Student Trader, Low Capital but eager!

As the title suggest i'm an eager student (20) doing a business degree in england. I'm highly interested in trading and have been doing a lot of research; even played around with spread betting and earnt a small amount of money, but i don't feel spread betting is right somehow - almost has a 'dirty' feel about it. I may just have a false stigma about so let me know if i'm wrong.

Anyway, i'm so eager to get going but have no idea where to start (ie spread betting, going through an online broker etc), nor which strategy would be best for me with my budget (up to £1000, idealy less).

If anyone could point me in the right direction that'd be great.

Thanks a lot, Ben.

Hello there, earning money in any way will have a 'dirty' feel. Unless you are a bank, you have to take money from someone else - there is no way around it. That's not to say banks have high morals, quite the opposite, but they are the only entities that can create money out of thin air.

As for trading, start with a demo account for several months or longer, until you are consistently profitable. Develop a technique/system that you are comfortable with and stick to it.

£1000 is a very low amount. I believe some/most brokers will not accept it at all. Spread betting companies will gladly take you on as a client because they know the chances to win with £1000 are minimal. Also, they will rob you from every possible angle (spread, rolling trades, slippage or "accidental" stop loss triggers). Been there, done that, tried several already.

After demoing, you could try finspreads. They allow 10p stakes for the first 8 weeks. This would let you trade according to the golden rule of 3% risk per trade. You won't earn much, but hopefully you won't lose much either. It's only 8 weeks, though - it will pass very quickly. Next in line is etx capital - 10p for gold, 50p for fx, £1 for most of the rest.

You could try a certain service that was advertised on this forum until recently. Just search for wallstreet1928 blog on google. The guy seems genuine. It's £50 per month (peanuts). I would do at least first month on a demo account, though, to understand his style of trading and make sure that your financial resources are big enough to follow.

Just my opinion. Don't shout at me all at once.

I've had a small business for twenty years. It makes you feel productive, a worthwhile member of the community and lots of friendly recognition.
With trading you get none of this.
The downside is, business suffers because of local economic conditions.
I got into trading after I read that you could short the market.
I thought, Wow you can actually make money in a downturn. That means I will no longer be held hostage to the economy.
But it's been about 100 times harder than I thought.
After twenty years in business I thought I knew myself....but I knew nothin'.
CFDs might make you feel a bit "cleaner".
Even if you lose your stake, in that short period you will learn more about your attitude to money, risk and level of resolve in twelve months then you will learn anywhere else in ten years.

Thanks for the responces guys...

So the current consensus is that i cannot really enter trading with my level of capital?

And spread betting isn't an option for me?

It seems that you can only begin trading will a lot of money!

Thanks

You're a student, right ? Plenty of time on your hands. Here's your strategy:
1. open a demo account and develop a winning system. No point in risking real money otherwise.
2. at the same time, start earning money the EASY way - check out "matched betting". You can do it with initial bankroll of £1000.
3. Once you earn a few grand from no 2 (can take a few months, it depends on luck / time spent etc.) AND have consistent winners on your demo account, you can open real money account depositing money from no 2. This way, you don't really risk your own money !

That's what I'm doing, anyway. You'll thank me later

MoonRocket said:

I've had a small business for twenty years. It makes you feel productive, a worthwhile member of the community and lots of friendly recognition.
With trading you get none of this.
The downside is, business suffers because of local economic conditions.
I got into trading after I read that you could short the market.
I thought, Wow you can actually make money in a downturn. That means I will no longer be held hostage to the economy.
But it's been about 100 times harder than I thought.
After twenty years in business I thought I knew myself....but I knew nothin'.
CFDs might make you feel a bit "cleaner".
Even if you lose your stake, in that short period you will learn more about your attitude to money, risk and level of resolve in twelve months then you will learn anywhere else in ten years.

Click to expand...

It's interesting that. Most people who run a business are essentially buying at one price and selling for more, or able to provide a service for one price, but charging much more. In other words ripping off customers, who don't have the ability or knowledge to get things for that price, so that they can make a profit. But for some reason people think that my cornershop owner buying food for cheap and selling it for twice the price is contributing to the community, or the restaurant owner who charges me 3 or 4 times what it costs in ingredients or staff to produce is doing something worthwhile. They're all just trading at the end of the day. And it's for their profit, not yours. They spot an opportunity and take it.

Opening poster, you don't need to risk any money. Consider trading as a skill or sport. Open a demo account as advised. Trading with that capital and your knowledge level would be like sitting down at a poker table with £1000 where you don't know the rules of the game, nevermind even some strategy about how to win. Do yourself a favour and save the money until you know what you're doing. there are forex micro account where you can trade at about 6 pence per pip. But you still shouldn't do that until you have some clue about how to trade.

Are you guys talking demo spread betting accounts or online broker? Also which one should i go for?

Shakone, what sort of strategy and market should i begin with?

Thanks

Benjam1n said:

Are you guys talking demo spread betting accounts or online broker? Also which one should i go for?

Shakone, what sort of strategy and market should i begin with?

Thanks

Click to expand...

The strategy you should use is to run away from trading while you still can, before the market grips your soul and destroys your money and your self-esteem.

If you were trading directionally, I'd pick something that has large typical daily movement relative to its spread, and that's liquid. A lot of people say you shouldn't trade forex when new, and they're probably right. I don't know though, they're all bloody difficult. Demo account at least make sure it lasts for a month or more, there are some that are indefinite.

I think its too late for me to walk away!

Could you recommend a place for me to open a demo account?

Thanks

Ok, a couple tips:

- You're eager. Don't act on this for a long time. You will lose your money if you do.

- Demo trade without a single thought for live money until you build up a basic understanding of the market, and start developing a strategy. You will lose your shirt if you don't know what you're doing.

- Understand the relationship between buyers and sellers, and why and how they make the market move. Especially get to know the concepts of support, resistance, round numbers, and trendlines. They are your friend.

- When you go live, do it for as small an amount as you can. Oanda, for example, allows you to trade for pennies. Do it.

- Understand your market's tricks and quirks. Same goes for the instrument you choose. Be very attuned to their movement and how they will trick you out of your money.

- Trading is all about psychology. The players will attempt to get your money. Be aware of the fallacy of "buying high and selling low". Your emotions will be your worst enemy. Do not go live until you understand how you emotionally react to the market. And when you go live, become attuned to your psychology as you come to trade larger sizes.

Books:

- Trading in the Zone by Mark Douglas.

- The Education of a Speculator.

- Reminiscences of a Stock Market Operator.

- Anything Brett Steenbarger.

Good luck, and don't rush. I did that and have lost about $6000 of my own money over the past 5 years. Completely stupid because I didn't believe in demo trading. Do not underestimate the importance of demo! If you have what it takes, money will just fall into your lap.

Thanks for the advice, it's great.

Though i still don't know where to get a demo account, any help?

What do you want to trade? Frankly with your capital you're going to be restricted to FX market as you can do small size with that. So you'd be looking at Alpari/Oanda off the top of my head and lie about your income. No idea what you mean about spread betting - it's all gambling in some form anyway, so if you can't get your head around gambling then give up now.

Ok i'll give one of those a go...

It seems that a lot of people say that spread betting companies are somehow evil and aren't worth dealing with, i was attrracted to them as i didn't need much capitasl.

So the question is; igindex (where i have an account) or OANDA..

How much income should i say i have?

Thanks

What do you want to trade? You can't trade stocks and some other instruments on Oanda.

It's not so much the income but savings/assets. If you tell them you have no savings they're not going to give you an account. It's just general compliance stuff but if you want an account you have to play the game.

When you refer to instruments what do you mean?

I think i'd like to trade either dax, ftse 100, or forex, not too fussy really - which would be best for my capital?

I like the idea of scalping as it seems to be pretty profitable and i understand it better than any other methods - any recommendations?

Would i be ok to just stay spread betting or should i move to oanda or something similar?

Dude, you're going about this way backwards. Think about trading first before the money. You still need to develop a mental frame for the market before even thinking about being profitable.

Now, Oanda allows you to quickly sign up for its free demo platform without going through the usual registration process, so, imo, it's the easiest to get into. Play around with that for a while to see if Forex is for you.

That said, you choose your instrument (stocks, bonds, options, futures, forex, CFDs, etc.) based on your preferences and time frame. Since you believe you're a scalper, Forex might be right for you. Oanda has tight spreads and that's what you want. Give it a shot.

You might also want to check out that Best Thread (sticky above) titled 55000% return in one month. It features a German student who discovered the joys of scalping currencies on the 10s time frame. Give that a look too.

Ok thanks, very helpful.

Should i stick with spread betting or move to oanda?

That's up to you, isn't it?

Give Oanda a shot. I hear SB is pretty sketchy, so Oanda'd be the better choice between e'm.

Would you be able to explain the difference between spread betting and what oanda does?

Thanks

Ok, at this point, I have to tell you to do your own research!

Trading is a highly independent, entrepreneurial activity. You must be self-sufficient if you're to do this stuff; no one can tell you what is right or wrong for you, it is something you must find out and develop on your own. This means doing the footwork and slogging through thousands of pages of book, online threads, forums, and anything else you can get your grubby mits on.

The difference between each of the above is a simple Googling away. If you cannot do that much, seriously reconsider taking up trading; it an endeavour at which you are likely to spend 5+ years before becoming successful. Do not underestimate the toll trading can take on your life; it will likely be one of the hardest things you have ever tried to do!

And with that, I wish you good luck. You have what you need to get started. Go do it!