Some questions about trading

[benzzro]

Hi, I'm fairly new to this forums and have recently been interested in the stock market, mostly trading and have a couple of questions since I'm pretty clueless about the subject.

1. I always hear from people that trading is too high risk, it's silly, you shouldn't do it, etc..how true is this? I mean If you study books, videos for months/years, can it be super profitable or is it still a lot of luck?
2. I've read a couple of books about the stock market and finance (Bogleheads for one) and all of it is based on the US market, are these suitable to read or should I be trying to find books based on the Aussie market, what is the differences between the US and AUS market and what are good books to start to read on trading
3. I know it's a broad question because their are so many different ways to trade and all require different capital, but how much would a broke 20 year old need to start trading?
4. If I wanted to be a full time trader, would it be a good idea to start studying a course at uni, or is learning on your own better.

Hopefully some experienced members will be able to give me some guidance, thanks!

 

[Gringotts Bank]

Hi, I'm fairly new to this forums and have recently been interested in the stock market, mostly trading and have a couple of questions since I'm pretty clueless about the subject.

1. I always hear from people that trading is too high risk, it's silly, you shouldn't do it, etc..how true is this? I mean If you study books, videos for months/years, can it be super profitable or is it still a lot of luck?
2. I've read a couple of books about the stock market and finance (Bogleheads for one) and all of it is based on the US market, are these suitable to read or should I be trying to find books based on the Aussie market, what is the differences between the US and AUS market and what are good books to start to read on trading
3. I know it's a broad question because their are so many different ways to trade and all require different capital, but how much would a broke 20 year old need to start trading?
4. If I wanted to be a full time trader, would it be a good idea to start studying a course at uni, or is learning on your own better.

Hopefully some experienced members will be able to give me some guidance, thanks!

1. Most people who try it will lose over the long term. So really it depends whether you are in the 10% that win or the 90% that lose. You only need average intelligence, but you do need to be extremely perceptive, a good learner (pick up new ideas quickly) and have a positive mindset and robust self-esteem. The self-esteem bit relates to one's ability to admit personal errors, take losses when indicated, and control greed and fear. You have to be very honest with yourself and be courageous enough to investigate your weak spots.
2. Have a look at Bulkowski's pattern site; most of that applies here.
4. I don't think anyone teaches you this stuff at uni.

 

[CanOz]

If you're serious about becoming a professional trader then check some of these firms and apply...

 

[Tano]

For T/A Read http://thepatternsite.com/ and read the free education at http://www.incrediblecharts.com/ and get the free software.

The minimum parcel of shares you can buy with an online broker is $500. CMC Markets is one of the cheapes at $9.90 but Interactive Brokers is the cheapest for ASX (but its not a very user friendly platform)

The smaller the account the harder it will be to make a profit since all the expenses (brokerage, software, data) eat up a large portion of your small account. If you only have a few thousand and cannot afford to lose it then stick your money in the bank. The next riskier instrument would be an Exchange Traded Fund or a Mutual Fund.

Read up on Risk Management before you do your first trade. I really liked 'Come into my trading room' by Elder.

 

[Gringotts Bank]

If you're serious about becoming a professional trader then check some of these firms and apply...

Prop trading for a beginner? That's a new angle!

 

[CanOz]

The OP asked:

4. If I wanted to be a full time trader, would it be a good idea to start studying a course at uni, or is learning on your own better.

I reckon it would be better to do some research before you went into a prop firm completely green, but if you have what it takes why would their training program not be able to do something with that?

I know nothing of the OPs educational background, but was assuming they had some.

 

[payday]

1) Trading can be super profitable but the time it takes to get there and the amount of pain you are willing to endure is up to the individual. It took me about 10 years to be profitable and the last 3 to be "super profitable" (whatever that means).
2) Books about trading can apply to all markets whether it's US or Oz, stockmarkets or futures markets. Lots of free info available over the net for free nowadays so do lots of reading
3) Personally for me (I solely trade futures) I think that $100000 USD as a minimum to really be able to make a decent income from. And only after you have become profitable.
4) Uni not necessary but if you are serious about trading working for a firm and working your way up might not be a bad idea especially if you don't have much money

 

[tech/a]

1. I always hear from people that trading is too high risk, it's silly, you shouldn't do it, etc..how true is this? I mean If you study books, videos for months/years, can it be super profitable or is it still a lot of luck?

"People" will generally say that of things they don't understand or perceive as risky.
Sky Divers love to Skydive.
Oh and super riches from trading (With less than$100K capital) IS LUCK!
Turned $30k to $360K from 2002 to 2007 that was one of the strongest bull runs in my lifetime.
I had no idea it was coming--LUCK!--DUMB luck at that!

2. I've read a couple of books about the stock market and finance (Bogleheads for one) and all of it is based on the US market, are these suitable to read or should I be trying to find books based on the Aussie market, what is the differences between the US and AUS market and what are good books to start to read on trading

Read here first and determine what you'd like to trade and what method you'd like to adopt.
Fundamental
Technical
Discretionary
Systematic

Then learn all you can on RISK and Trade management
Then couple that with what you can learn about your chosen method of trading.
Then Sim trade until you are consistently profitable.
10000 hrs should do it.

3. I know it's a broad question because their are so many different ways to trade and all require different capital, but how much would a broke 20 year old need to start trading?

A broke 20 yr olds never going to have enough to trade with.

4. If I wanted to be a full time trader, would it be a good idea to start studying a course at uni, or is learning on your own better.

Can Oz is on the money.
AFTER you do at least 10000 hrs.

 

[stewiejp]

Hi, I'm fairly new to this forums and have recently been interested in the stock market, mostly trading and have a couple of questions since I'm pretty clueless about the subject.

1. I always hear from people that trading is too high risk, it's silly, you shouldn't do it, etc..how true is this? I mean If you study books, videos for months/years, can it be super profitable or is it still a lot of luck?
2. I've read a couple of books about the stock market and finance (Bogleheads for one) and all of it is based on the US market, are these suitable to read or should I be trying to find books based on the Aussie market, what is the differences between the US and AUS market and what are good books to start to read on trading
3. I know it's a broad question because their are so many different ways to trade and all require different capital, but how much would a broke 20 year old need to start trading?
4. If I wanted to be a full time trader, would it be a good idea to start studying a course at uni, or is learning on your own better.

Hopefully some experienced members will be able to give me some guidance, thanks!

Benz,

Firstly good on you for making a positive decision about your financial future at a young age. This should be VERY profitable for you long term. your answers from my point of view, don't take this as financial advice, I'm not qualified to give it....

1. Trading can be risky, especially if you try to "day trade" or make short term trades with little or no experience or capital. Long term investing, however, is not (IMO) and over years (which you have), applying rules of compound interest and reinvesting profits/dividends - your profits/capital will multiply surprisingly quickly.

2. Not sure on books, depends at what stage of your investment career you are at. I'm a big fan of the Barefoot Investor for people "just starting out" - his ideas are simple, easy to read and not too much waffle. His weekly emails are free to sign up for but are simply his newspaper column a day early. In my experience I haven't gained a lot from books but I'm a boring old long term investor.

3. If broke means you have $0 at your disposal, sorry mate you are **** out of luck. I would say even though the brokers have a minimum buy of $500 worth of shares, you would want a couple of grand or more. You would also want to be in the position where any shares you buy you don't want to need to sell them, ie you have some cash in the bank for some unforeseen emergency, as well as your investment funds. Since you are new to all this, I'd be looking at buying some boring "safe" stocks, so at least you can benefit from their growth while you are learning. 4 to 6 safer stocks with around $1000 in each would (IMO) be a healthy starting point.

4. Not sure.

Best of luck benz.

 

[PinguPingu]

CMC Markets is one of the cheapes at $9.90 but Interactive Brokers is the cheapest for ASX (but its not a very user friendly platform)

Just a note on CMC markets, they have weird 'at market' orders that don't actually go in at market:

Can I place an ‘at market’ order online?
Yes. We can accept at market orders online, which will be placed at three price steps above (for buys) or below (for sells) the last sale price.

Bell Direct is I believe $15 and less dodgy.

 

[Tano]

Can Oz is on the money.
AFTER you do at least 10000 hrs.

Loosly speaking, is that 10,000 hrs (on average) to be a pro trader making big bucks or a slighly better than average trader making a bit of money to supplement his wage?

Lets say i work 8am-5pm. Get home 5:30/6pm, eat, shower,relax. If i spend 3hrs a night reading/sim trading on weekdays and 5hrs on the weekend for a total of 25hrs a week then it would take ~ 400 weeks or nearly 8 years to have a good grasp of trading?

I was assuming by reading a few hours a night for 2-3years to return 10% a year, and 10-15 years to get 40-50%.

 

[CanOz]

Loosly speaking, is that 10,000 hrs (on average) to be a pro trader making big bucks or a slighly better than average trader making a bit of money to supplement his wage?

Lets say i work 8am-5pm. Get home 5:30/6pm, eat, shower,relax. If i spend 3hrs a night reading/sim trading on weekdays and 5hrs on the weekend for a total of 25hrs a week then it would take ~ 400 weeks or nearly 8 years to have a good grasp of trading?

I was assuming by reading a few hours a night for 2-3years to return 10% a year, and 10-15 years to get 40-50%.

Interesting...I've chatting with a guy from another forum, the only guy I've ever seen on there make his records public. He actually tutors other traders for free, lets them watch him trade live. His entire journey has been chronicled on the forum. He's just finished his first full month of full-time trading after selling his business. He's profitable with about 9k net profits. About a 50% win rate, and a PF of 1.5 over 188 trades.

He's been at it since 2008.

 

[Tano]

Only ~ 5 years. That gives us some hope. It will be a lifetime thing for most so 5 years with dedication is manageable. I will PM you regarding trading advice once i grasp technical patterns a bit better. Thanks steve.

 

[Valued]

If you don't have much money and want a higher return than a bank account, you can always try investing your money instead of trading stocks. Investing is a bit of a different ball game to trading though. There is the quantitative aspect as well as the qualitative aspect. You have to really know the business you want to invest in and how it makes money and whether it's going to continue making more money in the future. It's more complex than you might think since you can't put numbers on it.

 

[benzzro]

Thanks for the advice guys! I'm prepared to put in the hours, and definitly going to try build up a bank roll to start trading but in the mean time learn as much as possible. Can anyone suggest some good books, I'm reading books by jack Schwager currently but struggling to understand a lot of the terms used, is there more of a newb friendly book, thanks.

 

[CanOz]

Thanks for the advice guys! I'm prepared to put in the hours, and definitly going to try build up a bank roll to start trading but in the mean time learn as much as possible. Can anyone suggest some good books, I'm reading books by jack Schwager currently but struggling to understand a lot of the terms used, is there more of a newb friendly book, thanks.

Grab something from the "for dummies" series. Seriously, it covers allot of the terms used in the industry first, provides a good background etc...

I think the first book i ever read was "A Beginners Guide to Daytrading" or something like that, about ten years ago.

 

[Valued]

If you don't have any money and you want money to invest, you get two jobs and you work 50 - 60 hours a week or more (or one job if they will give you this many hours). You work and work and you save and you work some more. You will soon be earning more money than your current expenses (try to cut down on current expenses too - you have to give up smoking etc) and then you can invest that. That's the only way to get started from nothing.

Getting a job and working is the most reliable way to earn money!

 

[ufo8mydog]

Hi, I'm fairly new to this forums and have recently been interested in the stock market, mostly trading and have a couple of questions since I'm pretty clueless about the subject.

Hopefully some experienced members will be able to give me some guidance, thanks!

Why not start a fantasy/mock portfolio - you can start practicing some trades, record how you are going over time and when you are confident enough you can invest some real cash.

Realistically, to clear expenses etc you would need a minimum of 5-10k to make any sort of appreciable return.

Cheers