Introduction & Novice questions re trading

[Deepthinking]

I'm not sure if this is the correct forum to post in, so mods feel free to move to the appropriate forum.

Firstly, let me give you all a bit of background on myself. For the past ~2yrs or so I have been a successful part-time online poker player. This has been my sole source of income whilst I complete my studies. I believe I have attained many skills that apply to trading: analytical thinking, risk/reward, money management. Though I have very, very little knowledge of trading thus far!

I have always enjoyed strategy games, and after reading a little about trading I am very intrigued by it., therefore I'd like to learn more!

Assume I am a complete novice (...well I am ), what are the best online resources to understand the basics? Also, what are the standard recommendations when it comes to beginner's books? I know very little at this stage, i.e. clueless on most of the jargon, how to go about trading (and the differnt types of trading) etc. etc. I only just about know what trading is, and as I say - I'd like to find out more

Also, and I may be getting ahead of myself here, but what could a good trader earn in an average year? I'll be on track to earn 6 figures via poker next year, would this be possible to earn through trading & how much capital would I have to put up to reach that kind of salary in trading (and is it an attainable goal)?

I understand there is ALOT of work to put in, which I am very willing to do if I find trading interesting.

Thanks for reading, and any advice is appreciated greatly.

Regards,
Darren.

 

[mb325]

Check out the 2nd post in this thread http://www.trade2win.com/boards/first-steps/37514-thought-i-had-clue.html for some good online resources, i'd also check out James16's thread on forexfactory.com.

Books i'd recommend (i assume as you say psych and MM are not your top priority) are Reminscences of a Stock Operator by 'Lefévre', and Mastering The Trade by John Carter. Some wouldn't agree but i'd also pick up any of the hundreds of books on technical analysis, they all say pretty much the same thing.

 

[Deepthinking]

Thanks alot mb.

 

[Deepthinking]

Thread is not getting much love Would it be better placed int he First Steps forum?

 

[Vrothdar]

I found the "school" at babypips.com very helpful when I first started. It's specifically aimed at forex (currency trading) but there's useful information in there even if you're not intending to trade forex. I suspect at this stage you've no idea what you'd like to trade.

I overcame that barrier by learning how different markets and derivatives work, finding out the pros and cons of trading in each one and spending time determining which market I felt most comfortable with.

The next step I took was to learn about different trading styles (swing, scalping, position etc.) and methodologies (fundamental and technical analysis) to decide which I felt would suit me best before I started work developing my own trading strategy.

I found traderpedia to be a good starting point for most of the above although I'd suggest finding other resources too.

 

[£10kLoser]

Welcome Deepthinking!

Excuse my pickiness but perhaps YOU can enlighten ME.

I notice you can spell and write very well but what's the origin of 'ALOT'? As an ancient trader educated half a century ago in a grammar school, I've noticed this spelling all over the place. Obviously, it should be ' a lot' so is your usage just a common mistake or is it a deliberate modern usage?

Not a sarcastic question - once upon a time I would have assumed you and ten thousand others just couldn't write properly but mayhap there is another explanation...

 

[shadowninja]

Read everything in "Articles" and "Traderpedia" above.

Out of interest, if you're successful at poker why not continue? Why waste time and effort, and then money, trying to learn to trade. I made a lot of money in IT (dotcom boom); I have no desire to start a plumbing business.

 

[Deepthinking]

Welcome Deepthinking!

Excuse my pickiness but perhaps YOU can enlighten ME.

I notice you can spell and write very well but what's the origin of 'ALOT'? As an ancient trader educated half a century ago in a grammar school, I've noticed this spelling all over the place. Obviously, it should be ' a lot' so is your usage just a common mistake or is it a deliberate modern usage?

Not a sarcastic question - once upon a time I would have assumed you and ten thousand others just couldn't write properly but mayhap there is another explanation...

Hi, thanks for the welcome.

I actually realise that it's a mistake - I just can't help it after using 'alot' for so long. As you say, it seems to be used a lot, particularly on internet forums, which makes it even more difficult to break the habbit when I am seeing it misspelled so frequently

Funnily enough, I never misspell it when I am handwriting - just when there is a keyboard in front of me

 

[Deepthinking]

Read everything in "Articles" and "Traderpedia" above.

Out of interest, if you're successful at poker why not continue? Why waste time and effort, and then money, trying to learn to trade. I made a lot of money in IT (dotcom boom); I have no desire to start a plumbing business.

Hey, there are a few reasons why I am looking to learn. The online games are not going to be around for ever, in it's current climate there is perhaps up to 5 years of good games left, and it could be a lot less. The games are getting progressively tougher, therefore decreasing my edge. Games could get better depending on legislation in the States, and/or if online poker takes off in Asia. Even so, online poker will not be here forever - I know this, so I'm trying to have a plan for when I inevitably bow out of poker I also don't want a ton of money lying around in a few years, so I'd like to learn to invest :smart:

Thank you to everyone who has contributed to this thread so far, I really do appreciate it.

 

[shadowninja]

Really? Why won't it be here "forever"? Governments worried about gambling addicts?

 

[Deepthinking]

Well, partly. America have made it super hard for people to get money online - that means there are less recreational players than, say, pre-legislation. It's absurd, really, as if they just regulated it they could make a ton of $ through taxation. I guess that's a perk of being based in the UK, no tax on gambling - reclassifying it as a skill game would be the worst thing for us Brits

 

[Adamus]

Guess the legislation is due to a clamp-down to stop money-laundering.

You didn't say whether you're interested most in forex, stocks or futures (or something else) (or all of them!). Re the amount of trading capital you need, I think stock trading requires the most. Futures I believe requires the least, i.e. you can get the most leverage, but I'm not totally sure on the capital requirements for forex trading.

And of course the amount you make in an average year as a trader is completely impossible to define! If you averaged out all traders, it would probably be 0, since it's mostly a zero sum game (unless you mean stocks), and loads of them / us just go bust and leave. You can't really cherry pick the remaining successful traders to use as a guide because that would just be nonsense.

You have to learn how to trade (or when to trade, better said), and learn how to manage your risk, i.e. how much on each trade, and then when you've worked out that you're doing something which works, you can extrapolate the money you'll make in a year.

If you insist on a really rough estimate, I'd say you should bank on making nothing in your first year, and then making 10% in your second, assuming that you learn all the time you're trading, don't take stupid risks and restrict yourself to trading only when you're sure you know what you're doing.

As a top-of-the-range estimate, to keep the dream factory alive, just look at Warren Buffett or Soros. Or for instance Ed Seykota as quoted in Market Wizards which I read just now, who took one account from $5000 to $15 million from '72 to '88 (with withdrawals along the way).

 

[Deepthinking]

Thanks a lot for your reply ahardy. I truly do not know what I'd like to trade yet - which is why I'm looking for research material to find out which I'd enjoy most!

 

[Deepthinking]

May I bump this up?

 

[Adamus]

Of course you may bump this up. But there must be a reason why, and you haven't made it too explicit. What are you after? Sounds like you need to read some good books.

AFAIK there isn't one called "How to work out what financial instruments I'd like to trade".

Market Wizards is the first recommendation I always make.

You could read Edwin LeFevre - Reminiscences of a Stock Operator - for stock trading. Or perhaps you'd need something more modern.

The Money Bazaar by Andrew Krieger (1992) for inter-bank forex (although you can now trade forex direct as a small account too).

Futures trading - hmmm, just watch 'Trading Places' with Eddie Murphy and Jamie Lee Curtis

For mechanical trading (completely computerized), can't think of one. Anything about Ed Seykota or Richard Dennis would do (e.g. Market Wizards)

Same for day trading - stocks, indices, futures. Not sure what to recommend.

Or just work out a well worded question for the forum. (edit: I say "well worded" because you don't want to kick off a religious war between the different factions, e.g. discretionary vs mechanical, price vs TA, scalpers vs traders etc)

 

[mpi2008]

Hey Darren,

I'm new to trading too and found the following two books excellent:

- Come into my trading room by Alex Elder
- Mastering the Trade by John F. Carter (as iterated by member mb325 above).

Also recommend setting up a practice account and trading with 'fake' funds once you have the basics. I have tried ETX capital (spread-betting firm) and Forex. Both have provided good insight. Both have technical analysis packages and free practice accounts. To get the advanced software charts on ETX capital (highly recommended) you'll have to deposit £100 with them.

Kind Regards