Advice to a beginner

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NoviceTrader

Hello all. I have not actually opened an account yet. I'm setting this Journal to solicit advice on my trading journey. Also I will post updates on my journey and goal of becoming a successful trader.

Recent Background information. I am a 24 year old recent college drop out. I will probably finish my degree. I have always been incredibly interested in the financial markets. After losing about $4,000 or 2/3 of my investments during the correction, and after a summer internship with a financial company in Kansas. I became very disenchanted in the financial services industry.

I don't want to use my name to solicit someone's business then have them lose half their money and be upset with me. I also realized that good financial planners are worth their weight in platinum. However, thats another story.

After losing most my money, I was shocked and upset. But I wasn't mad at the market I was mad at myself. It disturbed me that most of my professors didn't really know anything about the financial markets. All of their knowledge was academic. None of them could teach me how to make money.

Fortunately I had an Uncle that I knew was vaguely involved in the markets. As it turned out he was a Momentum trader. He's been willing to take me under his wing and teach me quite a bit about his system. This week I begin paper trading e-mini's using trade station 6. I'm very excited. I don't have a lot of money. In fact right now I'm basically broke. I'm planning on just practicing the system for a few months before I think about opening an account.

My Uncle reccomended Terra Nova to me but I don't meet their financial requirements. Right now I am looking at Interactive Brokers and Cannon trading company. Some things I've read about IB concern me. If anyone wants to follow me on my journey in hope of becoming a successful trader. Or if you have advice for a novice I'd love to hear from you. I'm trying to make my simulation as real as possible. The four factors I'm considering in a Broker are..... 1. Speed, speed, speed 2. reliability 3. Speed and quality of customer support.4. Low account requirements.

Because my knowledge of trading is completely academic at this point. I would love any advice from more experienced traders. This really is my dream job. Thanks and good luck to everyone.
 
Go back to school and finish your degree. It will give you the tenacity you will need to trade and something to fall back on when you fail here.
 
Being undercapitalized is usually first error made in trading. Make sure you have sufficient capital to withstand the inevitable drawdowns that will occur.

Good luck
 
Originally posted by NoviceTrader
Because my knowledge of trading is completely academic at this point. I would love any advice from more experienced traders. This really is my dream job. Thanks and good luck to everyone.
More...

Don't listen to anyone on here. Clear your mind of all preconceived notions of market movements. Prepare to get punched in the face, grabbed by the balls and thrown around. Learn from your mistakes -- try not to repeat the same stupid thing over and over.

Don't open up 3 option positions with 1 daytrade remaining on IB, only to close one position and have 2 left open and getting a warning that you are non "allowed" to close the other two.

You will find out that any mistake you can make you will make -- and some mistakes will cost far more than others.

I am currently lurking ET occasionally and concentrating solely on my own trading.

I will say this much -- throw out everything you've been told so far about the market from every source you know and go in there and figure it out for yourself.

You will see how market makers jerk stupid people around (like me a few times). You will see how little things, like leaving a limit buy or stop order for an option on a fast moving market will generally give you bad fills.

Sooner or later, after enough pain and observation, you will start to notice the dynamics. Then, just when you think you are starting to get a feel for all this nonsense, you will get ass-reamed in some new fashion that you never thought possible.

Today I watched as a $500 profit on a MSFT PUT got vaporized because I could not close out my position. This was after making $75 on a Citibank option trade. This was, at one point, my best day ever -- until I was unable to close positions.

See, this is the kind of bullshit you will soon learn about and I can assure you ... when you watch a $500 profit turn into a loss because you CANNOT close the position, you can only help but to just say f*** it, close up for the day and go do other things.

Most importantly, don't let anyone on this board fill your head up with BS saying you can't do it.

You *WILL* lose money at the beginning. I can positively assure you on this. Just keep that in mind and take it all in as a learning experience.

Hopefully MSFT goes down over the next 23 days, as I have a debit spread open with 1 LONG MSFT $55 PUT, 1 SHORT MSFT $47.50 PUT and 1 SHORT $42.50 MSFT PUT.

Oh and last but not least -- trade what you see, no matter how unbelievable it seems.
 
5k isn't enough. It will buy you learning experiences, but not much more. The SEC will make sure your 5k gets reallocated to others. See, they really are looking after your best interests.

Did I say don't listen to anyone? If I didn't, I'll say it again. Some people have great advice, but if you are serious about this then your brain will construct its own method.

Everyone else will just confuse you.

You probably don't remember how difficult it was to learn the English language as a one year old kid -- but that same amazing brain will eventually start to recognize opportunities -- after you've burned yourself every way possible in the market.
 
Originally posted by aphexcoil
Oh and last but not least -- trade what you see, no matter how unbelievable it seems.
More...

Very important is to get rid of any preconceived notions of what you think the market will or should do. It will do whatever the hell it wants and for no reason imagineable. Today the tan book comes out looking like hell. What happens? The market rallies. KLAC guides poorly - the stock rallies. Last week EBAY came out and guided higher - the stock tanked next day and didn't rally until the next session.

I know a trader who's down close to 30% on an 80k account these past few weeks. He's holding all his techs short and long gold because he's so damn sure this is a bear market rally. He may be right. But what if he's wrong? Why lose all that money becuase you think this shouldn't be happening?

Trade the charts! Good luck.
 
First step is to become an information sponge. Find highly rated trading books here or on Amazon and then either buy it , or go to B&N and read it until you find out that you need to own it. Learn as much as you can about trading, patterns, psychology and how the system works.

The key is discipline to follow your method and enforce risk control. When you try to get rich overnight or risk too large a position, is when you will get burned to no return. You want to try to break even in your first 6 months , while consciously realizing you are becoming a "better" trader every single week. Setbacks and losing streaks happen to the best of us, but the good traders always find ways to learn from their past mistakes.

IB is a great brokerage, the mere fact that you realize there are better things than Datek and Ameritrade is a good sign.
 
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