I'm a n00b. How's my setup?

[IronFist]

I seriously just spent like 20 minutes typing a post and then it said I wasn't logged in when I hit "submit." I logged in and it said "no forum specified." I clicked back and this text box was empty. I guess I should have highlighted everything and hit ctrl+c before I tried to post.

So as I was saying...

I'm a recent college grad and I've only been investing/trading since 1/05. When I started I thought I would be all about buy and hold, but recently I've been buying and holding from about 2-8 weeks.

I have an account with Scottrade, and I do my charting with SharpCharts2 because it's free and they have all the technical indicators that I like: Parabolic SAR, ADX, MACD, EMA, RSI, and Price Channels. I check the markets throughout the day at work (I'm a computer programmer so I'm usually by a computer unless I'm in a meeting or something), and I do most of my research at home after work. Pretty much all I use is finance.yahoo.com and that site above. I'm not really sure where else to go. I also have 2 17" monitors which are awesome for sufing the net as well as studying charts. I'm not sure if I've been trading long enough to have established a style, but I guess I would be a mix of long-term and swing(?) trading.

I've only traded long positions on stocks so far. I'm too much of an inexperienced noob to open a margin account in order to short anything. I want to make sure I absolutely know what I'm doing before I do that, and also make sure I understand how my taxes are going to work this year :cheesy:

So what are the average returns for a decent day/swing trader? I would assume it would be more than a long-term investor, right? The investement guy at my bank (who wanted $30 per trade... no thanks) said that if I go with him I would average about 10% per year. I would assume that day/swing traders would be more, because say you're only looking at like SPY, and say you're long-term and you buy it on 1/1 @ $100 and then on 12/31 it's $110. That would be 10% for the year. But say you're actively trading just that one stock; couldn't you theoretically take advantange of its swings throughout the year? Maybe you buy it on 1/1 @ $100, then it goes to $105 and looks like it's gonna tank so you sell it, then say you buy it back at $95 and it goes up to $110 for the end of the year. That would be roughly a 20% gain right there, but the long-term trader only made 10% on it. Am I on the right track here or did I completely miss the boat?

How do you judge your progress at the end of the year? Do you just compare yourself against the S&P or the Qs or something? My returns for this first year aren't that good, but I'm just glad I haven't lost money (knock on wood).

So what kind of software packages and stuff do people who aren't cheapasses like me use? I like the free site I listed above. Haha. I always see ads for all this software and stuff but I figure I probably don't need it. And I also assume all those websites that are like "make 5000% in 6 weeks" are BS.

So anyway, hi. I'm gonna copy this post before I hit "submit" again....

edit - I just realized I forgot to talk about my background. What should I focus my time on learning now? Pretty much all I've studied/know are technical indicators and candlestick patterns. I don't know the first thing about fundamental analysis, and I don't know any of the classic "American" patterns that I hear about like "head and shoulders," etc. I also don't know any of the weird indicators like Gann stuff, Fibonacci, or those wedges or triangles or whatever they're called. I really want to learn as much (useful) stuff as I can so I can make tons of money

Alright. Advise, please.

Thanks.

 

[garethb]

A day/swing trader can make huge amounts more than the long term investor. Will you as a day/swing trader make more than the S&P500? - only you can answer that. Many Day/Swing traders manage steady gradual losses or breakeven when the S&P gains 15%-20% in a year.

The way it works is this. On 1/1 you believe the market will rise so you buy at $100. The market does a very good impression of the start of the next great crash. You sell at $98 cleverly getting the fill which is the very bottom for the year. Market rises - you were right but you made a loss and you're not in. When you're convinced it is going up you jump in at $110, only to get shaken out at $107. This time you pick the bottom well at $105 and get a thrilling profit selling at $112. At $115 you KNOW it's overbought so you go short. Stopped out at $117 the market then falls - you were right again but lost money ... And so it goes on. Either that or you make a high proportion of profitable trades taking small profits only to be undone by a once a month big stop blowing/averaging down dissaster. Sorry to labour the point but the market only pays you when you are right and your timing is excellent.

I get the impression you do not have a clear idea of what you look for in taking a trade. Settle on a small subset of indicators or price/volume analysis. You need to focus not on learning more indicators and certainly not on how much money you can make. You need to find and understand what your approach will be.

If you enjoy your job stick with it and don't blow it. If you don't enjoy your job find another one that pays a salary and you enjoy. Unless you are going to cut off from programming and join a trading firm now then assume you will want a rewarding career outside trading for a few more years yet.

Write down the setups that you will trade, define your entry points and your rules for trade management. Then trade those setups with small size, keep a diary of your trading analysis and decisions. Analyse and refine your setups. You should know what % return you have made, your %winners and profit/loss ratio, so why ask what a day trader can make? If you are not making a profit on medium/long term trades you won't make a profit on day trading. If you do make a profit on medium/long term trades you MAY be able to hang on to your hit rate and profit/loss ratios as you shorten your holding period.

This is not mean't to be discouraging. If you have not lost money in your first year you're doing OK. Don't focus on how much you will make in year two focus on what you need to learn to be a good trader, which is what your trade rules are and the inner belief that they work and you are consistent with them.

Don't spend money on software that is beyond what you need. Consider reading "Come into my trading room" by Alexander Elder.

Best of Luck

Gareth

 

[solskjaer20]

So what are the average returns for a decent day/swing trader?

i would assume the average day/swing trader doesn't make much, afterall this profession has a 90 odd percent fail rate (or so i'm led to beleive). but i'm sure there are some day/swing traders that do very well. and they do well because they have found an edge. imo don't worry about what returns you can make, instead try to find yourself an edge, and the returns will take care of themselves.

and as you're a 'noob' i'll give you some free advice, if you take it, you will be more then half way to finding an edge, so here's my advice: THE TREND IS YOUR FRIEND. :cheesy:

 

[IronFist]

Don't spend money on software that is beyond what you need. Consider reading "Come into my trading room" by Alexander Elder.

I have that book here on my desk next to me right now, actually. I read this summer and I still look things up in it from time to time. I also have the workbook.

As a matter of fact, I really don't like my job and have been looking for a new one for a while now

Thanks for the reply.

 

[JumpOff]

.. Sorry to labour the point but the market only pays you when you are right and your timing is excellent.

this deserved a repeat and a highlight. You are an oracle Gareth.
JO