Most new traders make several assumptions when coming into trading, which then go on to almost guarantee, statistically, that they will not survive their first year. Start with the simplest strategy you can find, preferably one that uses no off-chart indicators. Use a low-risk strategy like trend-following: "beating the market" does not mean buying when everyone else is selling. Trial it on a demo account for a few weeks to understand why it works, when it fails and how it could be better.
strategy or tips
- Thread starter biglivetrade
- Start date
Many enter financial markets think returns are like a lottery. Many promoters and trainers say the same, should be illegal. They should be made to backup their claims.
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Right,
You see comments like this in mature bull markets, near the tops - had you invested $10,000 at the 1999 top it would be worth $1,976 at the low, you can bet the vast majority puked out of their positions close to the lows.
The same emotions that make day trading difficult also sabotage investors - the big panics. It sure is easy to say don't sell no matter what, good luck going against human nature. It sure looks easy from looking at a chart.
The grass is always greener - the losing day trader wishes they were a long term investor in a bull market, in a brutal bear investors which they were nimble traders.
Many retirement sites are factoring in the long term avg index gains as if it is guaranteed - there have been years to decades investors had to endure just to get back to break even, most capitulate close to the lows.
With this much hubris in the market it is no wonder most of the best old timer traders warn the next bear could very well be the worst in history, making 2008 look like a dressed rehearsal.
The bewildered heard has a long and rather predictable track record of piling in near the tops & bailing out near the lows. Every dog has its day, in a prolonged bull the herd has its day, most will end up giving it back in the next big bear.
hubris? where - from one random guy's post on the internet? you actually have fallen into the herd trap by trying to sound like a contrarian minority... you should show some real stats about this 'hubris'.
mature? why - because you ran out of fingers and toes counting how many years this bull has been?
3 years ago I asked the question "will we run out of shares", when the qqq was 105... 80 points later (soon to be 90 points later), people on the sideline in 2016 are still on the sideline today, kicking themselves for missing it..
while the fundamentals have not changed much - I have laid out many times - investor sentiment, sideline cash amount, corporate cash amount, yield spreads, fiscal/monetary policies... all the tail winds for the next big run...
yet there are too many still are afraid to dip their toes in the water - market 'looks so high after so many years'.... exactly why the market has room to run, because there are too many doubters out there!
W
Where do you trade? What instruments do you prefer? Add some information if you don't want some vague or plain answers
Are you actually a new trader, or do you just want to be, or plan to be, a trader? If you have already been trading, how long have you been trading? What do you trade? Where did you learn about trading? How big is your account? U.S. or offshore? What brokerage? Do you have a paper trading account?
A strategy is not really the most important part of trading. The most important part of trading is money management and particularly risk management. I can only speak on equities. I actually AM a new trader. I have been trading for about three months now, stocks only, intraday, so far, so equities is the only thing I can talk about. But if all your other alligators are in a row, you only need ONE basic strategy to begin with. If you don't see an opportunity to trade your strategy on a particular day, don't trade. A whole week? Don't trade. If the setup is not right, uptight, and outtasight, don't trade. There will be another day and another trade.
How are you picking your stocks to trade? Obviously stock picking is an integral part of any strategy. Most traders use what is called a scanner or screener to select stocks that are possibly suited to trade that particular day according to the price and volume behavior specified by the trader. I use TradingView but there are many others and your trading platform may have one built in, and it might be pretty good or it might be meh.
So you have a strategy and you have selected the most likely stock to trade or else a short list to watch for... an ENTRY. Your entry needs to be at a point where you have a good place to set a stop loss and a good place to take profit, and the latter should be at least three, and NEVER less than two, times the distance between the entry and the stop loss. This at least in theory leaves you with 3x potential profit relative to the risk. If you are right half the time and your profits from wins are 3x the losses from the losers, you will make money. Simpler to say it than to do it, but there it is. Oh, and your risk per trade ought to be no more than 2% of your total account size. 1% if you prefer lower risk, slow and steady trading.
But you want a strategy. I have a feeling that you have never traded and I am assuming that you are wanting to trade stocks. Most any good book on trading will have at least 3 or 4 effective strategies. What are the titles of some of your trading books? Do you have any at all? No? Set aside $100 of your expense budget for a handful of day trading books. Read them and read them again. Pick a strategy. Any one. They will pretty much all work if you follow them properly.
Trade like a machine. Figure out the rules by which you will do a trade, and stick to them. Select your stop loss and your profit taker and your entry point. If you don't get a chance at a good entry, don't enter the trade. Period. Once you are in, if the stock moves against you, don't move your stop further away from break even. Set it where it logically should be set, when you first set it. That's what it is there for, to give you a small loss instead of a catastrophic one. Don't move it until your stock is well past your break even point, then consider moving it beyond break even so you are no longer risking anything at all, and in fact have a few cents profit locked in.
Don't be greedy. If your stock gets close to your inftended closing point, let it hit. Don't move it up, either, unless volume is really high and the stock has broken out beyond resistance levels, and even so, clear half your position. If you have a good profit made, then you have achieved your objective for the trade. If you insist on letting the stock run when there is no particular indication that it will run, Sell or Cover half, and move your stop loss up to the low of the previous bar. Remember, this locks in profit. Keep moving it up if you are going to let the stock run. If you aren't ready for it, a hard reversal can eat up all your profit.
This is basic stuff. If you don't understand it, then you need to do some more reading.
And I STILL haven't given you a strategy. Okay here's a gimme. Bull Flag Momentum. Look it up. The pattern is easy to recognize and the correct play is pretty simple, and you can usually repeat at least once, sometimes twice, occasionally three repeats with the profit decreasing with each subsequent repeat. A lot of these setups are good for a couple bucks a share so it is not inconceivable to make say $400 profit trading 200 shares of just the one stock, over a period of maybe 2 hours.
You need to begin with paper trading. You need to make your mistakes without risking real money. If you begin trading live, without first learning your platform and working out your trading rules and learning how to recognize trading opportunities in paper trading, you won't last long.
Lastly, as a new trader, you are lunch for the wily survivors of the game. The chances are around 80% to 90% depending on whose figures you go by, that you will either fail and lose all your account, or give up on trading. Don't trade money you can't afford to lose or that is borrowed. Everyone wants to take your money. Including me, TBH. Think of it as a poker game. In poker, we say that when you look around the table and can't decide who the sucker is, it is you. If things aren't going well, get out. Get out for the day. Or get out for the week or for a month. Or forever.
If you suffer a 50% loss in a particular time period, you don't have to make 50% profit to get back up to where you were. You have to make 100% profit to get back to where you started! Easier to not lose a whole bunch of money in the first place, right? Decide on a maximum amount of money you can give to me and the other traders who are all trying to get it. When we have taken it, quit while you still have the rest. You have been warned, and my conscience is clear. If you survive, welcome to the club! But we will still want to take your money. We are all potential food for someone.
What is the QQQ? How do you buy it or sell it? Brokerage?
It is an exchange traded fund, or ETF. Yes you buy through your brokerage. Here is what it has been doing the last couple years...
futures brokerage or stocks brokerage?