Complete Newbie - what are the best possible starting foundations?

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Old Apr 26, 2008, 5:00pm   #1
 
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Complete Newbie - what are the best possible starting foundations?

Hey guys,

A bit about myself, Im 18 and from London, and this September im hoping to read an Investment degree at Cass Business School. They have some bloomberg reuters terminals and im hoping to run wild on them and make some money. I am damn eager to learn the ins and outs or the ups and downs (no pun intended) of trading.

Before I even contemplate trading, i know a lot of literature has to be read to understand. I know hardly anything about trading, and i was wondering what is the best thing to do to build a solid foundation for me? What would you current traders have done preferably when you were starting out?

So ...

What should i do first, what's the first steps, reading what? playing trading games?

And i'll start off with around £500 GBP, is this ok? ... But this is in September, i have some time to learn

Cheers guys
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Old Apr 26, 2008, 6:21pm   #2
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If you want a solid foundation, the best piece of advice I can give you is study your b0ll0cks off @ uni (boring but true). Get a copy of the reading lists for your courses and pick them up (2nd hand if you can; they should be pretty easy to get your hands on, there are a few textbooks that are used in most business schools. Try Amazon). The courses and material are unlikely to teach you how to trade, but performing well in them will certainly help you on your path to becoming a trader. I speak from experience; the route to trading professionally is far more convoluted if you spend ALL of your time playing rugby, drinking beer and chasing women

As for trading, there are plenty of resources here on T2W about taking the first step. I would play with a simulator over the summer; get an experience of the various products out there (Indices; Interest rate derivs; forex; equities etc...) and see which you like the best. Personally, I would suggest forex if you're going to be a student. Indices et al tend to have more "compact" trading days, perhaps with liquidity only available during the products native session. If you are a student, it will be very difficult to allocate enough time in each day for trading around all of you other student activities (see above ) forex, as a general rule, is a "slower" market to trade. Added to that, with some brokers (e.g. OandA), you can place custom trade sizes as opposed to contract specification. If you want to trade w. 500quid, a tick size of $12.50 is leaving you horrendously over-leveraged. And I wouldn't recommend trading with the 500quid anyway; no offence mate, but it is likely that you will lose it. Waste it on food and rent etc...

As a start, "financial Markets" by Kieth Pilbeam is a good introduction to the markets as a whole. Nothing too specific, but it should put you ahead of your classmates come septmeber.

FYI BBG and Reuters are available for trading to instituitions only; your uni will probably only have access to the data they provide for research, and poss. for 3rd yr students to get experience with, as sweetners to their CV's.
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Old Apr 26, 2008, 6:27pm   #3
 
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Originally Posted by MrGecko View Post
If you want a solid foundation, the best piece of advice I can give you is study your b0ll0cks off @ uni (boring but true). Get a copy of the reading lists for your courses and pick them up (2nd hand if you can; they should be pretty easy to get your hands on, there are a few textbooks that are used in most business schools. Try Amazon). The courses and material are unlikely to teach you how to trade, but performing well in them will certainly help you on your path to becoming a trader. I speak from experience; the route to trading professionally is far more convoluted if you spend ALL of your time playing rugby, drinking beer and chasing women

As for trading, there are plenty of resources here on T2W about taking the first step. I would play with a simulator over the summer; get an experience of the various products out there (Indices; Interest rate derivs; forex; equities etc...) and see which you like the best. Personally, I would suggest forex if you're going to be a student. Indices et al tend to have more "compact" trading days, perhaps with liquidity only available during the products native session. If you are a student, it will be very difficult to allocate enough time in each day for trading around all of you other student activities (see above ) forex, as a general rule, is a "slower" market to trade. Added to that, with some brokers (e.g. OandA), you can place custom trade sizes as opposed to contract specification. If you want to trade w. 500quid, a tick size of $12.50 is leaving you horrendously over-leveraged. And I wouldn't recommend trading with the 500quid anyway; no offence mate, but it is likely that you will lose it. Waste it on food and rent etc...

As a start, "financial Markets" by Kieth Pilbeam is a good introduction to the markets as a whole. Nothing too specific, but it should put you ahead of your classmates come septmeber.

FYI BBG and Reuters are available for trading to instituitions only; your uni will probably only have access to the data they provide for research, and poss. for 3rd yr students to get experience with, as sweetners to their CV's.
Good Stuff mate. Yeah i will work hard at uni, but the trading thing was a personal thing, outside of uni. I will read that book. How much do you reccomend starting with then? After i read the book do you think i should start a trading simulator? Reccomend any?

Cheers mate
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Old Apr 26, 2008, 7:25pm   #4
 
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Originally Posted by Bullzak View Post
Good Stuff mate. Yeah i will work hard at uni, but the trading thing was a personal thing, outside of uni. I will read that book. How much do you reccomend starting with then? After i read the book do you think i should start a trading simulator? Reccomend any?

Cheers mate
First and foremost understand that "running wild" and "making money" are two concepts that are about as far removed from one another as you can get in this business.

If you want my honest opinion I would leave trading well alone whilst at Uni. The emotional pressures of it will, very likely, distract you from your studies.

Making enormous amounts of money can be done almost effortlessly by some people but what everyone doesn't realise is that 99% of the time those people have been through years (and I do mean years) of learning and stuggle to get where they are. And for all those that do go through these years, only a very, very gifted few make it.

Prepare yourself for what you are about to do: I promise you that before you can make money consistently you will experience disappointment, disillusion, disgust, upset, confusion, anger and fear day in and day out whilst at the same time losing money.

If you are still adamant you want to do it: read an entry level book in your field. I trade Futures so I can recommend: "Getting started in Futures" or "How the futures markets work" or even the slighly harder "The Futures Markets: Who Wins, Who Loses, Why?"

Open an account. WATCH prices. Have a look at charts for a basic overview but DO NOT WATCH CHARTS. WATCH PRICES. This is a very important difference.

Watch the price every minute, of every hour, of every day you can. Look for patterns.

Patterns give you an opportunity.

Whilst doing this, immerse yourself in studying successful traders. Read at a minimum: "Reminiscenes of a Stock Operator", The "Market Wizards" Trilogy and "How I made $2,000,000 in the Stock Market" - All of those are absolutely essential.

Good luck.
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Old Apr 26, 2008, 7:36pm   #5
 
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Some random advice...

You can't read enough. While at uni, take some statistics courses (actually, as many as you can). Books at the top of my list are the Market Wizards books, Aronson's Evidence-Based Technical Analysis and anything by Ralph Vince. Don't worry about specific entry/exit rules; you'll get to those soon enough. Become well-versed in techniques for properly evaluating the merits of a rule first, and only then proceed to application of these techniques. This is the only way to avoid being seduced by bull****. (Well, there's also the hard way.) Also, learn to set your expecations properly. Take a look at the track records and styles of the most successful traders (not one-hit-wonders or flashes in the pan, but the traders who have succeeded at trading for decades). What you find out about risk-adjusted returns over the long run is likely to surprise you and will serve you well throughout your career.

Good luck!
jj
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Old Apr 26, 2008, 7:50pm   #6
 
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Originally Posted by trader_dante View Post
First and foremost understand that "running wild" and "making money" are two concepts that are about as far removed from one another as you can get in this business.

If you want my honest opinion I would leave trading well alone whilst at Uni. The emotional pressures of it will, very likely, distract you from your studies.

Making enormous amounts of money can be done almost effortlessly by some people but what everyone doesn't realise is that 99% of the time those people have been through years (and I do mean years) of learning and stuggle to get where they are. And for all those that do go through these years, only a very, very gifted few make it.

Prepare yourself for what you are about to do: I promise you that before you can make money consistently you will experience disappointment, disillusion, disgust, upset, confusion, anger and fear day in and day out whilst at the same time losing money.

If you are still adamant you want to do it: read an entry level book in your field. I trade Futures so I can recommend: "Getting started in Futures" or "How the futures markets work" or even the slighly harder "The Futures Markets: Who Wins, Who Loses, Why?"

Open an account. WATCH prices. Have a look at charts for a basic overview but DO NOT WATCH CHARTS. WATCH PRICES. This is a very important difference.

Watch the price every minute, of every hour, of every day you can. Look for patterns.

Patterns give you an opportunity.

Whilst doing this, immerse yourself in studying successful traders. Read at a minimum: "Reminiscenes of a Stock Operator", The "Market Wizards" Trilogy and "How I made $2,000,000 in the Stock Market" - All of those are absolutely essential.

Good luck.
Where should i open said account? This is a real one right? Just to observe trends etc.
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Old Apr 26, 2008, 8:07pm   #7
 
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Originally Posted by Bullzak View Post
Where should i open said account? This is a real one right? Just to observe trends etc.
Difficult to say. I tend to send people over to North Finance (Google them) to download their Demo platform MT4. You can open a DEMO account with them and use their real time price and charting facility to watch all the fx pairs and many indices, US equities and commodities.
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