Hello there trade2win!

Hey guys,

My name is Rob, I'm 20 years old and I got extremely interested in trading about 6 months ago. I've spent the last few months managing an imaginary portfolio while jotting down several notes per day, documenting news stories and the impact which they have on the markets.

My dad has about $5000 sitting in an account in the US, which he has decided to give me as a 21st birthday gift to use on the stock market. In theory, I could just withdraw the money and buy myself something, but trading is what I'd really love to get into, and in the long term, I may even be able to create some revenue from this fantastic gift.

I'm thinking of starting out spread betting, around the £1 stake area for a while, scalping the markets when I can until I can gain some experience, and some confidence. What do you lot think about this as an introduction to trading?

I'd like to spend maybe 3 days a week trading to give myself a little additional disposable income for the weekends. Maybe, £150 or so per week. Would this be realistically achievable operating at lower stakes (£1.00 - £2.00)?

I want some honest advice, if you think I should continue paper trading for a few more months, please tell me! I don't want to waste away the money, but I don't really need anything right now, so ideally I'd want to something productive, educational and potentially fun with it.

Cheers guys!

hey Rob,

first off, don't start thinking in terms of returns, ex: 150/week or whatever. Let that be, do not expect to make money from the start, on average it will be months until you will be profitable consistently. Just concentrate on studying, learning and analysis.

I would adivse you to paper trade another couple of months, there is no rush

Trak said:

Hey guys,

My name is Rob, I'm 20 years old and I got extremely interested in trading about 6 months ago. I've spent the last few months managing an imaginary portfolio while jotting down several notes per day, documenting news stories and the impact which they have on the markets.

My dad has about $5000 sitting in an account in the US, which he has decided to give me as a 21st birthday gift to use on the stock market. In theory, I could just withdraw the money and buy myself something, but trading is what I'd really love to get into, and in the long term, I may even be able to create some revenue from this fantastic gift.

I'm thinking of starting out spread betting, around the £1 stake area for a while, scalping the markets when I can until I can gain some experience, and some confidence. What do you lot think about this as an introduction to trading?

I'd like to spend maybe 3 days a week trading to give myself a little additional disposable income for the weekends. Maybe, £150 or so per week. Would this be realistically achievable operating at lower stakes (£1.00 - £2.00)?

I want some honest advice, if you think I should continue paper trading for a few more months, please tell me! I don't want to waste away the money, but I don't really need anything right now, so ideally I'd want to something productive, educational and potentially fun with it.

Cheers guys!

Click to expand...

1) Paper trade for 6 months minimum whilst you find even the most basics of a system you like and get used to rigid money management - in this respect dont dick around with $10,000 a trade ....trade the same level you will when you go live (See below)....and make consistent money to go to 2)

2) them move to trading a real account on micro money to learn the Emotions and subjective side......and trade for 6 months achieving consistent profitability ...

if the system is not profitable at any point go back to 1) and start again

3) What happens next from there ?.......people have a >5% chance of even getting to this point my friend so dont worry till you get there

and theres nothing wrong with being in the 95% .....at least you tried

good luck
N:smart:

Hi Trak,
Welcome to T2W.

Back in the early noughties, I had a £5k account and, after making consistent gains week-in week-out day trading US equities over a three month period, I thought I had this game pretty much sussed. The market takes great exception to participants who think that way and decided to teach me a lesson. I proceeded to lose over £3k on one day trade (turned swing trade) lasting just 24 hours. Doubtless, you're thinking you won't be so stupid. I thought the same thing when reading about other traders doing it until I did it myself.


Basically, the toughest challenge you face is to resist the temptation to put your dad's money into the market too soon. How soon is too soon? That's tough to answer because it depends on you and how good you are and how quick you learn etc. Certainly, you want to paper trade until you've got a really consistent track record - several months at least if you're day trading and months to a year plus if you're swing trading.

I don't wish to be negative but, based on the 'average' of most newbies entering the markets, the chances of you (or your dad) still having that £5k this time next year is pretty slim I'm afraid. Read all the FAQs on here and go slowly. And learn from my mistake - the minute you start to feel confident and that you have a handle on the market - that's when you've most vulnerable and liable to take a hit. At least if you die a death by a thousand cuts you can pull the plug when there's still a good amount of capital left in your account. If you've been thorough in your testing, you should have a reasonable idea of the expected drawdown of your methodology. I'd recommend 10% tops. In other words, don't trade any approach which you know may incur a drawdown more than this because, as a new trader, you simply won't have the confidence or experience to stick with it until your equity curve resumes an upward trajectory. So, when you're down to £4.5, go back to paper trading and don't resume using real money until you've identified the cause of the drawdown, corrected the problem and then verified the solution by yet more paper trading. It's all tedious and time consuming stuff and a far cry from the glamorous image of making a fortune in next to no time trading from the comfort of ones own home. Welcome to the world of retail trading - good luck!
Tim.

so, given the assumption that you're going to lose it anyway,
why not flip a coin, enter a trade in one direction and see how it goes ?

you'll either lose all 5k, or make as much again or even treble it.

if you lose it, it's just getting the inevitable over and done with that much quicker.

if your trade takes off profitably, you can pay back your old man, so that pressure's off,
finance some proper studying of the markets,
and bankroll your own trading life

It's what I'd do if I had some "free" money suddenly descend on me

Thanks everyone, all the feedback and suggestions are great. Cheers for taking the time out of your day to help me out.

So I should remain focused on paper trading, accept that I'll probably be making very little profit, if any immediately and stay extremely cautious when I first begin using real money. That leads me to my second bunch of questions.

What software should I use to begin paper trading in spread betting? Are there any online brokers that offer practice funds so I can operate under true market conditions (without delay), with real trading platforms? I'd like to find a system I'm comfortable with, on software I know the ins and outs of.

rathcoole_exile, while that sounds like a fairly brilliant idea, I'd rather try and get as much out of the money in terms of educating myself in trading. While there is a chance to win big, I'd rather make small gains or even losses if that means I'm learning something from the experience.

Thanks again everyone.

Trak said:

what software should I use to begin paper trading in spread betting? Are there any online brokers that offer practice funds so I can operate under true market conditions (without delay), with real trading platforms? I'd like to find a system I'm comfortable with, on software I know the ins and outs of.
.

Click to expand...

Most, if not all, brokers will offer a practice/demo account. However whilst it will be the same software the execution of demo compared to live trades will be entirely different. Once you start trading with real money or, God forbid, actually make money you will encounter a lot of issues that you never saw on demo, for example slippage and a 'frozen' platform when trying to exit with profit.

By the way your aim of making £150 a week on £1 or £2 per point is hopelessly optimistic, totally unrealistic in fact. A good result would only be losing £150 a week.