... SP=0 ..... loss $1000

Repeat the above process for example 10 times ...... Investment= $10,000

To keep it simple, lets say 3 stocks go bust, 3 stocks double and 3 stocks remain stagnant. Lets also assume you get one outlier that increases to 5X initial outlay.

That would net you close to 50% ROI.

You could possibly achieve that result with Random entries/Stock picks. For an experienced trader, the above scenario should be a piece of cake .....

I agree that you don't need $50,000, but you will definitely need more than $1000 to swing the statistics back closer to neutral. Just my

Good luck.

Billyb · 11 September 2011

LostMyShirt said:
Hold on; why is it gambling if he has conducted research on the stock like any other trader would do? Now, if he just randomly picked off an index on the other hand, I'd agree with you.

One could assume that a stock that is capable of doubling in value in a 3 week period is probably a high risk speculator stock - i.e high risk.

Putting your money into these kind of stocks is not gambling if you have some sort of money management strategy. IF you have a $50000 account and you put $1000 into a speculator stock like that (that you've researched) and you have allocated/diversifed the rest of your capital to reduce portfolio risk then it's not gambling. This is because you are only risking 2% of your entire account. But when you only have a $1000 account and you put it all on one speculator stock (Black/Red) then it's not all that different to gambling IMO (no matter how great the fundamentals, especially in a bear market). It's the same as putting 100% of a $50000 account on one speculator stock - of course that's gambling.

LostMyShirt · 11 September 2011

Yes I do agree with that, Billy. The risk is significantly higher when parking the entirety of your desired asset into a single growth potential. I personally believe that a well conducted FA should help avoid such breakdowns however, it must be for the long term.

I also agree that such a strategy should be implimented into a Bull market - however, a decent entry into a growth potential left in there for the long term (with top ups through-out the course of the trade) is a better option than a short to mid term investment. I am glad that some members were able to close out high percentages within 3 weeks of the trade, however for the most part in these volatile times the swings may make a trader panic, thus long term is better with a stock that has growth potential after being confident enough to buy in after a very well done FA.

The risks are significant, OP. I hope you realize that - but you do have the potential to succeed.

tech/a · 11 September 2011

I doubt that any amount of careful and considered F/A is going to be accurate in the future with regard to " perceived" undervalued stock.
With world economics as they are today's undervalue is likely to br tomorrows over value.

Frankly I think your more likely to profit very short term in these markets of uncertainty than taking the optimistic view long term.

I'm always amused that strong and persistent selling is seen as "panic"
Yet buying dips is seen as smart value investing.
Even though there is no sign of an emerging bull run.

I think it's highly likely that the really smart traders are unloading to the really smart traders every time there is a move up.
Who's really smart then?

My point is that putting anything long term in this market is at best optimistic.
If I was trading a grand I'd be technically trading fast momentum moves in and out in a day or so.
Infact -----

LostMyShirt · 11 September 2011

No doubt, Tech/a - with experience and knowledge you can do these strats and win. That was my initial drive to get into the market and learn to make quick trades. I am testing my theories on paper before I hit the market short term with real money.

Well; I hope the Original Poster got a kick out of the thread.

skc · 11 September 2011

barney said:
To keep it simple, lets say 3 stocks go bust, 3 stocks double and 3 stocks remain stagnant. Lets also assume you get one outlier that increases to 5X initial outlay.

That would net you close to 50% ROI.

You could possibly achieve that result with Random entries/Stock picks. For an experienced trader, the above scenario should be a piece of cake .....

You can make a lot of profits by giving hypotheticals. Go back to all the listed stocks on say 1 Jan 2000 and see what percent of them went bust vs stagnant vs double vs 5x outlier... and see what a portfolio of 10 stocks will achieve on average today.

barney · 12 September 2011

skc said:
You can make a lot of profits by giving hypotheticals. Go back to all the listed stocks on say 1 Jan 2000 and see what percent of them went bust vs stagnant vs double vs 5x outlier... and see what a portfolio of 10 stocks will achieve on average today.

SKC, Respectfully ...... Quoting my post with my caveat omitted is not really a fair representation of what I was alluding to, but I understand your point.

My Bull Market "hypothetical" was simply an alternative for under capitalised new traders to slowly access the market, while keeping their risk minimized.

Seems a safer plan than saving up $50K, then cutting loose on the "unsuspecting" market ........... That a bit like giving an L plater a V8 Supercar to practice their parallel parking in

ps. I crashed my V8 Supercar a few years ago so I speak with authority

theartglasshouse · 12 September 2011

One thing I would never do is place all my eggs into the one basket, but that is hard to really do when you only have $1,000 to start of with!

So if I was starting out again and only had $1,000 to invest, I would be looking at a spec stock that is close/near to producing with good assets and a good management team.

Over time I would topping up on this one to build a base whilst putting some cash aside for future share purchases. Whilst you do this, you have time research other companies that you may want to invest in. This also gives you time to learn.

Certainly these are more volatile times, but thankfully out the 12 stocks I own, 75% are still in the green. I am not concerned about the others (as I have been topping up at these wonderfully low prices) as I believe they have a good future with some quality assets. One thankfully, is close to producing

The main thing is getting your foot in the door, and this is the time do it! Another thing is to not be too concerned with the price fluctations. If you have picked a quality company with good assets, you can with a bit of luck, watch that base grow like I have done (and I only started of with $2,000, although I did have more cash in the bank).

Generally, I am long term buyer/holder, so for me doing something like I did with IVR, certainly was a gamble, but it was also a company I had been looking at for a while. I only wished I had bought in a bit earlier at $0.05

Whatever way you go, I would ignore the comments of you can't do it, as you certainly can like I have, and like many others no doubt.

All it takes is patience, time, research and of course, a bit of luck. And never panic, unless your on the titanic!

LostMyShirt · 12 September 2011

Couldn't agree more, GlassHouse.

I am also quite glad to hear that your portfolio is majoirty green It is always nice to hear about wins

theartglasshouse · 12 September 2011

For the moment lostmyshirt, some are edging close to where I bought in at LOL. See how this week pans out :

LostMyShirt · 12 September 2011

I personally would wait until this uncertainty passes and we are back to moderate swings.

I am in RED at the moment and has been fairly resiliant however selling now at the 4% loss wouldn't be a good idea. If your companies are fundamentally strong then I suggest waiting. It may be a terrible suggestion but oh well, I'll see if it is in time.

theartglasshouse · 12 September 2011

I will be riding it out of course as there is no point in selling in the current market and the majority of my shares are long term investments.

I have looked into RED as well, but have decided to forego a purchase into them at the moment due to other financial commitments

LostMyShirt · 12 September 2011

theartglasshouse said:
I will be riding it out of course as there is no point in selling in the current market and the majority of my shares are long term investments.

I have looked into RED as well, but have decided to forego a purchase into them at the moment due to other financial commitments

Well either way I hope you make a bundle.

marioland · 12 September 2011

I too have just started with two grand. Day trading with this sort of money, not a chance. Speculative buys, yes.

LostMyShirt · 12 September 2011

marioland said:
I too have just started with two grand. Day trading with this sort of money, not a chance. Speculative buys, yes.

I started with 1K (topped up along the way), and lost a bundle on Aug 5th - being an absolute newb, I cashed out. If I rode the storm for only a month I'd be back in the profits.

skc · 12 September 2011

barney said:
SKC, Respectfully ...... Quoting my post with my caveat omitted is not really a fair representation of what I was alluding to, but I understand your point.

My Bull Market "hypothetical" was simply an alternative for under capitalised new traders to slowly access the market, while keeping their risk minimized.

Seems a safer plan than saving up $50K, then cutting loose on the "unsuspecting" market ........... That a bit like giving an L plater a V8 Supercar to practice their parallel parking in

ps. I crashed my V8 Supercar a few years ago so I speak with authority

The suggested plan was saving up $50k while you learn the market - not saving up $50k and go crazy!

If you hypothesize with numbers plunked out of thin air you can't suggest that one can achieve anything like 50% ROI while minimising risk. I don't know what the real percentages are, but I suspect not 1 in 10 stocks will go up 5x.

There is nothing wrong with starting with $1k - It's only wrong to expect great returns on the average.

P.S. Where do you get yourself a V8 supercar?

barney · 12 September 2011

skc said:
The suggested plan was saving up $50k while you learn the market - not saving up $50k and go crazy!

Lol ..... I know that ... A man needs a little poetic licence to embelish when writing on a Forum!!

The biggest problem for new traders is that no amount of reading books/paper trading/learning t/a, f/a etc etc will have them ready to take on the market with the required depth of experience (in my view) ....

There may be some exeptions, I just haven't met any of them yet:

With that in mind ..... amplifying the start up capital will only amplify the eventual losses until the required "real time" experience is gained (again in my view) ... Perhaps I'm wrong.

skc said:
If you hypothesize with numbers plunked out of thin air you can't suggest that one can achieve anything like 50% ROI while minimising risk. I don't know what the real percentages are, but I suspect not 1 in 10 stocks will go up 5x.

I agree with the part in Bold I was only trying to keep the maths simple ...... and also agree that a random selection of stocks would require a fair amount of luck ...... however, trading well researched "penny stocks" in a Bull Market with a mix of ...

Low Debt
Extremely low market Cap
Quality assets/Tenements/ etc etc
Switched on management
And a dash of T/A for productive entries
(Each trader can add his own specifics)

can be very fruitful ... and who doesn't like fruit??

skc said:
There is nothing wrong with starting with $1k - It's only wrong to expect great returns on the average.

P.S. Where do you get yourself a V8 supercar?

For sure ..... Not great returns with $1K, but with $10K the odds can be adjusted more favorably, especially when a few exit/entry filters etc are added to the mix ........... although, even with $10K its going to be a hard road unless additional risk is added.

The V8 Supercar was a hypothetical representation of my first trading account which was well over the $50,000 figure mentioned earlier ....... I crashed and burned that account unceremoniously, which is why I shudder when I see traders recommending new traders save up their base capital before learning how to lose correctly!!

Fortunately by my most recent trading account has faired much better

appreciate your input as always.

So what am I getting myself into?

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