Quick question on my cash vs my caps

This is a discussion on Quick question on my cash vs my caps within the First Steps forums, part of the Reception category; BRAND NEW to this. Still in the early stages of research, reading, and building my plan. But as I read ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Sep 27, 2017, 6:35am   #1
 
3 Posts
Joined Sep 2017
Quick question on my cash vs my caps

BRAND NEW to this. Still in the early stages of research, reading, and building my plan. But as I read and study I'm continually asking myself what price range stocks should I be looking for to get the most out of the amount of cash I have to trade.

My VERY early plan is to keep reinvesting my wins and build up to eventually have a good college fund for my kids (meaning about 7 years to get it done). Once I have that going my plan is to build up some respectable side income and regularly reinvest a portion of that into large cap stuff for my golden years.

I'm 38, will have a solid 401k and a solid pension if it doesn't end up frozen. Most people in my company have retired with this package and are doing just fine. I'd like to do better.

At the moment, I have $200 USD per month that I'm OK with losing. I'm hoping to start real trading by the first of the year. That money is already collecting untouched so by that time I'll probably have $1,000 available to start.

So the question I'm asking myself is...with that starting amount plus 200 more each month, what price range stocks and cap size should I be researching to be able to get a decently quick trading schedule and build up my cash bit by bit? I know it won't be overnight and I don't want to day trade. I'm very patient and willing to solidify my plan and follow it exactly. What dollar range stocks can I go with to maximize my return on average price fluctuations? If we were to presume that I had 200usd on the first day of every month, what stock buys can offer me the best turnaround? I presume I'll be looking into small and mid cap. The most basic thought I get says something like, "I could spend $100 for 200 shares of a 50 cents per share of what I would determine to be undervalued stock and get out at $1 and will have made $100 minus fees. Something like that would be great if I could keep coming up with little wins and minimize losses. Just a way to get going and build up a larger pool of funds to work with.

Is there a rule of thumb for value investing with regard to cash vs the price of prospective stocks? Sorry if I sound repetitive. Just hoping this makes sense.
PJR202 is offline   Reply With Quote
Old Sep 27, 2017, 2:23pm   #2
 
Quantt's Avatar
Joined Jul 2017
Quote:
Originally Posted by PJR202 View Post
BRAND NEW to this. Still in the early stages of research, reading, and building my plan. But as I read and study I'm continually asking myself what price range stocks should I be looking for to get the most out of the amount of cash I have to trade.

My VERY early plan is to keep reinvesting my wins and build up to eventually have a good college fund for my kids (meaning about 7 years to get it done). Once I have that going my plan is to build up some respectable side income and regularly reinvest a portion of that into large cap stuff for my golden years.

I'm 38, will have a solid 401k and a solid pension if it doesn't end up frozen. Most people in my company have retired with this package and are doing just fine. I'd like to do better.

At the moment, I have $200 USD per month that I'm OK with losing. I'm hoping to start real trading by the first of the year. That money is already collecting untouched so by that time I'll probably have $1,000 available to start.

So the question I'm asking myself is...with that starting amount plus 200 more each month, what price range stocks and cap size should I be researching to be able to get a decently quick trading schedule and build up my cash bit by bit? I know it won't be overnight and I don't want to day trade. I'm very patient and willing to solidify my plan and follow it exactly. What dollar range stocks can I go with to maximize my return on average price fluctuations? If we were to presume that I had 200usd on the first day of every month, what stock buys can offer me the best turnaround? I presume I'll be looking into small and mid cap. The most basic thought I get says something like, "I could spend $100 for 200 shares of a 50 cents per share of what I would determine to be undervalued stock and get out at $1 and will have made $100 minus fees. Something like that would be great if I could keep coming up with little wins and minimize losses. Just a way to get going and build up a larger pool of funds to work with.

Is there a rule of thumb for value investing with regard to cash vs the price of prospective stocks? Sorry if I sound repetitive. Just hoping this makes sense.
My advice, don't do it... your bankroll is just too small to make any real money... you'll spend half of those 200 buck on data feeds, commissions, etc... even if you make money let's say very good return of 20% per year, you cannot make any money close to your goal to save for a college funds, which will frustrate you and lead you to the path of risky trades and charlatans and you'll lose everything in the end... If you need the extra money, spend the same time on getting a second job and save everything... And to answer your original question, frankly stock prices doesn't matter, 10% increase on a $100 stock is the same as on $10 stock, e.g. it is the same ff you make 10% on 10x$100 stocks as 100x$10 stocks in both cases you'll make $100 in the end...
__________________
"If you don't find a way to make money while you sleep, you will work until you die." Warren Buffett, CEO of Berkshire Hathaway.

My number 1 trading rule: EDUCATE YOURSELF!

Before you trade even single penny on the stock market, please spend the time and educate yourself by back testing different trading strategies and ideas - go to eBay and search for "historical stock market data", you can buy 20 years of data for less than $100 - that's all you need to start.
Quantt is offline   Reply With Quote
Old Sep 27, 2017, 3:00pm   #3
Joined Feb 2002
Its good to have an objective but that's all this is - seems like you're planning how to spend/invest the profits before you've made a plan as to how to generate them.

Small capital means small risks which means small profits. Small profits aren't a bad thing - if you can only make enough to pay for a new roof on the house in 5 years' time that will seem like a dream come true when the rain stops coming in. Money is money and its always better to have more than you thought you needed rather than less.

Go ahead, develop some skills in stock analysis, technical analysis and write a trading plan. And I do mean write, it has to be your own and it has to have definite rules.
tomorton is offline   Reply With Quote
Old Sep 27, 2017, 4:36pm   #4
 
3 Posts
Joined Sep 2017
PJR202 started this thread Thank you both for the replies. I know I'm just starting so this is why I'm here. Despite all the links and info provided in the registration email, there are some information gaps that I couldn't fill in (or find). The organization of the content here could be better for the true beginner. Not a dig on the site...just an honest critique. Most of what's provided on those original links are still slightly ahead of a true beginner. I found some very helpful info on investopedia though and i think it's gotten me closer to making proper use of the trade2win links. I've dug around quite a bit and still haven't found a good example of an investment plan. The only thing I've been able to gather is it's made up of your goals and your hard rules for getting in or out. I didn't feel like I could come up with those answers without answering my original question. So, thank you.

So, realistically with my expendable cash I should shoot for a lesser goal for the time being. That's fine. I know I still need to test the waters on a trainer app,etc. A second job isn't an option other than a couple ideas I've been knocking around I could do from home. Regardless, if I find that i'm able to do this successfully then I can come up with more money without borrowing or dipping into my savings, etc. I have more free income from my day job, but I don't want to put it on the table just yet. I'm not a big risk taker and I have a pretty solid BS detector when it comes to charlatans. In short...I'm not desperate for the income from trading. My current course should see me fine into my next phases of life.

I do like the roof analogy, and I had been knocking around a smaller idea (based on what I was told here today) of just something simple, like buying my daughter a car in 4 years. As I said, if I find consistent success I'll divert more non crucial cash to trading but it's good I think to have a small goal.

A couple more questions if I may.

What are my underlying costs for trading? The first reply mentioned data feeds. I presume this is a source of information about companies that has done most of the research for you so you can more easily see if it fits into your plan?

If you had my current funds and just wanted to get started in more of a hobby scenario, what kind of value based stocks would you look for? In the first reply it basically said 10% is 10% (if I'm understanding correctly) and I get that. But let's say my goal is the 10% profit. Should I just be analyzing historical data and looking for stocks that have consistently made 10% swings (and I would also be searching for the reasons for those swings like market share, industry growth, etc)? And wouldn't those be small and mid cap companies for the most part?

Is there a solid example of a trading plan around here? I know it has to be mine, but a few examples would be nice. I still can't find what the basic components of a trading plan are.

Thank you!
PJR202 is offline   Reply With Quote
Old Sep 27, 2017, 6:41pm   #5
 
Quantt's Avatar
Joined Jul 2017
Quote:
Originally Posted by PJR202 View Post
Thank you both for the replies. I know I'm just starting so this is why I'm here. Despite all the links and info provided in the registration email, there are some information gaps that I couldn't fill in (or find). The organization of the content here could be better for the true beginner. Not a dig on the site...just an honest critique. Most of what's provided on those original links are still slightly ahead of a true beginner. I found some very helpful info on investopedia though and i think it's gotten me closer to making proper use of the trade2win links. I've dug around quite a bit and still haven't found a good example of an investment plan. The only thing I've been able to gather is it's made up of your goals and your hard rules for getting in or out. I didn't feel like I could come up with those answers without answering my original question. So, thank you.

So, realistically with my expendable cash I should shoot for a lesser goal for the time being. That's fine. I know I still need to test the waters on a trainer app,etc. A second job isn't an option other than a couple ideas I've been knocking around I could do from home. Regardless, if I find that i'm able to do this successfully then I can come up with more money without borrowing or dipping into my savings, etc. I have more free income from my day job, but I don't want to put it on the table just yet. I'm not a big risk taker and I have a pretty solid BS detector when it comes to charlatans. In short...I'm not desperate for the income from trading. My current course should see me fine into my next phases of life.

I do like the roof analogy, and I had been knocking around a smaller idea (based on what I was told here today) of just something simple, like buying my daughter a car in 4 years. As I said, if I find consistent success I'll divert more non crucial cash to trading but it's good I think to have a small goal.

A couple more questions if I may.

What are my underlying costs for trading? The first reply mentioned data feeds. I presume this is a source of information about companies that has done most of the research for you so you can more easily see if it fits into your plan?

If you had my current funds and just wanted to get started in more of a hobby scenario, what kind of value based stocks would you look for? In the first reply it basically said 10% is 10% (if I'm understanding correctly) and I get that. But let's say my goal is the 10% profit. Should I just be analyzing historical data and looking for stocks that have consistently made 10% swings (and I would also be searching for the reasons for those swings like market share, industry growth, etc)? And wouldn't those be small and mid cap companies for the most part?

Is there a solid example of a trading plan around here? I know it has to be mine, but a few examples would be nice. I still can't find what the basic components of a trading plan are.

Thank you!
Cost of trading would be real time data - most likely from your trading platform, it is always worth it, even if you don't day trade, others would be commissions/transaction costs for buying and selling shares + form here the sky is the limit (news feeds, virtual servers, up to Bloomberg terminals - stuff you won't need at least in the begging).

Trading plan - start with how much you can lose per trade: good start is 1 present for all your holdings (after you have the system you can optimize it using Kelly for example) and from here go and back test any trading strategy you can find to see what works and what not and this way you'll build your plan and hopefully find you edge, after all that you can start trading with real money...
__________________
"If you don't find a way to make money while you sleep, you will work until you die." Warren Buffett, CEO of Berkshire Hathaway.

My number 1 trading rule: EDUCATE YOURSELF!

Before you trade even single penny on the stock market, please spend the time and educate yourself by back testing different trading strategies and ideas - go to eBay and search for "historical stock market data", you can buy 20 years of data for less than $100 - that's all you need to start.
Quantt is offline   Reply With Quote
Old Sep 29, 2017, 4:50pm   #6
 
3 Posts
Joined Sep 2017
PJR202 started this thread thank you all!
PJR202 is offline   Reply With Quote
Old Sep 29, 2017, 8:36pm   #7
 
Kaeso's Avatar
Joined Oct 2015
Quote:
Originally Posted by PJR202 View Post
I'm continually asking myself what price range stocks should I be looking for ....

I have $200 USD per month...ill probably have $1,000 available to start.

hi Pjs

im not sure what your asking but maybe youre asking the wrong question anyway

do you know what it costs you in commission to buy/sell stocks direct? what size trade do you need to make in order to be cost effective?

there are ways of "investing" $200 per month into the market with little or no commission or trading a $1000+ account but maybe you are in the early stages of figuring out how

Last edited by Kaeso; Sep 29, 2017 at 8:44pm.
Kaeso is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
How I Made Some Quick Cash Trading Binary Options proxyman Trading Journals 9 Jun 3, 2012 7:31pm
Just a quick question. pietro Spread Betting & CFDs 4 Sep 22, 2004 9:18am
Very Quick Question CarpeUK First Steps 19 Jul 30, 2004 3:29pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)