What sort of trading vehicle should i use as i start? Background info provided...

K

krosfyah

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Before i start, here is my background info:

1 - start up capital = £1000 - i want to get into this as a hobby, to see if i can succeed, not as a means to "get rich quick"

2 - willing to lose 2% per trade. I know this is high with the usual "expose to 1% of capital" idea, but 1% of £1000 isn't much. I know to expect far more losses (or almost nothing but losses) starting out, but i also am not risk adverse - i won't just blindly back something without doing a proper analysis of it, and i'm open to taking a hit on something if i can also make the return back elsewhere.

3 - i have about 4 hours/day total time, including prep/analysis - 7am-9am and 5.30pm-7.30pm. I could probably get another hour in in the evening for analysis/next day prep. I would have access at work, however, i am not able to sit here monitoring on a minute by minute basis. Couple of checks on prices every hour most likely. Weekends are free as i please.

4 - what i want to get out of it - firstly, see if i can suceed at something that i've always been interested in, but never involved with. My dream would be to be successful enough to gain a new way to make a little money from something new and exciting. I want this to fit around my day job.


As i'm just starting out - or not even starting, more looking to work out HOW to start out - any advice and info from you guys would be appreciated.

Many thanks.
 
Some pointers

krosfyah said:
Before i start, here is my background info:

1 - start up capital = £1000 - i want to get into this as a hobby, to see if i can succeed, not as a means to "get rich quick"
.
Click to expand...
Krosfyah

Starting with the basics - if you go to the top of the "First Steps" forum you will find some "stickys" - these are posts that refer back to beginners documentation in each forum. Also look under the K,Lab and Traderpedia drop-down menues for other useful documentation.

£1,000 is not a lot quite frankly.

For example, the Securities and Exchange Commission (for US equities) classifies a trader who buys and sells the same security in the same trading day 4 or more times in any 5 consecutive day trading period as being a Pattern Day Trader. Such a trader must keep a minimum equity balance of $25,000 US in their account. Thus you would be restricted from this type of trading. It doesn't mean that you couldn't trade US equities, but that you would have to watch the frequency of the transactions.

We don't have this restriction on the London Stock Exchange. So the first thing to consider is what type of instrument and which exchanges you are interested in. Instruments include equities, foreign currency (forex), derivatives such as options (more advanced stuff ) etc. You can find sub-fora on this site for each of these as you start to home in on the different products.


krosfyah said:
2 - willing to lose 2% per trade. I know this is high with the usual "expose to 1% of capital" idea, but 1% of £1000 isn't much. I know to expect far more losses (or almost nothing but losses) starting out, but i also am not risk adverse - i won't just blindly back something without doing a proper analysis of it, and i'm open to taking a hit on something if i can also make the return back elsewhere.
.
Click to expand...
Not only must you account for losses per se, but also for the costs of trading. There are one-off costs such as computer hardware. There are recurring costs, such as data feeds and there are transactional costs, such as commissions and spreads. These will all eat into your capital so don't ignore these.

For information on fees and commissions look at the brokers' sites that are mentioned on this site. As as starter one of my brokers is Interactive Brokers (www.interactivebrokers.com) and there are drop-down menues or searches on fees and commissions.

You wil probably want some charting software which can range from free to hundreds of pounds either one-off or recurring. Many brokers provide trading interface software, which often includes charting capabilities as part of their service.

Many brokers provide "paper trading" accounts which are either dummy accounts that use demo data, such as delayed data or that use real-time data if you have already subscribed to the data feed. These can be used to become familar with their software, practising with different order types and developing strategies.

krosfyah said:
3 - i have about 4 hours/day total time, including prep/analysis - 7am-9am and 5.30pm-7.30pm. I could probably get another hour in in the evening for analysis/next day prep. I would have access at work, however, i am not able to sit here monitoring on a minute by minute basis. Couple of checks on prices every hour most likely. Weekends are free as i please.
.
Click to expand...
As discussed above there are various markets you could be trading e.g. South Africa, USA, UK. Each has its own timezone and you might like to work out which markets are open during the hours you mention. These will be markets where you can trade live and watch prices move in real-time (assuming you have the real-time feeds). Alternatively you can just analyse the market when it is closed (end-of-day) and place trades with suitable stops etc.


krosfyah said:
4 - what i want to get out of it - firstly, see if i can suceed at something that i've always been interested in, but never involved with. My dream would be to be successful enough to gain a new way to make a little money from something new and exciting. I want this to fit around my day job.

As i'm just starting out - or not even starting, more looking to work out HOW to start out - any advice and info from you guys would be appreciated.

Many thanks.
Click to expand...
It's worth doing some reading around the subject - using this site and books recommended on this site.

Here are some works which are often recommended:

Elder - Come into my trading room

Douglas - Trading in the zone

Murphy - Technical analysis

Again look the "stickys" under the First Steps forum

Hopefully this will give you some pointers that you can start investigating.

Charlton
 
Charlton many thanks for taking the time to help me understand more and help me on my way, i very much appreciate it.

I will look into your recommended reading, and continue to go through and digest the stickies in the First Steps forum.
 
Start with a pretend account, Oanda & Visual Trader do good FX feeds as if they're live and Cap Spreads allow you to open a demo on their system. Put £100 into a Cap Spreads account for the charts on non FX, Use Oanda or http://ifx3.it-finance.com/CBFX/itcharts.phtml?uid=HC5922 or Visual Trader for FX. See how you go when playing monolopy with the markets. If you can hack it with these then look to bump up your capital so that you can start for real. My advice, don't do it with £1k, not enough. You're looking at ten losses of £100 and you're out of the game!!! Name of the game, stay in. don't concede a last min goal that costs a cool few million like Valencia just did!!!!
Enjoy the ride, costs a few bob, but it can be exhilirating!!
Chris
 
Krosfayh,

I'm a newbie too so these are my views

1. £1,000 is too low. £5,000 minimum if you decide to trade margined products.
2. 1% maximum with a range of 0.5% to 1%. Ideally scaling in and out. Reducing below 0.5% on a set number of consecutive losses. Learn from any mistakes.
3. These times sound ideal for swing and positional trading. Alternatively, you can trade the US markets in the evening as well as FX. Be careful with FX from 7pm, as I believe you can get erratic swings.
4. That's a very good goal to have.

Other stuff
Go through this and other websites, read books, attend free evening and weekend seminars.
Think about how you will trade, develop a trading plan, fit your plan around your personality, demo trade on a variety of platforms (and enter trading competitions) to test it out your plan, learn from your mistakes (I've been taking screen prints of mine!) and if you're doing well after 3-6 months start for real taking very small positions.

Good luck, Fibonelli
 
fibonelli said:
Krosfayh,

I'm a newbie too so these are my views

1. £1,000 is too low. £5,000 minimum if you decide to trade margined products.
2. 1% maximum with a range of 0.5% to 1%. Ideally scaling in and out. Reducing below 0.5% on a set number of consecutive losses. Learn from any mistakes.
3. These times sound ideal for swing and positional trading. Alternatively, you can trade the US markets in the evening as well as FX. Be careful with FX from 7pm, as I believe you can get erratic swings.
4. That's a very good goal to have.
Click to expand...

IMHO: £5000 minimum!?? :-0 This really is ill advice. Using the benefit of hindsight and experience I would say that learning to trade is similar to learning to fly. You wouldn't say to someone who has never flown: "Make sure you fly a small plane and stay low to the ground but watch those mountains though. If you want to do loops make sure you remember to trim the aircraft and always check that your artificial horizon gauges have properly working gyros".

Krosfayh, your £1000 pounds will be better spent on books, historical data and simulation software that you can practice simulated live trading with. I wrote my own using Visual Basic. I advise you open a spread-betting account because you can trade with very small amounts of money- £500 is plenty enough to begin with if you keep your stops tight. Your aim is simply to learn and understand the mechanics of trading. I can't understand why anyone would tell a newbie that £1000 isn't enough! :-0 :-0 :-0

Think of learning to trade as studying for a Ph.D. It will take years before you begin to be consistently profitable. For every 1 hour I spend watching and trading live markets I put in at least 1-2 hours of practice. This is a long slow journey of blood, sweat and tears.

4 - what i want to get out of it - firstly, see if i can succeed at something that I’ve always been interested in, but never involved with. My dream would be to be successful enough to gain a new way to make a little money from something new and exciting. I want this to fit around my day job.
Click to expand...

If you do this properly it will take at least 6-12 months before you get any idea of your chances of success.
 
Last edited:
Squares dont seat well into circles

krosfyah said:
Before i start, here is my background info:

1 - start up capital = £1000 - i want to get into this as a hobby, to see if i can succeed, not as a means to "get rich quick"

2 - willing to lose 2% per trade. I know this is high with the usual "expose to 1% of capital" idea, but 1% of £1000 isn't much. I know to expect far more losses (or almost nothing but losses) starting out, but i also am not risk adverse - i won't just blindly back something without doing a proper analysis of it, and i'm open to taking a hit on something if i can also make the return back elsewhere.

3 - i have about 4 hours/day total time, including prep/analysis - 7am-9am and 5.30pm-7.30pm. I could probably get another hour in in the evening for analysis/next day prep. I would have access at work, however, i am not able to sit here monitoring on a minute by minute basis. Couple of checks on prices every hour most likely. Weekends are free as i please.

4 - what i want to get out of it - firstly, see if i can suceed at something that i've always been interested in, but never involved with. My dream would be to be successful enough to gain a new way to make a little money from something new and exciting. I want this to fit around my day job.


As i'm just starting out - or not even starting, more looking to work out HOW to start out - any advice and info from you guys would be appreciated.

Many thanks.
Click to expand...

888888888888888888888888888888888

Ive had a little thought on this huge !!!!! asking , looking back on it, and almost ignoring your post ive come up with this filter which might help you help yourself with a better start. Pursuing what i think is best. Apllies to all newcomers too I think.


Study the options 1,2,3 below.



1) A secuirty guard pulling a 12 hour stint content with redoing last years unsolved wordfind puzzles, and to lighten the dull shift, engages from time to time in trying to out manouver his own reflection on the inside of the security huts window ,lit by cheap overhead strip lights. Favoured vice- cigarettes & porn

2) A window salesman who thinks appearing in court on harassment charges is just a part of the job and acts as a reminder to himself that he's ,giving it all hes got. To get the sale. Favoured vice- cocoaine & sport f****ing

3) A 9-5 office worker who takes homemade sandwiches to work , and likes to occassionally play a game of a squash in the same good conditioned (but now a little tight fitting) white shorts he had when he was 17. Favoured vice- pipe smoking & cross dressing


Now and its not a trick question or anything like that, out of the three options above, which is nearest fit to you.

O.k. myself for example I choose 1. but have been the other 2 :) If you can choose or identify with one of the three then I think you might save yourself a few years.



When/ if you let me know I will respond with what I think is the best route (area for you to focus on ) for you to take based on what number picked.




.
 
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new_trader said:
IMHO: £5000 minimum!?? :-0 This really is ill advice. Using the benefit of hindsight and experience I would say that learning to trade is similar to learning to fly. You wouldn't say to someone who has never flown: "Make sure you fly a small plane and stay low to the ground but watch those mountains though. If you want to do loops make sure you remember to trim the aircraft and always check that your artificial horizon gauges have properly working gyros".
Click to expand...
new_trader said:
New Trader,
I would be grateful if you would kindly ensure that any posts are quoted within context.

The following was not quoted to make your point.

"Other stuff
Go through this and other websites, read books, attend free evening and weekend seminars.
Think about how you will trade, develop a trading plan, fit your plan around your personality, demo trade on a variety of platforms (and enter trading competitions) to test it out your plan, learn from your mistakes (I've been taking screen prints of mine!) and if you're doing well after 3-6 months start for real taking very small positions".

Cheers Fib
Click to expand...
 
1000 bucks is allright. trading in theevening is worst

WRONG IS :1. £1,000 is too low. £5,000 minimum if you decide to trade margined products.
WRONG IS :3. These times sound ideal for swing and positional trading. Alternatively, you can trade the US markets in the evening as well as FX. Be careful with FX from 7pm, as I believe you can get erratic swings.
 
take a look at what traders at highest credibility r buying, get rid of paid services

u cant measure your own credibility. therefore dont buy anything what u analyzed

+ look at what other traders r proposing to buy
+ dont analyze this buy opportunity
+ measure the credibility of these traders on a time scale of x days
+ credibility is a variable with a dependency on initial loss and gain within x days

i.e. DWL and stocktiger
 
fibonelli said:
new_trader said:
IMHO: £5000 minimum!?? :-0 This really is ill advice. Using the benefit of hindsight and experience I would say that learning to trade is similar to learning to fly. You wouldn't say to someone who has never flown: "Make sure you fly a small plane and stay low to the ground but watch those mountains though. If you want to do loops make sure you remember to trim the aircraft and always check that your artificial horizon gauges have properly working gyros".
Click to expand...
new_trader said:
New Trader,
I would be grateful if you would kindly ensure that any posts are quoted within context.

The following was not quoted to make your point.

"Other stuff
Go through this and other websites, read books, attend free evening and weekend seminars.
Think about how you will trade, develop a trading plan, fit your plan around your personality, demo trade on a variety of platforms (and enter trading competitions) to test it out your plan, learn from your mistakes (I've been taking screen prints of mine!) and if you're doing well after 3-6 months start for real taking very small positions".

Cheers Fib
Click to expand...

Ok, that is a fair point. However, your very 1st suggestion is:
1. £1,000 is too low. £5,000 minimum if you decide to trade margined products.
Click to expand...

1) So how does this fit into the context of "Other Stuff"?
2) Why is £1000 too low? Too Low for what exactly?

I have been day trading for almost 2 years and I don't have nor have I ever had £5000 in any of my 3 accounts combined. I have made well over 100 trades through my direct access broker and spread betting accounts and my losses don't exceed anywhere near £2000 to date. It's a myth probably perpetuated through booklearned advice that you need to lose £1000's before you learn anything. Perhaps I am far too conservative with my trading. I own my flat so I don't pay rent or mortgage, I have a high disposable income and £1000 is a lot of money. I can't understand how people can dismiss it so easily as "not enough". :-0
Click to expand...
 
new_trader said:
Ok, that is a fair point. However, your very 1st suggestion is:

My post included many conditions so I fail to understand the point you are trying to make. :rolleyes:
Click to expand...
 
fibonelli said:
new_trader said:
Ok, that is a fair point. However, your very 1st suggestion is:

My post included many conditions so I fail to understand the point you are trying to make. :rolleyes:
Click to expand...

Hmmmm...ok, I'll make it really simple.

Krosfayh has £1000.

Is this enough money for a newbie to start trading "margined" products?
Click to expand...
 
newbie and accountsize rnt correlated

I didnt get your q.
"Is this enough money for a newbie to start trading "margined" products?"
 
new_trader said:
Hmmmm...ok, I'll make it really simple.

Krosfayh has £1000.

Is this enough money for a newbie to start trading "margined" products?
Click to expand...

re-read all of post #5 including the many conditions relating to pre-trading and trading for real and you'll find the answer to your question.
 
Nothing wrong with £1000 starting capital
Nothing wrong with starting to trade with minimums, this is HIGHLY advisable. As chump would say "Distance = Perspective".
2% MAX capital risk per trade is OK. 1% would be better....
 
fibonelli said:
re-read all of post #5 including the many conditions relating to pre-trading and trading for real and you'll find the answer to your question.
Click to expand...


We keep going round...and round...and round...

So, one last time and then I'll give up.

What do you mean by this statement?: ( I have highlighted the important bit in bold)

1. £1,000 is too low. £5,000 minimum if you decide to trade margined products.
Click to expand...

Point 4 implies it is some type of "goal" and your "other stuff" does little to clarify. I started trading with much less capital. So please explain how you came up with these figures.
 
JTrader said:
Nothing wrong with £1000 starting capital
Nothing wrong with starting to trade with minimums, this is HIGHLY advisable. As chump would say "Distance = Perspective".
2% MAX capital risk per trade is OK. 1% would be better....
Click to expand...

Better still, for even more distance & perspective, a demo account might be a good idea.
I have never used a demo account as i prefer/ed to "get stuck in" & "keep it real", but many consider a demo account as a highly valuable learning tool, until you have a better feel for what you're doing, and know that how you trade (strategy) works.
With a demo account, you're not making money, but you're not losing any money either.

Perhaps all traders should start off with a demo account????
 
new_trader said:
We keep going round...and round...and round...

So, one last time and then I'll give up.

What do you mean by this statement?: ( I have highlighted the important bit in bold)



Point 4 implies it is some type of "goal" and your "other stuff" does little to clarify. I started trading with much less capital. So please explain how you came up with these figures.
Click to expand...

New Trader,

Here's a maths test. Which is greater:

0.25% on £5,000 or 1.5% on £1,000?
 
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