Advice wanted from any experienced traders

This is a discussion on Advice wanted from any experienced traders within the First Steps forums, part of the Reception category; Originally Posted by blueclaret Thanks for the reply. I should have explained more about the 50k. He states that you ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Mar 3, 2008, 8:23am   #8
 
new_trader's Avatar
Joined Jan 2006
Quote:
Originally Posted by blueclaret View Post
Thanks for the reply. I should have explained more about the 50k. He states that you should only trade with 2% of your capital, so if I was buying shares then I would buy £1000 worth which is really the lowest amount I think someone should trade with, because of commisions etc. But I guess if I spreadbet and had an account of £1000 then I can trade with a stop loss of 20 pts which would be 2%. Am I making sense? I'm just thinking of the money management side of things.
IMO: The problem with these often quoted percentage rules of money management is that they almost persuade people away from learning how to trade proficiently. An Engineer once said to me that "an Engineer can do with 10pence what any idiot can do with £1.00"

Focus all your attention on learning how the stock market works, learn the nuts and bolts so to speak. Observe, study and practice. You will become a more intelligent trader and you will be able to do much, much, more with much less.

In short, you don't need £50K....sheesh!
__________________
"It always pays a man to be right at the right time."
-Jesse Livermore


CLICK - My Trading Journal | SEARCH: soundmoneyproject.org |
new_trader is offline   Reply With Quote
Old Mar 3, 2008, 8:39am   #9
Joined Dec 2004
blueclaret started this thread Yeah I thought 50k was too high! I have been buying shares for the past 3 years or so with up and down results. I make profits and then they go when the market dips although I do place stops all the time so I have learnt something right i guess. I have learnt most of what I know from books and by just doing it. I do not know anyone else who trades and wonder if this is a good thing or bad thing. I feel overwhelmed like all beginners with all the information and martkets etc. My next step is to learn technical analysis and have a system and paper trade etc. I also want to know if you all do have a plan as I have read this is one of the most important things to do. Any help is appreciated.
blueclaret is offline   Reply With Quote
Old Mar 3, 2008, 12:18pm   #10
Joined Feb 2004
let's open a whole can of worms

Quote:
Originally Posted by blueclaret View Post
Yeah I thought 50k was too high! I have been buying shares for the past 3 years or so with up and down results. I make profits and then they go when the market dips although I do place stops all the time so I have learnt something right i guess. I have learnt most of what I know from books and by just doing it. I do not know anyone else who trades and wonder if this is a good thing or bad thing. I feel overwhelmed like all beginners with all the information and martkets etc. My next step is to learn technical analysis and have a system and paper trade etc. I also want to know if you all do have a plan as I have read this is one of the most important things to do. Any help is appreciated.
hmmmmm. . . . . . . .

I've never been a fan of the percentage rule. Before BBB was banned he did say: if you can trade any amount of money can help, if you can't no amount of money can help.

I believe the percentage rule is mostly applicable to "statistical" systems. A lovely feature of statistical systems is that losing runs are inevitable, because (and I may get a lot of stick for this), statistical systems are actually "brainless", a shoddy attempt to disguise lack of understanding about the market (like all those back testers).

I started trading pennies a point. Then moved to 50 pence a point on finspreads. Had about £50 - £100 in the account at the time. These were my losing days. Finally got consistent, but could not make much money from fins because they "did things" to my interface and made things awkward for me. Moved to trading £1 a point on the DOW with another SB company, about £500 in the account, still slightly losing overall in those days. Had my breakthrough and rammed the account to £1500 in 3 weeks, lost £1200 over the next day or so because I was totally unprepared for the way the SB's company's interface screwed me (lagging and awkward fills). After a few weeks I made it all back and more. Got banned by the SB after a few more weeks, very nice of them I'm sure.

It's the psychological pitfalls that screw you, and I don't have a concept of a losing run, because when you "know" what's going to happen, you just know. I do make losing trades, but that's just because I've been "lazy" or taken on something I knew was weak.

So no, £50K is not required. As long as you can survive financially while you are learning you could just put £100 in a SB account (fins is probably the only company that let you do this) and trade away. Be prepared to accept that you are in for a very long hard slog, it ain't easy, but then again we are talking about not having to work for somebody and gaining your "freedom", and the price of that MUST be high because most people cannot do it.
temptrader is offline   Reply With Quote
Old Mar 3, 2008, 12:46pm   #11
 
Chorlton's Avatar
Joined Dec 2004
Quote:
Originally Posted by dbphoenix View Post
Mediocre systems may become profitable with the "right" money management rules applied on paper, but not in the real world. A beginning trader who can't turn a consistent profit is not going to have the confidence to trade, with discipline, a strategy that shows only occasional profit. Even if his money lasts long enough for him to withstand the losses, this is an unnecessarily torturous road to sustained profitability and perpetuates the emotional responses that marginal traders bring to their work.

Db
I do agree with you but surely without due consideration to Money Management which encompasses such things as Position Sizing, % risk per trade, etc, one does not have a "complete "or most probably long-term profitable system.

I say this as when I first started out I put too much emphasis on the obvious elements of a System such as Entry and Exit conditions, etc.

But I definately appreciate that one needs to focus on the basics first!!

All IMO ....
__________________
A Fine is a Tax for doing something wrong. A Tax is a Fine for doing something right !!

Return of Capital should always be more important than Return on Capital
Chorlton is offline   Reply With Quote
Old Mar 3, 2008, 1:41pm   #12
Joined Feb 2004
Quote:
Originally Posted by Chorlton View Post
I do agree with you but surely without due consideration to Money Management which encompasses such things as Position Sizing, % risk per trade, etc, one does not have a "complete "or most probably long-term profitable system.

I say this as when I first started out I put too much emphasis on the obvious elements of a System such as Entry and Exit conditions, etc.

But I definately appreciate that one needs to focus on the basics first!!

All IMO ....
I'll give you a little hint.

I don't use money management. Money management usually go hand in hand with statistical systems because they factor in the losing runs (or draw downs as they are known) as approximate worse case scenarios. But since even the latter cannot be totally predicted (remember it's statistical), you can NEVER be sure that you won't get totally wiped out. See what I'm getting at?

I do have a use for statistics though: I have spent many pleasant days learning advanced probability theory and playing with strange weird calculations that the general population is not interested in.
temptrader is offline   Reply With Quote
Old Mar 3, 2008, 3:44pm   #13
 
dbphoenix's Avatar
Joined Aug 2003
Quote:
Originally Posted by Chorlton View Post
I do agree with you but surely without due consideration to Money Management which encompasses such things as Position Sizing, % risk per trade, etc, one does not have a "complete "or most probably long-term profitable system.
Eventually. But the trader whose success rate is low and who has seven or eight losers in a row is not likely to let that winner "run" when it finally arrives. He's going to grab that profit as fast as possible since his next trade may well be another loser, and his account is decreasing with each successive loser. Thus his losses outweight his gains and he goes broke long before he achieves any confidence in his system.
__________________

dbphoenix is offline   Reply With Quote
Old Mar 3, 2008, 4:31pm   #14
Joined Jan 2007
Quote:
Originally Posted by dbphoenix View Post
Eventually. But the trader whose success rate is low and who has seven or eight losers in a row is not likely to let that winner "run" when it finally arrives. He's going to grab that profit as fast as possible since his next trade may well be another loser, and his account is decreasing with each successive loser. Thus his losses outweight his gains and he goes broke long before he achieves any confidence in his system.
hi db & chorlton

agree, think SR mentioned on another thread, I now it makes BSD cringe but.....


you can learn to run a profit and its relative to targets etc my average winner only around 7 pts with a high hit rate

but theres at least 3 trades over +30 and a few more 12-16 ish in the last month to

you can"t improve anything if your not in it, you have a chance to re-group if you are trading high SR method.

If its a 40% SR and 10 losers come along which is to be expected once in a while(1% chance) = your heads in bits if not fully switched on and confident in method etc

How do you learn to hold your nerve on match ball at snooker

keep getting/putting yourself there and try again, perhaps with a different approach / method / rule, once you have done it, next time is a little easier, you have positive expectancy / growing confidence in your ability and method = how can I improve it, can it be improved etc etc

Just don"t damage your bank imho or your F..cked !

game over
black bear 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
Questions for experienced option traders JamieSorres Futures & Options 28 Apr 3, 2009 6:49am
Experienced trader wanted (to join hands) skl General Trading Chat 7 Jan 30, 2008 5:00pm
Experienced traders read this dec13401 Spread Betting & CFDs 3 Mar 5, 2007 9:04pm
Question on slippage - Experienced traders please help victor123 Indices 7 Oct 28, 2006 3:30pm
Trainee Broker wants advice from experienced traders matt1979 Home Trader 4 Jan 25, 2005 6:55pm

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