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Have You Been Here? Need Your Wisdom
- Thread starter Pondering Man
- Start date
I've been at this for 37 years and I still lose money trading (not a lot, but it happens more than I like). If you're going to trade, please take to heart all of the advice the ET posters have given you, the primary one being to paper trade until you feel comfortable - and that could be years away, or never.
In trading I have found only 2 true Holy Grails (profit while principal is secured) after spending decades searching them out. The best one, and I can say what it is because it's not really a secret, is true arbitrage where you are simultaneously buying and selling, but that takes a lot of capital, a lot of equipment, and you need to be properly colocated on the Internet. The other one works very well for me, but its probably going with me to the grave (no one has ever been willing to pay me what I want for it - lol).
So, unless you're lucky enough, or smart enough, to find one of these on your own, chances are you will lose money trading.
Here's my advice for you as a newbie to the market. Do something simple and conservative first, like writing covered calls on a blue chip like GE. You'll make 3 or 4% per month while protecting your principal a little.
If you can figure out how options work (and I note that there's tons of information on the Internet about Covered Call Writing), then you're probably intelligent enough to take on the market if you study it thoroughly and practice. If not, think CDs.
Good luck.
In trading I have found only 2 true Holy Grails (profit while principal is secured) after spending decades searching them out. The best one, and I can say what it is because it's not really a secret, is true arbitrage where you are simultaneously buying and selling, but that takes a lot of capital, a lot of equipment, and you need to be properly colocated on the Internet. The other one works very well for me, but its probably going with me to the grave (no one has ever been willing to pay me what I want for it - lol).
So, unless you're lucky enough, or smart enough, to find one of these on your own, chances are you will lose money trading.
Here's my advice for you as a newbie to the market. Do something simple and conservative first, like writing covered calls on a blue chip like GE. You'll make 3 or 4% per month while protecting your principal a little.
If you can figure out how options work (and I note that there's tons of information on the Internet about Covered Call Writing), then you're probably intelligent enough to take on the market if you study it thoroughly and practice. If not, think CDs.
Good luck.
Well, expand out that arbitrage position to a longer holding timeframe and it becomes a spread trade - which is a great strategy employed by bank desks and commercials, but IMO it serves a retail oriented trader quite nicely.
In terms of covered calls on GE generating 3 or 4 % per month, please verify that - if true, the entire known investing universe would arb that down to zero in a heartbeat and claim a Sharpe Ratio of 3.0 !!!!
Grandson introduced it to me about 10 years ago. He' in college now, and I still like a good session of Starcraft. You ought to try it sometimes instead of whacking to the chicks with dicks website.:eek:
bone, good point, but I was trying to give the OP something a little simpler and more conservative to tax his intellect with and build his experience upon. It beats encouraging a novice to blow out his account trading the S&P.
I wouldn't generally advocate using a simple covered put or call strategy on a long term basis -- unless you're an option jockey (in which case you'd be using spreads or some other device anyhow). But again, for a novice in the short-term, it's a good introduction to the market without risking his wad.
I wouldn't generally advocate using a simple covered put or call strategy on a long term basis -- unless you're an option jockey (in which case you'd be using spreads or some other device anyhow). But again, for a novice in the short-term, it's a good introduction to the market without risking his wad.