Essentials Of 'New to Trading'

This is a discussion on Essentials Of 'New to Trading' within the First Steps forums, part of the Reception category; Originally Posted by awesomo4k This information is extremely helpful and I've bookmarked this site. What is the typical progress for ...

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Old Apr 14, 2012, 6:33pm   #16
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Re: Essentials Of 'First Steps'

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Originally Posted by awesomo4k View Post
This information is extremely helpful and I've bookmarked this site. What is the typical progress for a newbie in trading? Does one usually start w/ stocks then move on to futures and options? Does anyone have any suggestions on what is the best plan to become a knowledgable trader?
Hi awesomo4k,
Like moths to a flame, the typical progress for most newbies is to be attracted by what promises to make them as rich as possible in the shortest time possible. Currently, the bulk of ad's offering untold wealth recommend trading Forex. When I first started out it was options and then stocks.

I suggest you ignore the fads and follow the info' provided in this Sticky and the Trading FAQs. This will involve learning a little about all the markets and different mechanisms for trading them. Once you have a broad foundation of knowledge, you'll be better placed to make a decision about which is best for you.

As for becoming knowledgable, if you read the threads I've mentioned and follow the links provided in those threads, you'll end up with a very good base from which to build. Enjoy!
Tim.
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Old May 2, 2012, 6:19pm   #17
 
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Re: Essentials Of 'First Steps'

Hi, I am new to investing, though I will soon be the proud owner of at least 50-shares of Duke Energy. Does anyone care to answer this question for me? Primarily this: Dividends - shares of ownership in a company, but how are dividends actually acrrued prior to payout? Are they actually weekly income as I have assumed and tallied for periodic disbursement minus company retainings? I would appreciate an honest and concise response. Thank you.

Last edited by Frater.vn; May 2, 2012 at 6:57pm.
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Old May 2, 2012, 8:10pm   #18
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Re: Essentials Of 'First Steps'

timsk started this thread Welcome all new members!

Frater - a dividend is usually a percentage of the value of the share. So, if a share is priced at $1.00 and you own 1,000 of them and the dividend is 5%, you will receive 1 x 5% x 1,000 = $50.00.

In the case of Duke Energy, they appear to pay a quarterly dividend of around about $0.25 per share, therefore, you'll receive around $12.50 for your holding of 50 shares.
Duke Energy
Don't spend it all at once!

For more essential information about shares, check out the Essentials of Equities Sticky.
Tim.
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I'm New To TRADING – Where Do I Start? - a must read for anyone new to TRADING
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Old Jun 3, 2012, 12:33pm   #19
 
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Re: Best Threads In The 'First Steps' Forum

For a beginner in Forex trading i will advise 5 things:

1. Starting with a Demo account

2. Learning the basics right

3. Money Management

4. Always trading with Stop Loss

5. Planning

Last edited by timsk; Jan 15, 2013 at 5:29pm. Reason: Monthly housekeeping
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Old Jul 3, 2012, 5:04pm   #20
Joined Jan 2007
Re: Essentials Of 'First Steps'

In response to many posts Ive seen here this is the absolute truth of the matter. This information I will give you is going to accelerate you.. but be very careful indeed.

1. The most critical thing in trying to understand the markets and others plus thier commentaries is TIMEFRAME. Thjis is why there is so much confusion. Group issues into timeframes and the world becomes a litle easier e.g. IS this intraday, 2-5 days or a month or more than a couple of months. This is critical.
2. Scalp trading for beginners is the road to ruin. Death by 1000 cuts
3. The best money is made over longer timeframes.. get rid of that busy trader active trader image taking trade decisions every 5 minutes.. it will kill your account and reduce learning.
4. Stop believing you have to be right every trade. No one knows any trade will be a winner., if you approach the market believing a trade MUST win. you will feel negative about losses =more stress= tense thinking=limited thinking= fighting the market= chasing the market for more losses.
5. New traders do the opposite of what should be done.. they hold on to losses and then as soon as they feel a trade winning they profit. NO you must cut the losing trade and it is ABSOLUTELY CRITICAL that you hold on to winners ELSE the mathematics of winning DOESNT WORK.
6. How do we do this? well, your BELIEFS need to change. RISK of loss must be expected so therefore you cut your risk by never risking more than 1-5% on any single trade. this means a 5000 account you dont risk more than 50-150 max or you are simply going to go broke PERIOD.
7. The markets are a game, in this game you must ride winners, your searching for trains, your not searching for little disposable bicycles. if you do YOU WILL BLOW YOUR ACCOUNT. PERIOD.
8 . If you win 3 out of every ten trades, and each trade you lose your loss is 100 units.. the last three trades must collectively make700 just to break even. as such scalping for less than a 3 to one gain is a losers game because even then your 3 winners one will be break even and one will be only a small gain. conclusion.. begginers must be looking for trades where they believe a 7 to 10 fold win loss ratio is possible OR DONT TAKE THE TRADE. This means typically you should be looking for massive swing trades, not silly scalp trades. OR DONT TAKE THE TRADE
9. Spreadbetting is a sophisticated tool not a begginers tool.You should avoid spreadbetting if your a newbie, its not in thier interest for you to win, why? most make thier money from your losses. WAKE UP! Thats why you dont see volume data much amongst them.
10. The three most important concepts in trading are a trade plan that describes all the exit and entry signals and strategies you are looking for (so you dont have to think much during trading). A deep understanding of your personality type and your beliefs. and the most important of all a realisation that knowing more doesnt mean more money, preparedness and planning of eventualities ie always controlling risk & the application of your money for each trade and successive trade is actually what makes you money. e.g. fixed amount trading e.g a specific risk amount isnt going to help you achieve your dreams.

11. It is possible that you can do everything right and simply through bad luck you could have a string of loosers hit you 16 times in a row. Does your system allow for this high probability of a losing streak?

When you have been trading on and off for 7 years like me and you get fed up of loosing, this is where you end up, finally dotting all the is and crossing all the Ts wishing you had listened to EVERY corner of that advice given to you. Well, realise you have just been given the keys here, and I dont care how advanced you are.. if you disagree with any of this, you need to examine your belief systems and try and alter or refine those beliefs before you even begin to reply back to me.
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Old Jul 3, 2012, 5:29pm   #21
 
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Re: Essentials Of 'First Steps'

Quote:
Originally Posted by Paulds11 View Post
In response to many posts Ive seen here this is the absolute truth of the matter. This information I will give you is going to accelerate you.. but be very careful indeed.

1. The most critical thing in trying to understand the markets and others plus thier commentaries is TIMEFRAME. Thjis is why there is so much confusion. Group issues into timeframes and the world becomes a litle easier e.g. IS this intraday, 2-5 days or a month or more than a couple of months. This is critical.
2. Scalp trading for beginners is the road to ruin. Death by 1000 cuts
3. The best money is made over longer timeframes.. get rid of that busy trader active trader image taking trade decisions every 5 minutes.. it will kill your account and reduce learning.
4. Stop believing you have to be right every trade. No one knows any trade will be a winner., if you approach the market believing a trade MUST win. you will feel negative about losses =more stress= tense thinking=limited thinking= fighting the market= chasing the market for more losses.
5. New traders do the opposite of what should be done.. they hold on to losses and then as soon as they feel a trade winning they profit. NO you must cut the losing trade and it is ABSOLUTELY CRITICAL that you hold on to winners ELSE the mathematics of winning DOESNT WORK.
6. How do we do this? well, your BELIEFS need to change. RISK of loss must be expected so therefore you cut your risk by never risking more than 1-5% on any single trade. this means a 5000 account you dont risk more than 50-150 max or you are simply going to go broke PERIOD.
7. The markets are a game, in this game you must ride winners, your searching for trains, your not searching for little disposable bicycles. if you do YOU WILL BLOW YOUR ACCOUNT. PERIOD.
8 . If you win 3 out of every ten trades, and each trade you lose your loss is 100 units.. the last three trades must collectively make700 just to break even. as such scalping for less than a 3 to one gain is a losers game because even then your 3 winners one will be break even and one will be only a small gain. conclusion.. begginers must be looking for trades where they believe a 7 to 10 fold win loss ratio is possible OR DONT TAKE THE TRADE. This means typically you should be looking for massive swing trades, not silly scalp trades. OR DONT TAKE THE TRADE
9. Spreadbetting is a sophisticated tool not a begginers tool.You should avoid spreadbetting if your a newbie, its not in thier interest for you to win, why? most make thier money from your losses. WAKE UP! Thats why you dont see volume data much amongst them.
10. The three most important concepts in trading are a trade plan that describes all the exit and entry signals and strategies you are looking for (so you dont have to think much during trading). A deep understanding of your personality type and your beliefs. and the most important of all a realisation that knowing more doesnt mean more money, preparedness and planning of eventualities ie always controlling risk & the application of your money for each trade and successive trade is actually what makes you money. e.g. fixed amount trading e.g a specific risk amount isnt going to help you achieve your dreams.

11. It is possible that you can do everything right and simply through bad luck you could have a string of loosers hit you 16 times in a row. Does your system allow for this high probability of a losing streak?

When you have been trading on and off for 7 years like me and you get fed up of loosing, this is where you end up, finally dotting all the is and crossing all the Ts wishing you had listened to EVERY corner of that advice given to you. Well, realise you have just been given the keys here, and I dont care how advanced you are.. if you disagree with any of this, you need to examine your belief systems and try and alter or refine those beliefs before you even begin to reply back to me.
Interesting post. Always good to be clear on a few things. Of the statements I've emboldened, define 'best money'. Easiest to trade? Easiest to understand? Can increase account more quickly? Smallest drawdown? Least stress? What is best about it?

On risk reward. It's always possible on any entry that it will go more though isn't it? You can have an idea where trouble areas are, but it's hard to say for sure it can't go past a particular area. Therefore, please be clear on which trades you would turn down because you believe they have no potential to have such a risk:reward.

Do you believe it is impossible to make money from a lower risk:reward in the long run?

Thanks.
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Old Jul 3, 2012, 5:58pm   #22
Joined Jan 2007
Re: Essentials Of 'First Steps'

Shakone

Best money? =The most profitable trades, the smoothest returns.. the most efficient capture of profits.

increase account? = increase your alpha, your equity curve, your account profit figure

win loss ratio: every trader has a win loss ratio.. the best traders rise to around 40-60% of thier trades as winners. if you lose 7 times out of ten, add up the cost of those losses and you will see that the winning three must exceed the value of the loosing 7 . One of those winners be a break even, thus you need to be gunning for trades that typically exceed your average single loss by at least 3.5 times. Can you see this? keep it simple. On this basis of 3/10 winners you have a 30% success rate. and in order for that success rate to be profitable to you you must be looking to EXCEED your average loss by a factor of 3.5 MINIMUM. Thus you need to be looking for real super potential for each trade, else youre going to go broke. Many traders dont even do this type of homework. This is why they (and me many times in the past) were losing and blew their accounts.

By developing a trading plan, you have already done this homework. All your looking to do is recognise patterns from historical information . When you see that this pattern yeilds a POSITIVE EXPECTATION ie. yes you can see this tends to happen when x y z happens that is the beggining of a stategy with a POSITIVE EXPECTATION ie more than 50% chance it will succeed for any given market CONDITION( choppy or smooth market etc). THIS IS where you spend ALL your time as a trader. doing homework looking for patterns.. NOT in front of the DOM ready to pull the trigger when you "feel like it".

You will turn down trades that dont fit the strategy you have pre=planned. It is a thing of beauty sit and watch the market and not take any trade because all day long none met your criteria. THIS IS THE DISCIPLINE you need. ALL TRADES ARE TURNED DOWN if they do not meet your conditions as set out in your trade plan. simple.

You asked "Do you believe it is impossible to make money from a lower risk:reward in the long run"?
My answer is this.. it is possible to make 300 million from such a strategy. IT IS THE MANAGEMENT OF RISK (money) THAT KEEPS YOU IN THE GAME LONG ENOUGH TO MAKE PROFITS ON MANY TRADES. SUCH MANAGEMENT OF YOUR MONEY REQUIRES A LOW RISK TO REWARD plan. ALL MONEY MAKING PLANS have a lowered RISK to reward. You dont have to RISK everything to make a lot of money.. you just have manage the risk carefully from money management rules you set up in your trading plan and then NEVER BREAK YOUR RULES.

Why am I doint all this? because the trading world is full of crap and its about time people were not misled. by thieves and brokers who do not have your best interest at heart.

Last edited by timsk; Sep 17, 2012 at 3:58pm. Reason: Removed reference to a book with no name!
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Old Jul 5, 2012, 9:53pm   #23
 
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Re: Essentials Of 'First Steps'

Thanks to all who have contributed I this tutorial. It was quite a useful read through. Though I didn't see anything about trading stocks? Wonder why?
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Old Jul 6, 2012, 12:04pm   #24
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Re: Essentials Of 'First Steps'

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Originally Posted by mamcm View Post
. . . Though I didn't see anything about trading stocks? Wonder why?
Hi mamcm,
Welcome to the site.

The Sticky is generic - so it covers trading in general - regardless of whether you're a scalper or position trader and whether you trade stocks or forex etc.
Tim.
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I'm New To T2W - Where Do I Start? - a must read for anyone new to T2W
I'm New To TRADING – Where Do I Start? - a must read for anyone new to TRADING
The Trading Plan Template - a must read for anyone without a proper TRADING PLAN
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Old Jul 7, 2012, 7:42am   #25
 
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Re: Essentials Of 'First Steps'

Hi

Thanks for your post, which company do you use for spread betting and would you recommend them.

Thanks

Last edited by timsk; Sep 17, 2012 at 4:00pm. Reason: Deleted quoted post
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Old Jul 19, 2012, 7:05pm   #26
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Re: Essentials Of 'First Steps'

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Quote:
Originally Posted by mamcm View Post
Thanks for your post, which company do you use for spread betting and would you recommend them.
Hi mamcm,
I've had an account with ETX Capital for years - but I rarely use it. If I was looking from scratch I'd consider as many of the major players as possible. This FAQ will help to point you in the right direction in terms of what to look for: Can You Recommend a Data Feed, Charting Software & Broker?
Enjoy!
Tim.
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I'm New To T2W - Where Do I Start? - a must read for anyone new to T2W
I'm New To TRADING – Where Do I Start? - a must read for anyone new to TRADING
The Trading Plan Template - a must read for anyone without a proper TRADING PLAN
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Old Jul 31, 2012, 1:42pm   #27
Joined Jan 2007
Re: Essentials Of 'First Steps'

For new Traders:
1. The most important aspect of Trading is understanding your own Personal Psychology. This will wash over you until the pressure of seeking to trade properly from the series of losses you will incur will force you to visit this area again in more depth. Then you will understand the battle isnt with anyone else, its with yourself and how disciplined you must be to trade properly.
2. The nest issue which sets good traders from bad traders is that good traders begin with a plan. If you are not trading from a plan which details everything about how you will trade in the market and the strategies you will use for each market condition, then youre not ready yet to trade profitably CONSISTENTLY. But its always a good thing to trade a little so you understand where the books are coming from
3. You are going to read more information than many individuals do who take degrees. Dont kid yourself here, its relentless and most great traders will blow thier accounts completely at least once in a 3-8 year journey trying to trade properly. Many wont make it because they run out of money/ think that they can shorcut the learning/ think they dont need to read that much/ or do not accept properly that the real issue is about themselves NOT the market.
4. Scalping as a method for Newbies to begin trading is often the culprit which sets in bad habits about understanding how best to trade. Avoid it as a beginner despite the calls of many to use it as a begginers strategy especially from those who make profit from your losses like Spreadbetting forms.
5. Spreadbetting is not a Newbie tool.. Its actually a sophisticated tool with less critical data (volume) for you to use AND the margins are often set poorly and if you are scalping using them you are actually at a disadvantage. Forget the issue of taxes your not coming to the market new to make millions free of txes. This is a consideration only when youre consistently profitable and the truth is that is likely to be at least 2 years away MINIMUM.

Trading is as sophisticated as surgery, flying jet planes, not neccesartily in the factual understanding required but actually in the way you as a person are able to stick to your goals and remain consistently self analytical in a quest to better yourself and control yourself. That is the key.

Lastly if your emotions are up and down.. your trading isnt right. Trading isnt an emotional game. Losses are a part of the game. You will never know what will happen next, stop trying to predict it. Youre goal is to use PROBABILITY in your thinking, to plan your trade, place the trade and accept whatever happens. If you know you will not accurately predict any market you will PROTECT yourself. When you do this whole thing right, you will realise the emphasis ISNT ON PROFIT. The emphasis is on NOT lossing too much every trade. when you do that profits suddenly happen to you.

The last and most critical piece in the jigsaw puzzle is then to LET YOUR PROFITS RUN. No trading works unless you actively allow profit to keep accruing when youre in a winning situation. If you jump out of a trade to secure the profit too early this indicates your psychology isnt right and eventually what youre doing is cutting your chance of winning in this game.

Trading is the HARDEST WAY to make an EAY LIVING. Those poor at learning, not willing to work day and night reading, those who are bad at self discipline will likely not succeed... that is why its impossible these days to get a trading post without an MBA or post graduate education. These are the people youre competing with. To compete against them you need to be willing to study hard and control your impulses. Start with Psychology and trade planning and keep focused on these two aspects as you go beyond all other aspects. Indicators are secondary. If this sounds daunting to you I advise you not to trade. If this sounds challenging to you and youre not put off. Good luck to you. Welcome to the lions den.
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Old Oct 10, 2012, 11:46am   #28
 
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Joined Oct 2012
Re: Essentials Of 'First Steps'

hello,

Firstly , I apologize because mu English not good

I want to know somethings


What is the minimum to open an account on American exchanges ?

If I bought a stock today , How many days I have to be patient in order to be executed sales ? I mean ( T + ... ?? )

I heard before that I can avoid that problem, through opening an account worth $ 25,000, is this true?
If it's true and opened the first order with the account and lost $ 1,000 and the account value became 24000$ . does it mean that I went back to the same problem again?

Is there brokers provide leverage on stocks? What are this brokers ?
and How this Leverages ( 1:2 or 1 : 30 or 1: 100 or ... or what )

Sorry for the inconvenience
Thanks all
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Old Nov 22, 2012, 3:18pm   #29
Joined Apr 2011
Re: Essentials Of 'First Steps'

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Discipline my self to follow only my method , cut my losses fast,admit I am wrong and my mistake ,keep losses small ,never add to a losing position,trade like a pro,there will be other better opportunities .Be nice to everybody , life is short.
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Old Nov 26, 2012, 7:16pm   #30
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Re: Essentials Of 'First Steps'

timsk started this thread
Quote:
Originally Posted by hmaster101 View Post
Hey am new here but was just wondering where I am wrong on this strategy. Find a big market/share moving event. Put £50 on short shares with a stop loss of -3% and put £50 on long shares with a stop loss of -3%. Then when the share moves 10% u make 10% on the long shares and -3% on the short shares = Profit of 7%
Thks guys!
Hi hmaster101,
If you're talking about buying and selling the same stock, you'll need two accounts and you'll be paying the spread twice. You may be using a different broker and/or trading platform, so it's unlikely that you'll be filled at the best prices on both legs of the trade. The losing leg is stopped out at -3% and, at that moment, in theory you'll be up +3% on the other leg, less the spread x2, commissions and possible slippage. Who's to say the winning leg is going to continue in the same direction to give you your +10% profit? It could happen, equally it could just as easily reverse and your net position across both legs will be in negative territory.

Having said all of the above, going long one instrument and short another highly correlated one is a well established strategy with lots to recommend it. Search for 'spread Trading' or 'Pairs Trading' in the Articles section of the site to find out more.
Tim.
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I'm New To T2W - Where Do I Start? - a must read for anyone new to T2W
I'm New To TRADING – Where Do I Start? - a must read for anyone new to TRADING
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