Beginner looking for answers please!

Hi to all and a Happy New Year. I am researching to become a full time trader of UK Stocks with £20,000. Initially trying to decide whether to start as a day or swing trader.

I hope that you will be able to help answer my questions.

1) How do you decide the amount of each trade from the initial £20,000?

2) How do you choose where to set the stop loss on a trade?

3) What would be the best charting and live feed software to use?


Thank you for any responses as all are much appreciated.
 

NVP

Legendary member
37,581 2,007
Hi to all and a Happy New Year. I am researching to become a full time trader of UK Stocks with £20,000. Initially trying to decide whether to start as a day or swing trader.

I hope that you will be able to help answer my questions.

1) How do you decide the amount of each trade from the initial £20,000?

2) How do you choose where to set the stop loss on a trade?

3) What would be the best charting and live feed software to use?


Thank you for any responses as all are much appreciated.

Hey F

you really need to spend 6-12 months or so getting up to speed........befroe yuo put a penny down

these questions are all covered in most Free forums , websites if you search

plus you will learn all the other essential things needed

good luck (y)
N
 

rbrew

Junior member
12 1
Hey F

you really need to spend 6-12 months or so getting up to speed........befroe yuo put a penny down

these questions are all covered in most Free forums , websites if you search

plus you will learn all the other essential things needed

good luck (y)
N

i'm also looking for a good starting point... is it best to start through some specific series of articles, or thread / forums?
 

pboyles

Legendary member
8,072 1,302
i'm also looking for a good starting point... is it best to start through some specific series of articles, or thread / forums?

The solution is to keep your money in the bank and forget all about trading. It's highly unlikely you'll ever make a cent and most likely you'll lose whatever you put into this. If you want extra money get a part time job.
 
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Pat494

Legendary member
14,564 1,549
Put half your trading money into a seperate account for next year.
Read ALL the articles on T2W and others to find out what sort of trading suits your style. Then spend the rest of your life perfecting it.
 

x4x

Well-known member
465 61
Put half your trading money into a seperate account for next year.
Read ALL the articles on T2W and others to find out what sort of trading suits your style. Then spend the rest of your life perfecting it.

Agreed, but perhaps he should put 90% of his money into a separate account, and use 10% next year, and 10% the year after etc.
 

Pat494

Legendary member
14,564 1,549
Agreed, but perhaps he should put 90% of his money into a separate account, and use 10% next year, and 10% the year after etc.

I see your reasoning.
They skip about like new born lambs :whistling
 

Hoggums

Senior member
2,176 878
£20K is not enough to make a living from trading stocks (I am assuming unleveraged stock holdings and not trading a leveraged derivative).

Plus you are only able to trade in one direction (buys). Even the best in the business can't make money this way in a falling market.

And the best in the business probably make 15% in a good year - can you survive on £3000 a year?
 

ILikeCCI

Junior member
33 0
Hi to all and a Happy New Year. I am researching to become a full time trader of UK Stocks with £20,000. Initially trying to decide whether to start as a day or swing trader.

I hope that you will be able to help answer my questions.

1) How do you decide the amount of each trade from the initial £20,000?

2) How do you choose where to set the stop loss on a trade?

3) What would be the best charting and live feed software to use?


Thank you for any responses as all are much appreciated.

Don't day trade, its very hard - especially for beginners. Most people are attracted to day trading because they think they can make money quicker but in reality the opposite is probably going to happen. You could try day trading later down the line but there are not very many people who can stomach it even if they are experienced traders.

The amount to trade is always a percentage of your capital, usually 1% risk on each trade.

Stop loss depends on the setup you have targeted its usually above a recent high or low.

Also trade Forex instead of stocks because it trends better and there are more opportunities. Its also better for a beginner because you can trade micro lots and start getting used to it by only risking small amounts of money.
 

timsk

Legendary member
7,375 2,164
Hi Freedomtrader2012,
Welcome to T2W.
Hi to all and a Happy New Year. I am researching to become a full time trader of UK Stocks with £20,000. Initially trying to decide whether to start as a day or swing trader.
As a very broad rule of thumb, the general consensus would be to start off swing trading first and, if you do well, then try day trading. The key benefits are that you'll make fewer trades which will help with commissions and stamp duty and you'll have more time to consider the merits of each trade before hitting the buy/sell button. That said, it's horses for courses, no one can say for sure what is best for you.

1) How do you decide the amount of each trade from the initial £20,000?
This sticky will go a long way towards helping you answer this question: Essentials Of 'Risk & Money Management'

2) How do you choose where to set the stop loss on a trade?
There are as many different answers to this as there are traders. Again, what works for you won't work for someone else. If your methodology enables you to enter trades with pin-point accuracy, such that if they don't go into profit straight way you close the trade - then you can set very tight stop losses. Typically, this is what many day traders try and do. Swing traders tend not to have such finely tuned entry criteria and require a little more wiggle room for the trade to 'breathe' - and set a wider stop. Here's an article that covers a few of the most common questions about stop losses: Stop Loss - Q&A

3) What would be the best charting and live feed software to use?
Again, there is no best really - just the one that provides what you require at a price you're willing to pay. Check out this FAQ: Can You Recommend a Data Feed, Charting Software & Broker?
Tim.
 

ForexProdigee

Junior member
47 0
I read this post just now, and I was wondering one thing.
What exactly does it take to preform well in the market? It seems like most advance traders don't expect beginners to make it. I understand most fail, but the adept traders were once beginners at one point. Is there really any hope?
 

ILikeCCI

Junior member
33 0
I read this post just now, and I was wondering one thing.
What exactly does it take to preform well in the market? It seems like most advance traders don't expect beginners to make it. I understand most fail, but the adept traders were once beginners at one point. Is there really any hope?

Not day trading is a great way to improve your chances of making it, also only risking 1% on each trade.
Day trading amplifies the negative emotions by orders of magnitude, if you had about 4 losing trades in a row all @ 1% over just a few hours how are you going to feel? Would you feel like taking that fifth trade? I know I wouldn't.
Although I suppose you could go down to 0.5% or 0.25% risk for day trading, then you would be more likely to be able to take a string of losses in your stride.
But I much prefer end of day trading anyway because losing a couple of % over about a week is something I can take and feel OK about and I can really take my time over my planning and stalking of nice setups and just walk away.
 
Some very good points for me to consider, thanks. Certainly understand the rationale of trading 1-2% of your account as a max with each trade however on an account with £20,000 how is a trade of approx £400 expected to return a profit? Surely this would require a huge price increase to return any profit at all? Buying/selling and SDRT costs will have such an impact. I am looking to trade UK Stocks only with no margin or leveraging.
 

SimonTemplar

Junior member
11 4
I'd echo those who have said 'risk no more than 1%'. Money/risk management has to be a central part of one's trading plan, in my view, if one is to succeed in this business.

I would treat it like any other business: draft a detailed plan, covering everything from the nuts and bolts of your approach - including SL placement/management as well as how you identify setups - to some defined rules for your risk management. Psychology is, in my view, a tough aspect of this business, and the tighter your plan the more you coccoon yourself from the worst effects of this. How much exposure to the market are you happy having at any given moment? If having 5% on the table is something you are happy with, at 1% risk that would be five open trades (assuming untrailed SL levels). If you neglect this aspect of your trading plan, in my experience you increase the likelihood of making bad decisions when you hit your first pressure moment.

Say you have five open trades, then spot two five star setups. Your original five positions are all in a small amount of profit, and you had a couple of wins the week before, so you take the other two setups. Then the market bucks, and all seven trades stop out, leaving you 7% down on your account in a matter of minutes. A trading plan will hopefully either help you avoid drawdowns that take you too far out of your comfort zone, or will give you a plotted course out of that. When you take a hit, do you take a day or two off? Reduce risk on the next few trades? If so, by how much? For how long? Or do you just trade through, same risk as ever, because your backtesting/experience tell you that that is the most sensible course of action for your approach? Or any one of a number of other reactions?

This can be a psychological, emotional roller coaster, if you let it. In my view, the surest path to success is simply the mechanical execution of an effective strategy. The more detailed your trading plan, the more mechanical you can keep your trading, generally the more profitable you will be. If you find yourself having an inconsistent reaction to market variables, you will often find that you also have inconsistent trading results.

So with apologies for being preachy, I would start by drafting a detailed trading plan, then make sure that as you start trading you keep it updated. It will become second nature one day, but in the meantime I'd read it pretty regularly.

I'd echo the others who have said that I'd doubt you can support yourself from the proceeds of trading a £20k account, not least because the pressure to make an income would be likely to affect your trading decisions early on. But if you can find an alternative income, ringfence the £20k, then you should be able to trade that up to a size that can throw out a decent income.

I think that it is too easy for experienced traders to make this seem an impossible task to any newer trade, when as you have said we were all beginners once. This is a tough area to get into, trading takes a lot of work at the outset - but then that just makes it like any other career that offers this sort of reward. So I would go for it, but make sure that you have a tight trading plan, keep your trading mechanical and consistent, and don't expect to make a living from your trading right from the get go.

But I can't think of anything else that offers this much financial and lifestyle freedom without the need to work for anyone else and with no surrounding industry infrastructure to satisfy.

I would also add Forex to your trading plan, but that's just me..!

I hope that you found some of this of at least some use. If you make it work you'll be absolutely DELIGHTED with your decision to try trading!

ST
 
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