Why is it so hard?

[jman2007]

Start with the end in mind. What do you want? What are you capable of? Is what you want realistic? The markets are a means to an end. ASX.G

A couple of good points raised here,

Obviously you need to decide what type of investor you are, as has already been touched on by numerous posters. I guess never investing more than you can afford to lose goes without saying as well.

Stargazer, if you've just recently jumped aboard the market in the past 5-6 months, you've come onboard at a very difficult time. I'll be the first to admit that I was swept up in the hype during the uranium boom early last year, and subsequently like a lot of people lost my shirt in a few companies while trading on emotion and unrealistic expectations. Not huge dollars mind you, but enough to teach me a short, sharp lesson.

The marketplace these days is a very different place from that of 12-18 months ago, where almost any Joe could seemingly strike it rich. Gone are the days of pipe-puffing and beard-stroking certainty that the All Ords would easily push through 7000 by the end of 07. At the oppposite end of the spectrum, probably these same people went through shock, denial and then despair and declared in a chorus that the world was indeed coming to an end on "Black Tuesday" a few weeks ago.

Imo, the balance is definitely in the middle somewhere, what we all thought was the tamed beast that we were happy to ride last year, has suddenly turned into a cornered beast, unsure of where to go, and capable of delivering a vicious kick to the unwary. It is still possible to make some good investment decsions at the moment, but you need to be very clear on what it is company XYZ is doing, how they are/intending making money and what their financial capabilities are. If you pull up short here, then exercise extreme caution.

Perhaps you're just not being patient enough, I'm sitting on losses at the moment in several companies, but am happy to hold as I'm quite happy in the fundamentals. Look at the boom in gold prices in the early 80's, the real wealth wasn't generated then, but in the subsequent 6-7 years that followed.

Just my
Best of luck
jman

 

[ShareIt]

Pretty much true unless you mean in the sense of "No one ever succeeded with playing lotto". Of course some people will be successful through luck, but overall both technical analysis after transaction costs and lotto are losing propositions.

Totally disagree with you.... I base most of my trades on T/A supported with some FA and it has definately worked.... T/A is a good way to determine market sentiment and because so many traders use T/A, price movements will sometimes go against what the fundamentals are telling us.... perfect example is oil... demand is slowing / we have increasing supply, yet prices are rising... which I believe has a lot to do with what the technicals are telling us, a break and close above $100.

If you are looking to invest, then that's a different story... FA would be more appropriate.

 

[Rastan]

FWIW I thought I would put my 2c in. I am very much a newbie to investing - I caught the bug when I came into contact with energy traders as I am a software developer and worked for 2 years with them on a trading and risk management solution.

Many things attracted me to trading and I am not under any illusions that its going to be an overnight process. I have been sick and tired of the IT industry for a few years now (have been doing it for 10 or so) and finance/trading looks like something that would suit my personality and background. The first step of my plan is to get a Masters of Business (Applied Finance) (I am in the middle of my first semester right now).

Now I know this isn't _required_ and certainly isn't for everyone but I have a number of reasons to do it.

1. A year off doing 9-5 in the cubicle soul crusher, plus I love learning new things.
2. I get more experience that i can use in a new industry either with or without my existing quals.
3. If I'm going to do this thing, I have to focus on it 100%, be blinkered.

Now like I said its not the path for eneryone but its the one for me. I simply couldn't work fulltime in one industry and have enough time to make a succesful trader. I have 2 properties and am selling one and will free up ~ 80K. Of that I plan to use -
40K for living expenses for one year to learn.
20K invest in long term stock (which is a bargain right now).
2x10K trading accounts to learn with (different risk profiles) - when im ready - they can go in safe shares/high int accs till then.

Its been a very big decision and I haven't taken it lightly (I'm 32). I plan to go to London for at least 1-2 years on completion of the Masters and work for an Investment company. I will earn and learn (and hang glide all through Europe) for the next 3 - 5 years. Hopefully I will build up a reasonable trading account in 5 years. I will diversify my total investments across other areas such as property and maybe business.

Hopefully, at the end of it, I either learn to trade (fulltime) or if not maybe buy a profitable (something returning 200K a year, cost about 1.2M right now at a guess) business on the north coast. If things go well, I can get to 5+ MIL in 10-15 years and look at changing my strategy. You have to set goals i suppose and they may as well be lofty, so long as your willing to admit to the work they require and be determined.

So for now I am staying in the boring job so it can fill the coffers and doing my best to complete my 2 uni subjs (and reading investment books). But in 3 months time I will be studying and learning fulltime and probably picking the wealth of brains that so wonderfully put their time into this great forum. I look forward to it.

On another quick note, I considered getting a 100K capital protected loan for the 5 year Emerging Markets (EM US) fund (since before making the big move this will be my last chance to organise big loans etc), but i think since it is mostly based on a NYSE Index (ETF) - I would rather wait out the next one year and see what happens to big ol uncle sam.

Thanks for your time and I look forward to learning with you all.

 

[treefrog]

Hi all

Over a period of time i have trying to gather as much info as i can to generate some income from the market.

At first it was buy some stocks they go up and sell etc well not much progress there as the market has gone done. On some occassions i did sell only to see the stock take off and miss nice profits. On the other hand i held on to stocks i should've in hindsight sold and of course they went down.

Then i looked at stocks with dividends well the dividends were not that great eg OXR and BPT so no joy there.

I started to look at options and just when i thought i had some progress with covered calls they appeared to be fairly low risk. Looked good for some monthly income but via this forum i was alerted to the risks. The volatility trap etc

Finally got to understand Calls and Puts etc but again lots of confusion and everyone telling me how risky it is if you get it wrong infinite losses etc

CFDs have been touted as very risky so have steered clear of these.

So as time goes by trying to absorb so much info i am getting more and more confused of which direction i should take to learn how to gain some income from the market.

Has anyone got any suggestions where my first base should be to try at least.

Cheers
SG

perhaps it is hard because we don't accept understanding it really is simple - liked this simple but true explanation.

Stock Market Stages
Stage Analysis on a Stock Chart
To trade stocks successfully, you must first understand the four stock market stages that individual stocks and the overall market go through.

These cycles tell you if you should be long, short or in cash.

Once you are able to identify what stage it is in, you can then trade accordingly to those characteristics.

After a while you won’t even have to think about whether you should be long or short. You will know, without question, exactly what you should be doing NOW. You will either be focusing on long positions, short positions, or you will stay safely in cash - just by glancing at a chart!

Here are the four stages that stocks go through. This happens in all time frames whether it is a monthly chart, weekly chart, daily chart, or an intraday chart.



Ok, so I’m not the best artist in the world but I think it will serve our purpose here! What? You thought it would be more complicated that? My philosophy on the stock market is that if it is too complicated then it is just not worth doing. Now, we’ll look at the characteristics of the four stock market stages. I promise it will be painless!

Stage One
Stage 1 is the stage right after a prolonged downtrend. This stock has been going down but now it is starting to trade sideways forming a base. The sellers who once had the upper hand are now beginning to lose their power because of the buyers starting to get more aggressive. The stock just drifts sideways without a clear trend. Everyone hates this stock!

Stage Two
Finally stocks break out into Stage 2 and begins the uptrend. Oh, the glory of stage 2!! Sometimes I have dreams of stocks in Stage 2! This is where the majority of the money is made in the stock market. But here is the funny thing: No one believes the rally! That’s right, everyone still hates the stock. The fundamentals are bad, the outlook is negative, etc. But professional traders know better. They are accumulating shares and getting ready to dump it off to those getting in late. This sets up stage 3.

Stage Three
Finally, after the glorious advance of stage 2, the stock begins to trade sideways again and starts to "churn". Novice traders are just now getting in! This stage is very similar to stage 1. Buyers and sellers move into equilibrium again and the stock just drifts along. It is now ready to begin the next stage.

Stage Four
This is the dreaded downtrend for those that are long this stock. But, you know what the funny thing is? You guessed it. Nobody believes the downtrend! The fundamentals are probably still very good and everyone still loves this stock. They think the downtrend is just a “correction”. Wrong! They hold and hold and hold, hoping it will reverse back up again. They probably bought at the end of Stage 2 or during Stage 3. Sorry, you lose. Checkmate!

Here is an example:



Stock market stages occur in all time frames on every chart you look at. This could be a five minute chart of Microsoft or a weekly chart of the Dow.

Generally, you want to stay in cash when a stock (or the market itself) is chopping around in a stage one. In stage two you will want to be aggressively focusing on long positions. In stage three you want to be in cash. In stage four you want to be aggressively focusing on short positions.

That’s all there is to it. I told you that trading with stock market stages would be painless!

 

[tech/a]

Treefrog.
Basic but good Weinstein stuff.

The real key is learning what makes individual stocks and markets move.
Understand this and profit abounds.
From the consolidation below on this chart over 100% return on investment was easy pickings---can you see why?
This chart --- each bar is telling a very strong story.

Its at an interesting point right now---can you see what its saying?
If you really know what makes the money in trading "Choppy" markets--- (as you call them)--- are a god send.