Complete Newbie - what are the best possible starting foundations?

[Bullzak]

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

 

[MrGecko]

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 :innocent:

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.

 

[Bullzak]

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 :innocent:

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

 

[trader_dante]

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.

 

[Mathemagician]

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

 

[Bullzak]

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.

 

[trader_dante]

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.

 

[Bullzak]

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.

I'm on it boss

 

[Bullzak]

lol i've just downloaded it, and i think i should buy some GBP vs USD ... but then i don't understand anything appart from that lol, volume, stop loss, take profit values etc... what would i do to understand how to use this stuff? And a blunt Q, is forex markets just trading inbetween currencies to make a profit?

Cheers

 

[trader_dante]

lol i've just downloaded it, and i think i should buy some GBP vs USD ... but then i don't understand anything appart from that lol, volume, stop loss, take profit values etc... what would i do to understand how to use this stuff? And a blunt Q, is forex markets just trading inbetween currencies to make a profit?

Cheers

Bullzak take it from me that you are in a very FORTUNATE position. If you are new to this game - you are a blank slate. Being a blank slate means you most likely haven't learned anything yet that you are later going to have to UNLEARN.

If you are interested in GBP/USD just WATCH it. And while you watch it, read, read and read some more. You have already been given a good list of books.

Do some research on Technical Analysis. There are some good websites out there.

Learn how to draw support and resistance.

This should be your first goal. Practice drawing in your levels. Watch the price. Does it react to your levels? Keep practicing.

Don't look at anything else for now. You will see information on many different areas. Ignore them for now. Support and resistance (supply and demand) is the key to understanding the markets.

Most of what I am saying may not make sense. As you learn it will do.

 

[just_pondlife]

If you can find one, get a good mentor; someone who will pull no punches and keep you in check. I made big losses to start, but got turned around by a seasoned trader who spends the time.

 

[MrGecko]

lol i've just downloaded it, and i think i should buy some GBP vs USD ... but then i don't understand anything appart from that lol, volume, stop loss, take profit values etc... what would i do to understand how to use this stuff? And a blunt Q, is forex markets just trading inbetween currencies to make a profit?

Cheers

Ok mate; Those who have no experience of trading tend to have an image of shouting young men in expensive suits, bashing away at their keyboards like they're playing track n field on the NES. Of the traders that do this, most go bust, prey to the pro's (who, in turn, are slowly being picked off by computers). The most part of trading is watching and waiting. The hardest part of trading is watching and waiting.

Buy the books; read the books; watch and wait. Write down WHEN you'd think about buying GBP/USD (also knows as Cable, because there is literally a cable runnng between them and that's how the currencies were originally traded). Write down WHERE you think it's going. WHY do you think's its going there? HOW would you know if you were wrong? Until you can do these things (you needn't be right immediately, but you need to be intelligent about it), what do you hope to gain from trading SO soon?

The cold hard fact about trading is that it is probably as far removed from peoples' perception of it as possible, IMO this is important for you to know. I'm sure there are many aspiring traders who start off, guns blazing, not really getting anywhere, and giving up. Even experienced traders are succeptible to "over trading" because they have an image of what they should be doing as a trader, and blow themselves up in the process of fitting the profile. Don't let yourself be one of them!



For some more tangible advice, two books you might want to try are "the candlestick course" by Steve Nison, or "Trade chart patterns like the pro's" by Suri Dudella. Read TD's thread here on T2W (fu**ing good value if you had to pay for it). These might point you in the direction of WHAT you should be WATCHING AND WAITING for. Stop losses and Take profits will all come in time. What was it Gary Barlow said? "A million love songs are made up"?... no, the other thing: HAVE A LITTLE PATIENCE!

good luck buddy

P.S. If you're waiting to take your A'level exams, don't even dream of getting wrapped up in trading yet. Seriously, screwing up your exams because you spent your time taking a punt on the Euro would be a c0ck up of monumental proportions.

 

[black bear]

"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."

Yes imho



"Look for patterns."

No imho, patterns are an illusion TD, they play out, they do not play out.

You have to no they mean nothing at all and newbies don"t so ..............No imho

Good post TD, no reppy because you never give me one, you always say you have run out , you give me the illusion of a reppy with no substance

 

[grantx]

Bullzak,

Get real, grow up, don't fck about or you'll simply fck up your future by not getting a good degree. Study hard, and play hard (drink, drugs, sex and parties) - the next three years are the last three years of total freedom. Make the most of it. Forget trading - you can't do both.

Grant.

 

[grantx]

Bullzak,

All the posts so far give excellent advice re trading but I think you'll agree, it isn't something that be can done between lectures. I would forget about it (but I don't think you will).

Grant.

 

[trader_dante]

patterns are an illusion TD, they play out, they do not play out.

You have to no they mean nothing at all and newbies don"t so ..............No imho

Oh no, bear, we're going to have to have an argument now!!! lol

When I say "patterns" I mean study the price to look for things that happen time and time again that you can perhaps take advantage of.

In my early days I made a lot of money by studying the price of particular markets. When I moved over to another SpreadBet firm I then watched the same price and realised that it was moving with a far greater degree of volatility than it ever had before.

By studying this momentary volatility (price spike) and then immediate reversion to the norm I discovered that the price was an error and proceeded to take the SB firms for a huge deal of money.

This is what I mean by an exploitable pattern.

This was FREE MONEY. It was not proper trading but it was discovered by watching the price and this money I made paid my large tuition fees to get through the university of trading.

I believe "patterns" are visible if you look long and hard enough. I've started scalping the FTSE at work just by watching the ladder only.

After a while you get to see the "invisible" support and resistance levels.

 

[black bear]

Snakes and Ladders

"Oh no, bear, we're going to have to have an argument now!!! lol"

No we are not td

"imho its an illusion"



Have a good week and watch out for them snakes td, that ladder is one big illusion imho to

:clover:

 

[Bullzak]

Bullzak,

All the posts so far give excellent advice re trading but I think you'll agree, it isn't something that be can done between lectures. I would forget about it (but I don't think you will).

Grant.

Haha, no i take all the advice given here as a gold.

I understand, tradign is a serious time consuming thing, and i will learn and educate myself about it, study patterns of one particular currency etc in my spare time. I'll try and get these books too.

Cheers guys

 

[Shanghai]

Bullzak, Peter Lynch the legendary US investor said that you shouldn't buy any stocks unless you can sit down and explain to someone for 2 minutes why you should buy that stock at that time. I would say that the advice also applies in trading. Once you have developed a strategy that means you can explain to someone for 2 minutes why you should enter a particular trade (and also exit one) at that particular time then you may be on to something. "Because I think it will go up" does not count!

 

[grantx]

Shanghai,

The guy interviewing may be pretty talkative; 5 mins may be better/safer.

Grant.