Quote from CaptnDustball:
Okay, I shudder to think how this will be received. There seems to be a lot of angry people on this board who live for posts by ignorant newbies like myself asking dumb questions. I am not going to stop you guys. Blast away! But for those who are helpful, let me give you a little bit of background. I know next to nothing. Well, I read Investing For Dummies so I know the very basics. But I wanted to get your opinions on how I should approach trading.
I'm a little under 30 with a knack for taking some risks. I would like to make a decent amount of money as fast as is not considered reckless. I don't expect to make 500k in a year, but 100k would be nice once I'm up and running for a couple of years.
When all is said and done, I will (yes, very unfortunately) probably only start with 10k. So I know that makes things very difficult. But that's why I'm reaching out for your expertise. Here are my questions:
1) How long should I practice before I start trading for real?
2) What is the practice-trading software preferred by people on this board?
2) I expect to get a lot of varied responses on this one but which strategy is proven to work better? Fundamental or Technical. To be honest, I'm not entirely sure what either of these mean. But I believe fundamental is more Cramer-like (do a lot of research on the company, stock, etc.) and technical is more graph-based (study the graph and try to find trends).
3) How much should I realistically expect to make? I know this is a vague question requiring more information (how much are you going to risk? are you going for big gains or small gains? etc.) but from a brief glance at the threads in this forum, it's hard to figure out who, if anyone is actually making any money. Are there people on this board who make a comfortable (>100k) living just by trading? Or is that a pipe dream? If you are one of those people, how long did you work at trading before you became successful? What system do you use? Any advice?
5) How helpful is software in this job? I'm a computer freak so I'm leaning towards anything that involves software helping me out. Is there software out there that traders just can't live without? The software that recognizes trends and, I assume, gives you probabilities on when to buy a stock is something I'm intrigued by. But I don't know if it works. Does it?
6) Finally, any general advice? Maybe you can recount your earliest mistakes so I don't make them.
Thanks for you time guys. I appreciate the responses (if any).
best,
c.g.e.
I'm also a relative newbie who has yet to be consistently profitable, so I might have some recent perspective on these issues...
1) It's common advice here to paper trade before doing it for real, but to me that's like learning to drive by backing in and out of your driveway. I feel like the only way to build confidence and get used to the 'emotional' side of things is to put actual cash on the line. There are also practical problems with using "sim" accounts or whatnot (like differences in fills and slippage). I find that trading very small lots (like 1 futures contract at a time with tight stops) works to hold down my risk. However, if you have a relatively small amount of capital and you still need to learn very basic things, e.g. how stop and limit orders work, paper trading might be a good idea.
2) I don't know that very many people here are able to invest on fundamentals only. Fundamental analysis is for mutual funds and the like, i.e. those looking for relatively low returns over a long period, and even the pros have trouble beating the market that way. I previously traded index ETFs and now trade futures because I found that picking stocks based on business prospects, earnings, clinical-trial results etc. and holding overnight just did not work for me; I lost about $13k learning that lesson. I've been studying the charts since I first started out. Now I'm using intraday charts in combination with basic general knowledge about market conditions.
3) I'm not one of those people, but if you have a consistently profitable system, your returns are limited only by the position size and leverage you're willing to take on. My long term goal is in the $100k/year range.
4/5) Not quite sure about this one. I spent a few months trying to come up with a profitable autotrading system, but I think I could have spent years on it without succeeding, especially as I wasn't a profitable "manual" trader. Personally, I find that learning the chart patterns, etc. is hard and time-consuming enough without also fiddling around with software that claims to print money for you. I know that some people do use market-scanning software to look for rare, but consistently profitable setups in a wide variety of stocks. The hard part is identifying a setup like that.
6) My best advice is to read all the threads on ET, especially the "day trading 2.0" thread, watch all the tutorial videos you can find (there's a thread with a number of PureTick videos), read all you can about chart patterns, indicators and so on. There are so many different strategies out there, the difficult part is finding the one that works for you. Also, be aware that it's much harder to pick up than you might think, I've had several stretches where I thought I might have broken out of the learning curve, only to get slapped with a big drawdown the next day. Still working at it though...
Good luck!
