Feeling defeated before even starting!

[Cornishpatriot]

Hi,

I have spent the last 5 months just reading books and watching videos (Anton Kreill)

So far I have worked my way through Tim Sykes: 'An American Hedgefund',(penny stocks). reminiscences of a stock operator by Edwin lefevre and Market Wizards by jack schwager.

My ultimate/dream goal is to be able to work self employed as a trader but every other post I read seems to contradict each other and warn me off against either being a day trader or forex trader.

The one thing I have noticed is that a lot of the big game winners seem to trade futures but literally, everyone warns newcomers off that until they are seasoned veterans of the industry.

So I kind of feel lost. Do I spend the next 6 months understanding the fundamentals of stocks or the technicals of forex? Or should I look at a completely different industry all together?

 

[Pat494]

Agas dynergh

 

[counter_violent]

Hi,

I have spent the last 5 months just reading books and watching videos (Anton Kreill)

So far I have worked my way through Tim Sykes: 'An American Hedgefund',(penny stocks). reminiscences of a stock operator by Edwin lefevre and Market Wizards by jack schwager.

My ultimate/dream goal is to be able to work self employed as a trader but every other post I read seems to contradict each other and warn me off against either being a day trader or forex trader.

The one thing I have noticed is that a lot of the big game winners seem to trade futures but literally, everyone warns newcomers off that until they are seasoned veterans of the industry.

So I kind of feel lost. Do I spend the next 6 months understanding the fundamentals of stocks or the technicals of forex? Or should I look at a completely different industry all together?

Don't despair. Reading around the subject of trading is good grounding and you should continue down this route. More of the pieces will click into place.

It's easy to get bogged down though in this mass of conflicting information, or a better description may be, misinformation.

Have a good read of this document. Ever since the financial markets took a hit in 2008, there has only been One game in town and that is to assess whether the markets are generally "risk on or risk off. Get to understand these two market modes and you will be 90% there.

The document is getting on a bit, but in principle, nothing has changed. If anything, it's relevance will come sharply into focus in 2017 as the crisis in the EU unfolds.

 

[timsk]

My ultimate/dream goal is to be able to work self employed as a trader but every other post I read seems to contradict each other and warn me off against either being a day trader or forex trader.

Hi Cornishpatriot,
Welcome to T2W.

I'm sure most members have felt the same way as you at one time or another - I certainly have. So, as c_v says, don't despair! The issue of contradictory information and advice is a reflection of the markets themselves. For every buyer there's a seller so, in very broad terms (there are quite a few exceptions to this), one side thinks an instrument will rise in value while the other thinks it will fall in value. For markets to function effectively, it's necessary for participants to take different views and to trade against one another. Your job then is to decide whether or not the advice to steer clear of day trading and forex applies to you personally.

In order to do that, I suggest that you don't take anything you read on here or elsewhere as gospel and assume that the comments are just personal opinion which may - or may not - be relevant to you. So, for example, I'm not a fan of forex, but I wouldn't tell you (or anyone else) not to trade it. My advice would be to look at the pros and cons of all markets and instruments and, if you decide to trade forex, be clear in your own mind why you favour it above other markets and what are its features that you think you can exploit for a profit that are not found in other markets.

The same principle applies to being a day trader. There is no doubt that there are issues associated with day trading that swing and position traders don't have to contend with. In the main, these are better handled by experienced traders - rather than novices just starting out. Here are a few examples off the top of my head:

1. Reaction time.
Everything happens much faster for day traders, and decisions have to be made on a spur of the moment. Failure to act quickly and decisively can result in heavy losses, smaller profits and lost opportunities.

2. Costs.
You could make 10 trades in a day and end up with +20 points / pips made. Let's assume a 1 point spread. The swing trader may make just one trade, save the 9 points spread, thus finishing up with +29 points. So, you need to be sure that your methodology is suited to day trading and that you will make more than you would if you were swing trading. For most novices, taking their time over a few carefully chosen swing trades is often a better option than doing loads of small intra day trades.

3. Psychology.
A (very) common problem for day traders is boredom and taking trades they have no business to be in because not much is happening. This tends not to be a problem for equities traders. While index futures and forex traders are tearing their hair out with frustration, equities traders can usually find something that's moving - even on the quietest of days. The flip side of the coin of course is deciding which equities to look at out of a universe of many thousands of instruments.

There are lots of other examples. So, look at your situation and decide on the things that you can be sure about - without worrying what someone else might say or think. What's important is that you consider all the options available to you and pursue a path that's right for you and your circumstances. There are precious few absolutes in trading and, ultimately, no one but you knows what's best for you.
Tim.

 

[aag100]

Hi,

I have spent the last 5 months just reading books and watching videos (Anton Kreill)

So far I have worked my way through Tim Sykes: 'An American Hedgefund',(penny stocks). reminiscences of a stock operator by Edwin lefevre and Market Wizards by jack schwager.

My ultimate/dream goal is to be able to work self employed as a trader but every other post I read seems to contradict each other and warn me off against either being a day trader or forex trader.

The one thing I have noticed is that a lot of the big game winners seem to trade futures but literally, everyone warns newcomers off that until they are seasoned veterans of the industry.

So I kind of feel lost. Do I spend the next 6 months understanding the fundamentals of stocks or the technicals of forex? Or should I look at a completely different industry all together?

5 years later you will still feel the same but maybe then the breakthroughs will start to appear.or maybe you could be a genius and do it sooner.
try watching a live market and see what you can gleen from that rather than from all those snake oil salesmen

 

[tomorton]

Hi Cornishpatriot - Welcome to trading. Don't be unnecessarily swayed by people who tell you this or that about trading, find out for yourself by direct practice and experimentation.

I would clearly recommend avoiding day-trading until you can trade and even then unless you're a great trader.

Otherwise, try the long-term charts and approach - when prices are rising be long, when they're falling be short, when they're going sideways be flat. Trading is hard but not complicated.

 

[Tonto62]

We all start somewhere and the very first live trade must be minimal. I use technicals on equities and have found this easier to understand than forex which I have yet to trade. Have you thought of trading either the Ftse 100 or Dow Jones?

 

[new_trader]

Do I spend the next 6 months understanding the fundamentals of stocks or the technicals of forex? Or should I look at a completely different industry all together?

Good question! Find someone who knew absolutely nothing about the profession and managed to become a self-employed full time trader before the age of 40 and ask them.

 

[Cornishpatriot]

thanks for the help guys.

I am stuck at another hurdle now though:

After doing some more research, I feel like technical analysis is the way forward for me so I now want to set up a demo practice account.

I want to trade plain old stocks to begin with. Most likely FTSE and AIM.

I use google finance to analysis charts and have the idea of overlapping this with the demo account, but is this a novice approach?

Also what broker/trading platform (guess it's the same thing) do I use to for a practice account?
I have researched this area and everyone keeps telling me it's like choosing a car or buying shoes.

Any lists I find that offer top 10 brokers seem to have guys like, Hargreaves, Barclays & TD direct listed, but aren't these aimed at more 'investors' instead of 'day/swing traders'?

Thanks in advance.

 

[Pat494]

Do your own research where possible as no one else can be trusted 100%.
There are threads on the broker problem etc. that explain a lot on this and other forums.

 

[sminicooper]

If you're just starting out you don't necessarily need a broker demo account. Just get the prices from the Internet and look after them on a spreadsheet. When you find you've got a methodology that works for you, then get a demo account – any demo will do since you're not going to be risking real money. If you don't like the interface then move on to another. You won't find if the broker suits you until you actually put down real money. (Also note that some software packages include an account module e.g. Amibroker, which is fine even for real trading). But that doesn't appear to be your problem at the moment. Just take one step at a time.

 

[tomorton]

Nice to hear you're sticking at it.

I trade forex major pairs and FTSE350 stocks via spread-betting. These are multi-day positions. I traded stocks only in January as the US and FTSE indices were so bullish and made about 17% on the account. I've posted my rules before -
* buy only if price above 50 and 200EMA, and price is up over last 3 and 6mths
* set buy order above high of any day when price closed in top 25% of daily range
* look for an entry day on or within a week of last swing low
* set stop at low of last swing low
* exit if price closes below 9EMA.

I would have made more but for obstinately trying to short some stocks as well as buying. Hey ho.

Point is, these sound like novice rules but I can assure you they make money.

 

[timsk]

thanks for the help guys.

I am stuck at another hurdle now though:

After doing some more research, I feel like technical analysis is the way forward for me so I now want to set up a demo practice account.

I want to trade plain old stocks to begin with. Most likely FTSE and AIM.

I use google finance to analysis charts and have the idea of overlapping this with the demo account, but is this a novice approach?

Also what broker/trading platform (guess it's the same thing) do I use to for a practice account?
I have researched this area and everyone keeps telling me it's like choosing a car or buying shoes.

Any lists I find that offer top 10 brokers seem to have guys like, Hargreaves, Barclays & TD direct listed, but aren't these aimed at more 'investors' instead of 'day/swing traders'?

Thanks in advance.

Hi Cornishpatriot,
Your only real 'hurdle' is knowing exactly what market to trade and how you want to trade it. You've addressed these two by stating that you want to trade U.K. equities and that you want to day trade them. That's a start.

It's not for me to dissuade you from doing this, but I will point out a few of the issues you'll encounter. Trading is a tough gig. Day trading for novices is especially tough. Most (but not all) experienced traders will recommend starting off with a longer timeframe to start with (i.e. swing trading over a few days or more), as it doesn't require constant screen watching and it gives you time to react to the market in a cool, calm and collected manner.

Regarding day trading actual U.K. shares, there are also issues here that you won't have if you trade stocks from, say, the U.S. Namely, you'll have to pay stamp duty on all your transactions - which will bump up your costs. You can avoid this by trading a derivative product such as CFDs or spread betting - but be prepared for an increase in the bid/ask spread. Depending upon the instruments you trade (and their spreads) and how heavily you trade them - will largely determine which route is the most economical. I've not looked at U.K. equities for years - literally - so things may be different now. However, ten years ago, the U.K. equity market wasn't as transparent as that of the U.S. The range of liquid instruments (enabling you to buy and sell at the price you want) wasn't there and the volatility was also limited. Unless you're trading large size (not recommended for a newbie), then volatility matters as that's the only way you're going to profit.

If you've got a plan (and it's essential that you have one) about how you intend to profit from the movement of whatever instruments you intend to trade, then your task is to find a broker that offers the most appropriate trading vehicle (CFDs, actual shares or Spread Betting etc.) that enables you to exploit your methodology to the full. The clearer you are about what you want to do and how you intend to go about doing it, then the easier it will be to find a broker that offers the products and services you need. This is why questions about 'who is the best broker' are next to impossible to answer, because every trader has his or her own objectives and trading style.

Regarding TA, most online brokers (if not all of them) will offer some sort of charting package. Most are pretty good and offer all the basics. In the meantime, Investing.com isn't a bad place to start.

Hope all that hasn't just muddied the waters further!

Tim.

PS - I've just re-read your post and you don't specifically say you intend to day trade - my mistake - sorry. So, just ignore my comments on day trading if you're not planning on doing this.

 

[Cornishpatriot]

Hi Cornishpatriot,
Your only real 'hurdle' is knowing exactly what market to trade and how you want to trade it. You've addressed these two by stating that you want to trade U.K. equities and that you want to day trade them. That's a start.

It's not for me to dissuade you from doing this, but I will point out a few of the issues you'll encounter. Trading is a tough gig. Day trading for novices is especially tough. Most (but not all) experienced traders will recommend starting off with a longer timeframe to start with (i.e. swing trading over a few days or more), as it doesn't require constant screen watching and it gives you time to react to the market in a cool, calm and collected manner.

Regarding day trading actual U.K. shares, there are also issues here that you won't have if you trade stocks from, say, the U.S. Namely, you'll have to pay stamp duty on all your transactions - which will bump up your costs. You can avoid this by trading a derivative product such as CFDs or spread betting - but be prepared for an increase in the bid/ask spread. Depending upon the instruments you trade (and their spreads) and how heavily you trade them - will largely determine which route is the most economical. I've not looked at U.K. equities for years - literally - so things may be different now. However, ten years ago, the U.K. equity market wasn't as transparent as that of the U.S. The range of liquid instruments (enabling you to buy and sell at the price you want) wasn't there and the volatility was also limited. Unless you're trading large size (not recommended for a newbie), then volatility matters as that's the only way you're going to profit.

If you've got a plan (and it's essential that you have one) about how you intend to profit from the movement of whatever instruments you intend to trade, then your task is to find a broker that offers the most appropriate trading vehicle (CFDs, actual shares or Spread Betting etc.) that enables you to exploit your methodology to the full. The clearer you are about what you want to do and how you intend to go about doing it, then the easier it will be to find a broker that offers the products and services you need. This is why questions about 'who is the best broker' are next to impossible to answer, because every trader has his or her own objectives and trading style.

Regarding TA, most online brokers (if not all of them) will offer some sort of charting package. Most are pretty good and offer all the basics. In the meantime, Investing.com isn't a bad place to start.

Hope all that hasn't just muddied the waters further!

Tim.

PS - I've just re-read your post and you don't specifically say you intend to day trade - my mistake - sorry. So, just ignore my comments on day trading if you're not planning on doing this.

Hi Tim, I do only intend to swing trade but you're still right, I need to analysis my plan more in depth.

I also think responses like yours and others on here is what gives people like me the desire to persist with what can seem like an insurmountable task when starting out.

Thanks for taking the time to reply.

 

[TEAMTRADER]

Not sure whether this will help you Cornish Pasty (am married to a Mousehole girl so only will understand the pasty joke)- but swing trading needs capital if you are to do this profitably and earn a good living.
Start with day trading to build up your capital before swing trading.
TEAMTRADER
(retired trader)

 

[Tonto62]

Hi Cornish pasty. Looks like things are becoming clearer for you. I use city index as a broker and spread bet on FTSE 100 indice and swing trade on FTSE 100 equities. Personally I would stay away from AIM if looking to do short term trading. In all your planning etc I would strongly urge you to begin with small stakes. I had a plan to start trading at £1 a per point until I had made x amount of points and then too slowly increase. You will know if your £per point is too high is when you go to bed at night with open positions and you cannot get to sleep in case the stop loss is triggered and you lose x amount of pounds. Trading is a marathon and not a 100 metre sprint. Many who thought it was a 100 metre sprint are out of the game having lost their capital due to too large a stake size. hope that helps.

We are all learning and seeking to improve

Agree with tomorton. Keep it simple and you will be surprised at what can be achieved over time

 

[neil]

Not sure whether this will help you Cornish Pasty (am married to a Mousehole girl so only will understand the pasty joke)- but swing trading needs capital if you are to do this profitably and earn a good living.
Start with day trading to build up your capital before swing trading.
TEAMTRADER
(retired trader)

Mousehole -know it well. Visit there at Christmas to see the lights

 

[TEAMTRADER]

As luck would have it dinner is a Cornish Pasty this evening!
Trading charts successfully and using templates is in the eye of the trader. The best advice I can give anyone is to get one that is simple (to them) and do not change it dramatically. Only then will trading be regularly successful. Careful, good and patient traders do not have weekly losses. I audited the figures of a good friend and he was one of those!! I was looking at his figures this morning and his worst week was 1.19%.
I find colour co-ordinates are best for my eye - if CornishPatriot wants to PM me to share the template it is an MT4 template. Illustration attached.
TEAMTRADER

 

[timsk]

. . . if CornishPatriot wants to PM me to share the template it is an MT4 template. Illustration attached.
TEAMTRADER

Hi TEAMTRADER,
If by the term 'template' you're referring to the specific settings of the indicators used - then in itself this will be of little use - or no use at all - to Cornishpatriot (or anyone else for that matter). It's just another chart. It's how you trade it that matters. So, rather than inviting members to contact you via PM - which looks very dodgy and is not encouraged here at T2W - why not explain what the indicators are and how you use them? That would be an interesting and useful contribution. Otherwise, members could be forgiven for thinking you're a vendor trying to sneak in through the back door.

Tim.

 

[TEAMTRADER]

Hi TEAMTRADER,
If by the term 'template' you're referring to the specific settings of the indicators used - then in itself this will be of little use - or no use at all - to Cornishpatriot (or anyone else for that matter). It's just another chart. It's how you trade it that matters. So, rather than inviting members to contact you via PM - which looks very dodgy and is not encouraged here at T2W - why not explain what the indicators are and how you use them? That would be an interesting and useful contribution. Otherwise, members could be forgiven for thinking you're a vendor trying to sneak in through the back door.

Tim.

Not my intention Tim - I am a very experienced chartist and my only concern was for someone who has the intention of trading live to be aware that swing trading is a hit and miss starting point. Definitely not a vendor!
Templates are good only if you, the trader, can understand the indicators and generally the fewer the better.
Yes, it is how you trade, but there needs to be understanding of what you are seeing as well as a specific method - I was always a scalper in the direction of the trend.
My eyes will differ from your eyes when it comes to a template - but I can post my chart indicators if there is any interest.
TEAMTRADER