Advice

[Snownation]

Hey guys.

I'm quite a beginner trader, with not alot of money to trade with. I'm currently a student surviving on a student loan. I've been spread betting on and off over the past year.

I had some gains, but only due to blind guesses, and luck. I know it's not the ultimate way to trade, and would like to learn of a more concise way to generate profits.

I usually go on the basis, of, if there is some good news, i trade long on equity indices. If news is bad, i would short.

I guess i got lucky throughout the year, and got complacent.

Is there any advice someone could give me that utilizes good strategy, and some deep thinking into what i should be trading?

I'm a student after all, so you can't expect me to seek positions of £10 or £20 trade sizes.

I normally do £1 stakes.

I still go to university, and i'm not glued to the monitor checking positions.

Advice?

 

[shadowninja]

Problem with news is that you are competing with the financial wizkids in the city who have MBAs and PhDs in Macroeconomics and AI. I think swing trading is your best bet if you can't be at the PC the whole day. Also, you have to make sure you get the news at the same time everyone else gets it.

 

[damianoakley]

Hi Snownation,

The best honest advice I would give right now: STOP TRADING.

If, as you say, money is precious to you at the moment, then stop playing guessing games with your trading capital, because your lucky streak will eventually run out...!

Stop trading and put your time and effort into developing a trading plan with strict rules that will take the guesswork out of your trading.

Every trade you make should have strict logical criteria: why are you taking this trade? where will you enter the market? where will you exit the market? how much of your capital will you risk on the trade?

These are things you should be considering before risking any money.


Thanks

Damian

 

[timsk]

Hi Snownation - welcome to T2W.

I'm quite a beginner trader, with not alot of money to trade with. I'm currently a student surviving on a student loan. I've been spread betting on and off over the past year.
I had some gains, but only due to blind guesses, and luck. I know it's not the ultimate way to trade, and would like to learn of a more concise way to generate profits.

I concur with the two previous posters. That said, when I was an art student way back in the late 70's, everyone went to the pub on the first day of the new term. The objective - for the talented, dedicated and serious student that is - was to blow the entire term's grant in the first evening. And quite a few of them did. In those days we had grants and not loans which, I concede, makes a big difference. Blowing someone else's money - the taxpayers - is a very different kettle of fish to blowing a loan which will have to be repaid and will incur interest along the way. Anyway, the point of this is that, in principle, there's nothing inherently wrong in chanelling some funds into your SB account, just as there's nothing inherently wrong in going out drinking once in a while - albeit in moderation.

I usually go on the basis, of, if there is some good news, i trade long on equity indices. If news is bad, i would short.

If you spend any time on here at all, sooner or later you'll read what I believe to be a very, very good piece of advice along the lines of: trade the REACTION to the news and NOT the news itself. Many day traders do this and the reason they do it is that sometimes the market reacts to news in the opposite way than, logically, it ought to react. A good example of this happened today. A LTBH investor friend of mine who made more money (percentage wise) than Warren Buffet did throughout the entire 1990's phoned me today. He was perplexed as to why the shares in a company in the oil services industry (that specializes in state of the art pipelines) actually fell on the SAME DAY that the second largest oil well in 20 years was discovered off the coast of Brazil, within spitting distance of where they have a major manufacturing base. On the face of it, It's completely illogical, counterintuitive and simply doesn't make sense. But it happens for reasons I won't go into now. So, the trick is to wait and see how the market reacts to the news - whatever it might be - and then look for the right opportunity to hitch a ride with the consensus view of the market. You may well find that it's in the opposite direction to the one you thought it was going to be.
Tim.

 

[Snownation]

Some very good advice here.

Something which i will consider deeply.

However, i don't think i'll stop trading, as some guys once told me, stay in the game to play the game.

Although I'm a student with a lot to lose. I was prepared to take out a few hundred to play with. Whether i lose this capital or not, is no concern to me. As i don't depend on this money to feed myself. So I'm prepared to lose it. I thank you all for your concern about my finances, I appreciate you all looking out for me. But i'm gonna stick with my decision.

I just need a good strategy to go with.
I've been following trends all along. Support, resistance, and up or down trends. That's as much techanalysis as I've ever done.

I would like to learn more though. Does anyone have any good sites to explain some more about technical analysis?
Any golden rules to follow?

Some very good people here. Friendly and willing to share. Unlike some people I've talked to elsewhere.

 

[timsk]

I usually go on the basis, of, if there is some good news, i trade long on equity indices. If news is bad, i would short.

A more obvious example of how trading the news itself rather than the reaction to the news can land you in trouble is Northern Rock. How many people bought the stock on the news that there were a handful of prospective purchasers - including Richard Branson - who were interested in buying the bank? I'm not sure of the exact day the news broke, but I am sure that the stock price was a lot higher then than it is now.

This ties in with that other famous trading maxim, credited to veteran trader Joe Ross, who said "trade what you see and not what you think". Those traders / investors who may now be questioning the wisdom of their purchase of NRK shares might wish that they had utilised this rule before making their decision to jump in.
HTH,
Tim.

 

[timsk]

I would like to learn more though. Does anyone have any good sites to explain some more about technical analysis?
Any golden rules to follow?

Hi Snownation,
Our posts overlapped. Yes, lots of golden rules. I suggest you devour the 'First Steps' section of the Knowledge Lab.
Tim.

 

[shadowninja]

Just noticed you said you're trading with money from your loan? Different. Well, when I say different, different to what successful traders do. I've read countless stories of people borrowing money to trade with and losing it, however. In the end, it's not free money and you have to pay for it and then some.

Trade for free here: www.tradindex.co.uk. Develop that strategy.

 

[Snownation]

Thanks for the help guys.

I think i will dig a little deeper in the technical side of things before going in blind.

If there's anything that i might ask in the future, please don't get annoyed with some of the what might seem like stupid questions.

Thanks!

 

[fifty2aces]

I would like to learn more though. Does anyone have any good sites to explain some more about technical analysis?
Any golden rules to follow?

One thing that might help you come to terms with the amount of work that it takes to become successful is to think of trading as being like any other job - you don't become a doctor or lawyer with a week's work, so don't expect to be a good trader quickly either.

I'd recommend that you read the following:

Trading in the Zone - Mark Douglas
Technical Analysis of the Financial Markets - John Murphy
Come into my Trading Room - Alexander Elder
The Master Swing Trader - Alan Farley

That should be a pretty good starter, and will give you an idea of where to look next. I'd also look through the t2w forums - there's a lot of good info here. (No bias on my part - I'm a member of many trading forums, but this is by far my favourite)

As for golden rules - money management is THE most important concept to figure out as a beginner - never risk more than 1% of your account, and if you don't understand exactly what this sentence means, don't trade.

 

[Snownation]

Well, yes i know what your sentence means.
However, I don't have finances of £20,000 to SB with.
I'm trading with £200.

So 1% is pretty much... £2. Which is just double the minimum stake size of where i'm trading with... So that allows a stop loss of... 1 point.

As you can see, I can't allow that until i gain some capital.

I thank you for your kind advice though. I know you're here to help.

Finspreads actually let me trade with 10p per point when i first started, which was nice.

 

[fifty2aces]

Well, yes i know what your sentence means.
However, I don't have finances of £20,000 to SB with.
I'm trading with £200.

So 1% is pretty much... £2. Which is just double the minimum stake size of where i'm trading with... So that allows a stop loss of... 1 point.

As you can see, I can't allow that until i gain some capital.

I thank you for your kind advice though. I know you're here to help.

Finspreads actually let me trade with 10p per point when i first started, which was nice.

Glad you understand that, now need to put it into action - I'd suggest you either stick to paper trading until you save enough to obey proper money management rules, or get a micro forex account which allows low pip values. There are several brokers which let you trade micro-lots ($0.10 per pip) and Oanda let you go even lower than that.

I know it seems pretty dull, but I hate to see someone who doesn't have a huge amount of capital lose it all straight away - at £1 a point, you could blow up your account just on bad luck - without even making a bad decision.

 

[shadowninja]

Trading in the Zone - Mark Douglas
Technical Analysis of the Financial Markets - John Murphy
Come into my Trading Room - Alexander Elder
The Master Swing Trader - Alan Farley

I'd add:

Trade Like Jesse Livermore - Richard Smitten
Money Management - Ryan Jones

I think I mentioned earlier that you can sign up to Tradindex and get a play account to test strategies free of charge!

 

[Paul71]

Hey guys.

I'm quite a beginner trader, with not alot of money to trade with. I'm currently a student surviving on a student loan. I've been spread betting on and off over the past year.

I had some gains, but only due to blind guesses, and luck. I know it's not the ultimate way to trade, and would like to learn of a more concise way to generate profits.

I usually go on the basis, of, if there is some good news, i trade long on equity indices. If news is bad, i would short.

I guess i got lucky throughout the year, and got complacent.

Is there any advice someone could give me that utilizes good strategy, and some deep thinking into what i should be trading?

I'm a student after all, so you can't expect me to seek positions of £10 or £20 trade sizes.

I normally do £1 stakes.

I still go to university, and i'm not glued to the monitor checking positions.

Advice?

You need information about your trading ability, you need facts about your ability, and you need to know where you can put your total base capital for the best guaranteed return you can expect from any other means, ie banks and saving schemes.

So, you want to know if you can beat the bank?

This can take years of trading!

Do not put anymore of your own money on the line, you do not know anything, yet.

Trade a simulator.

Trading is for life, not just for Christmas.

Regards.

 

[shadowninja]

Trading is for life, not just for Christmas.

:cheesy:

 

[Snownation]

=D

Well, i decided to get a book.
Which book would be the easiest to read for a beginner like me?

I'm fairly technical, and good at maths. Which book would suit the clueless of all clueless traders?

 

[shadowninja]

Get Trading In The Zone. All about discipline. As I've said before, there are shed loads of profitable strategies (and you don't even need to know much maths); there are some good ones mentioned on this site, no less.

 

[Paul71]

Maths?

Don't raize yourself. Why would you need to know about math?

 

[Snownation]

I assumed most technical analysis was heavily based on mathematics.
Guess i'm mistaken.

I do however get the idea that traders should be sharp, and mathematical.
But i only get told that because i'm planning to work in a bank as a trader.

 

[tightstops]

you are of course right but u wont get much sense out of that paticular member