Advice wanted from any experienced traders

Hi, I have been buying stocks for the past couple of years and want to now make a real effort to learn how to really make money from this. I have tried spreadbetting which went wrong because i didnt know what i was doing and i have made other stupid mistakes so i want to now do things how they should be done.

I have just finished reading Come Into My Trading Room by Alexander Elder which is really good and his money management methods would mean you would have to have £50k minimum which I dont have. Would everyone else here agree that this should be the minimum to start with? I want to make an effort to do this properly and will set up a demo account to practice with instead of blowing all my own money straightaway which is my usual method!

I would like to try swing trading so does anyone have any advice for me? (apart from dont do it!) And what chart sites would you all recommend , paid or free?

Thanks for any help.

good start

blueclaret said:

Hi, I have been buying stocks for the past couple of years and want to now make a real effort to learn how to really make money from this. I have tried spreadbetting which went wrong because i didnt know what i was doing and i have made other stupid mistakes so i want to now do things how they should be done.

I have just finished reading Come Into My Trading Room by Alexander Elder which is really good and his money management methods would mean you would have to have £50k minimum which I dont have. Would everyone else here agree that this should be the minimum to start with? I want to make an effort to do this properly and will set up a demo account to practice with instead of blowing all my own money straightaway which is my usual method!

I would like to try swing trading so does anyone have any advice for me? (apart from dont do it!) And what chart sites would you all recommend , paid or free?

Thanks for any help.

Click to expand...

Hi blueclaret

I would have thought you could start trading proper on far less than 50 K

I have,(intra day) mighty Oaks grow out of tiny acorns

If you can trade, the idea is you try and make money, its a dead give away something is wrong when you have to keep topping up your account:-0

T2W Day Trading & Forex Community

good article imho for a start,

Split supplied me with this one day when I was about to F..ck up, and I have found them a great help since

Trend lines, to me, are drawn arbitrarily. I just use them as a sort of "comfort line". If I am on the right side of it I feel fine and have no worries. The rule that they must be drawn across the tops or bottom is, more or less, telling the market what to do. How can you expect that of a price? When the price cuts the trend I look to see if a pattern is forming. If the pattern is continuous, I revert to a trend line, again, almost certainly, the momentum will have changed but if I keep to the right of it in a bear and to the left of it in a bull then I am OK- Whenever it crosses, it is a warning to pay attention to the trade, nothing more.

There is nothing to be learned from trend lines, IMO anyway, except to help keep the ship on course. Go inside it and you are entering into shallow water.

Watch the trend line but remember that deep sea men don't like shallow water. Neither do coastal men like deep water.

BY

Split


good thread, a few jokers there but some very nice p&f charts by tim barjon might give you some pointers on simple swing method, think he wrote cut down version of mark rivailand method some place on here

http://www.trade2win.com/boards/uk-indices/28003-swingin-ftse-2008-a.html

free info here on swing and p&f charts ...just one method of many

Marc Rivalland.com

oh and some basic rules to give you .....things to consider.........then write your own

Old Rules...but Very Good Rules.

If I've learned anything in my 17 years of trading, I've learned that the simple
methods work best. Those who need to rely upon complex stochastics, linear
weighted moving averages, smoothing techniques, fibonacci numbers etc.,
usually find that they have so many things rolling around in their heads that
they cannot make a rational decision. One technique says buy; another says
sell. Another says sit tight while another says add to the trade. It sounds like a
cliché, but simple methods work best.

1. The first and most important rule is - in bull markets, one is supposed to
be long. This may sound obvious, but how many of us have sold the first
rally in every bull market, saying that the market has moved too far, too
fast. I have before, and I suspect I'll do it again at some point in the
future. Thus, we've not enjoyed the profits that should have accrued to
us for our initial bullish outlook, but have actually lost money while being
short. In a bull market, one can only be long or on the sidelines.
Remember, not having a position is a position.

2. Buy that which is showing strength - sell that which is showing
weakness. The public continues to buy when prices have fallen. The
professional buys because prices have rallied. This difference may not
sound logical, but buying strength works. The rule of survival is not to
"buy low, sell high", but to "buy higher and sell higher". Furthermore,
when comparing various stocks within a group, buy only the strongest
and sell the weakest.

3.When putting on a trade, enter it as if it has the potential to be the
biggest trade of the year. Don't enter a trade until it has been well
thought out, a campaign has been devised for adding to the trade, and
contingency plans set for exiting the trade.

4.On minor corrections against the major trend, add to trades. In bull
markets, add to the trade on minor corrections back into support levels.
In bear markets, add on corrections into resistance. Use the 33-50%
corrections level of the previous movement or the proper moving average
as a first point in which to add.

5.Be patient. If a trade is missed, wait for a correction to occur before
putting the trade on.

6.Be patient. Once a trade is put on, allow it time to develop and give it
time to create the profits you expected.

7.Be patient. The old adage that "you never go broke taking a profit" is
maybe the most worthless piece of advice ever given. Taking small profits
is the surest way to ultimate loss I can think of, for small profits are
never allowed to develop into enormous profits. The real money in
trading is made from the one, two or three large trades that develop
each year. You must develop the ability to patiently stay with winning
trades to allow them to develop into that sort of trade.

8.Be patient. Once a trade is put on, give it time to work; give it time to
insulate itself from random noise; give it time for others to see the merit
of what you saw earlier than they.

9.Be impatient. As always, small losses and quick losses are the best losses.
It is not the loss of money that is important. Rather, it is the mental
capital that is used up when you sit with a losing trade that is important.

10.Never, ever under any condition, add to a losing trade, or "average" into
a position. If you are buying, then each new buy price must be higher
than the previous buy price. If you are selling, then each new selling
price must be lower. This rule is to be adhered to without question.

11.Do more of what is working for you, and less of what's not. Each day,
look at the various positions you are holding, and try to add to the trade
that has the most profit while subtracting from that trade that is either
unprofitable or is showing the smallest profit. This is the basis of the old
adage, "let your profits run."

12.Don't trade until the technicals and the fundamentals both agree. This
rule makes pure technicians cringe. I don't care! I will not trade until I am
sure that the simple technical rules I follow, and my fundamental
analyses, are running in tandem. Then I can act with authority, and with
certainty, and patiently sit tight.

13.When sharp losses in equity are experienced, take time off. Close all
trades and stop trading for several days. The mind can play games with
itself following sharp, quick losses. The urge "to get the money back" is
extreme, and should not be given in to.

14.When trading well, trade somewhat larger. We all experience those
incredible periods of time when all of our trades are profitable. When that
happens, trade aggressively and trade larger. We must make our
proverbial "hay" when the sun does shine.

15.When adding to a trade, add only 1/4 to 1/2 as much as currently held.
That is, if you are holding 400 shares of a stock, at the next point at
which to add, add no more than 100 or 200 shares. That moves the
average price of your holdings less than half of the distance moved, thus
allowing you to sit through 50% corrections without touching your
average price.

16.Think like a guerrilla warrior. We wish to fight on the side of the market
that is winning, not wasting our time and capital on futile efforts to gain
fame by buying the lows or selling the highs of some market movement.
Our duty is to earn profits by fighting alongside the winning forces. If
neither side is winning, then we don't need to fight at all.

17.Stock Markets form their tops in violence; Stock markets form their lows in quiet
conditions.

18.The final 10% of the time of a bull run will usually encompass 50% or
more of the price movement. Thus, the first 50% of the price movement
will take 90% of the time and will require the most backing and filling and
will be far more difficult to trade than the last 50%.

There is no "genius" in these rules. They are common sense and nothing else,
but as Voltaire said, "Common sense is uncommon." Trading is a common-sense
business. When we trade contrary to common sense, we will lose. Perhaps not
always, but enormously and eventually. Trade simply. Avoid complex
methodologies concerning obscure technical systems and trade according to
the major trends only

I would say use free charts to get started...........

Ig index do nice charts and extras, good demo at capital spreads, capital do £1 per pt I think if you get a full account. Full account same as demo. £1 per pt is plenty to start with imho, why trade larger than you need to till you find out if your any good or not.

charts month week day & hours for lloyds tsb(ig index), not advice =just an example,

have fun and mind how you go, sure other more experienced traders will add some more posts for you :clover:

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.

blueclaret said:

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.

Click to expand...

trading is trading in my book call it or put it in any box you like, just different tf and instruments, used to buy and sell a few cars its the same thing just no fancy charts.

cut the suit according to the cloth available I think is the old saying, I might be wrong on that one its getting late

good luck :clover:

blueclaret said:

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.

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Before addressing money management issues, I suggest that you first focus on developing a consistently profitable trading strategy. Without that, the best money management regimen on the planet won't save you.

At this stage, you very likely have a great deal to unlearn. What are you doing now, and what, to you, are you doing wrong?

dbphoenix said:

Before addressing money management issues, I suggest that you first focus on developing a consistently profitable trading strategy. Without that, the best money management regimen on the planet won't save you.

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Hi DB,

Wouldn't you agree that the Money Management should be developed in parallel with the rest of the strategy (Entry rules, Exit rules, etc, etc)?

I agree that if the strategy is not "sound" then you will ultimately lose in the end but on the flip-side of the coin, I have seen mediocre systems become very profitable with the right money management rules applied.

Chorlton

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

blueclaret said:

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.

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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!

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.

let's open a whole can of worms

blueclaret said:

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.

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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.

dbphoenix said:

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

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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 ....

Chorlton said:

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 ....

Click to expand...

I'll give you a little hint.:whistling

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.

Chorlton said:

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.

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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 said:

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.

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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

While DBpheonix's advice about sorting trading strategy out is important, I can't help but agree with Chorlton, in that in my own experience during the 'struggling years' having a profitable method/system just wasn't enough. Why? Because I didn't have the discipline and emotional maturity to trade it consistently. I'm convined that going into the market with any one of the 3 pillars (Method, Money Management & Mindset) unclear is a recipe for failure.

You can have a great method, but while you are developing the discipline and emotional strength to trade it, its your money management that's going to protect you. And yes you may screw up 20 times in a row but if its only a small percentage of your account (ie. 1% or 2%) then you can keep going until you start to get it.

Anyone called Blueclaret and living in London sounds like he supports the right football team to me so I'll give my opinion.

You need to get all three aspects of trading organised, money management and psychology.

As far as your 50K minimum goes, no you don't need that much. If you will be risking 2% on a single trade and once you take commissions and slippage into account you would need to be careful if you have less than 15-20K IMO. (In any case I thought in Come into my Trading Room he suggests that US 20K should be a minimum from memory?)

With regard to how you should trade then it partly depends on how much time you can devote to it and how regularly you can monitor your trades. If you have a full time job then day trading is not for you. Swing trading could work in that case, holding trades from 3-10 days perhaps. That's what I do.

For chart sites I can't help you much. I use Metastock with an EOD datafeed. That works for me and gives me more flexibility than a website ever could but my account is large enough to easily adsorb the cost.

You need to devise a few strategies and start paper trading. Just simple rules. From your reading and from this site you can pick up plenty. Then test them in the market. I'm sure you can make a profit from backtesting but try making the same trades in real time and you will see that it is harder than it looks!

Thanks for your responses and yes i am a happy hammer! You're right about the 20k, i think later he mentions 50k as being more advisable. I am using pro realtime for charts which is pretty good so i may stick with that for now. Swing trading is what i am aiming to do as day trading looks too dangerous and plus i have a full time job.

I was thinking of going to a seminar which i have never done before. I have only read books and the internet. Does anyone have any recommendations? I know which ones to avoid ie wininvesting. Robbie Burns (Naked Trader) looks quite good so i may try his unless anyone has any other suggestions.

Excellent to have another hammer here. Do you know Knees up Mother Brown - West Ham United FC Online: Home

For the seminars I read Robbie Burn's book a while back. Based on his website the seminar is just for a day I believe? So depending on the price may be worth it. His timescales for trading are probably longer than most people on here. I don't know of any other seminars where you are, as you can tell I'm a long way from the UK. Off to one of Alexander Elders trading camps myself in a while. Gerald Appel should also be there. He is the inventor of MACD so with those two together I would be surprised if i can't improve my results.

Just another point. As you have read "Come into my Trading Room" a good progression from there would be "Entries and Exits" by the same author. I don't often see reviews of that book. Maybe it means that some people don't like it but I think it is an excellent book to read when you are beginning. It discusses winning and losing trades from 20(?) traders, each with their different ways of trading. Could give you some ideas.

Indie Cator said:

While DBpheonix's advice about sorting trading strategy out is important, I can't help but agree with Chorlton, in that in my own experience during the 'struggling years' having a profitable method/system just wasn't enough. Why? Because I didn't have the discipline and emotional maturity to trade it consistently. I'm convined that going into the market with any one of the 3 pillars (Method, Money Management & Mindset) unclear is a recipe for failure.

You can have a great method, but while you are developing the discipline and emotional strength to trade it, its your money management that's going to protect you. And yes you may screw up 20 times in a row but if its only a small percentage of your account (ie. 1% or 2%) then you can keep going until you start to get it.

Click to expand...

I agree that having a supposedly profitable system is not enough. The supposedly profitable system will not be actually profitable without competent management.

However, a number of books written by non-traders advance the notion that money management will save the trader regardless of how crappy his system is, assuming he has one, and large numbers of traders who don't trade reinforce this nonsense on message boards. Beginners cling to the notion because it enables them to avoid the work of developing a strategy, much less a trading plan, and to believe that all they have to do is manage those losses. At least until the money runs out.

If people spent a fraction of the time learning how to trade that they do rationalizing their failures, the percentage of trader wannabees who succeed would rise dramatically.