Need words of wisdom from seasoned traders...

[Tesla.Lee]

I got interested in day trading a month ago and read just one book so far, and it cautioned me to preactice on a simulation for at least 3 months before actual trading.

I have a brother in law who also started a little more than a month ago, and he just started right in trading real money and made $25,000 so far, albeit having lost $7000 one day. He want's me to start right in with $1000 first week but I don't feel ready.

Who should I listen to? Should I practice on a simulation for a long time, or start real small and just try trading with my brother in laws guidance? He will show me how to pick stocks and when to trade...

He already knows pretty well the Thinkorswim platform and can program indicators, and I can't do that yet at all!

Please guide me ...

 

[boyes51]

personally this is just me though I know people would have different opinions.

the only reason i would use a demo is to get used to the platform and fully know what you are doing on it so you do not make any careless mistakes. so yes it does have its place in the world. but not for too long.

the reason why i do not believe in a demo to much is because it is not real money so you may drift away finding yourself placing trades that in real life you just would not place at all. then winning big and thinking that you have this sussed out. you need to be strict with yourself if it is a real account or not.

make a small account very small the smallest you can then pick your trades, only enter when everything in your strategy is lined up wheather it is technical or fundemental, dont just trade for the sake of it. if you only place one trade a week then thats fine. aim for a small percentage gain each week then if its going good slowly add more money to your account. i woulnt recomend risking anymore than 0.5 -1 % risk per trade. its a marathon not a sprint. the key is to be consistant not win big and loose big. to loose $7000 in a day is completly reckless unless thats 1% of your account balance.

you will loose and you will win but at the end of the week the key is to be in profit. i personally aim for 2-6 percent per week and have been consistant.


hope this helps

and be careful

G

 

[timsk]

. . .Please guide me ...

Hi Tesla.Lee,
The best guidance I can offer you is not to listen to your brother-in-law! At least, not as far as trading is concerned. Here's why. If he made $25k in a month and lost $7k in one day, then he'd need an account with a balance in excess of $250,000. (I'm guessing he doesn't have this as it's pretty rare for a novice trader to open a new account and deposit funds of this size.) That would make his monthly return 10% which means that if he's consistent he will double his money easily within a year. If he re-invests his profits (as opposed to withdrawing them) he'll be a multi millionaire in a few short years. This will make him one of the best traders on the planet. I've been on T2W for about 15 years and I've only ever heard of a couple of people doing this (via testimonies from brokers) and they said it was as much to do with good luck as with good judgement. The other reason he needs a $250k account is because of the $7k loss. In percentage terms that equates to 2.8% which might be acceptable depending upon his trading plan. If his account is substantially less than this in size then, almost certainly, he is over leveraged and taking huge risks trading too much size. That almost always ends the same way. Namely, he'll 'blow up' - which is traders jargon for losing all - or very nearly all - of his money. It sounds to me as if he's enjoyed some beginners luck which, by definition, never lasts.

Regarding demo trading or not - this is down to personal choice. What matters above all else is that you have a meticulously crafted and tested trading plan, so you know exactly what to do regardless of what the market throws at you. (See my signature for help with this.) If your trading methodology doesn't produce a profit in back testing - then it certainly won't magically work with real money. Assuming your back test produces a consistent profit over time and in a variety of market conditions (i.e. trending and range bound), then it's up to you if you move on to demo trading or live trading. If it's the latter, trade with the smallest stake size your broker allows and only increase it when you have a nicely rising equity curve.

Remember: beware the bro-in-law! He may be a great bloke and doubtless he means well, but that description fits millions of people who lose big time in the markets.
Tim.

 

[Tesla.Lee]

Thank you so much for those posts!

My brother in law started with mere $25,000, and averages $1000 per day already Tim (if that helps you guide me)

Please keep comments coming - I would like to hear more about this, before forking out hard earned money...

 

[timsk]

. . .My brother in law started with mere $25,000, and averages $1000 per day already Tim (if that helps you guide me)...

Tesla.Lee,
Just as I feared. The $7k loss equates to 28% of his account - in one day! If he's still trading by next Easter - I'll be extremely surprised. Take anything he says with a bucket load of salt, otherwise your bro-in-law won't be the only one that loses all his money. Trading and close family ties seldom make good bedfellows. Think carefully how the relationship between you and him and your siblings will be affected if everything goes pear shaped. Tread carefully, very very carefully.
Tim.
PS. Think in terms of percentages rather than $$$s. If he averages $1k per day on a $25k account - that's 4% per day, 20% per week and 80% per month. He is either the greatest trader that ever lived or he's enjoying beginner's luck. On the balance of probabilities, which do you think is most likely? I can offer you this 100% cast iron guarantee: he won't be able to sustain this success - nothing like it. Additionally, there's a very high probability that he'll blow up.

 

[Quantt]

Thank you so much for those posts!

My brother in law started with mere $25,000, and averages $1000 per day already Tim (if that helps you guide me)

Please keep comments coming - I would like to hear more about this, before forking out hard earned money...

Hey Tesla.Lee, if I am you, I would listen to every word Tim is saying, because he is 100% correct...

 

[options-george]

Tesla.Lee, I would really recommend to listen to Timsk's words of advice.

Do your study/homework/preparation before you start trading.

You wouldn't start in driving a car without lessons and an instructor, right?

 

[Nowler]

Hello Tesla.lee
Tim's advice is solid!

I am only 7 months in (I have 6 months on you) and if I was to give you the best advice I could, it would be to break free of your brother in law. You can converse and compare stats/strategies etc.. but unless you are totally fine with putting your finances in your in law's hands then you need build yourself up. As has been pointed out already, you're in law will not last long because he cannot absorb the losses that we all encounter. He is risking far too much!

I traded a demo for 10 days and once I knew how to execute orders and what not, then I moved to a live account. A mini live account I deposited €20 and have had over 600 trades worth of practical and psychological experience with that...results are choppy but the main thing is that my risk/money management allows me to loose consecutively and still be alive to fight another day. I have learned quite a lot from a mere €20...unfortunately your in law will pay more to learn less...

In sum,
Apart from learning things for yourself and not relying on your in law, then risk and money management is rule number 1. Do that and you will live long enough to test different things over and over until you find something that works for you.

Good luck!
And hold on tight!

 

[barjon]

Thank you so much for those posts!

My brother in law started with mere $25,000, and averages $1000 per day already Tim (if that helps you guide me)

Please keep comments coming - I would like to hear more about this, before forking out hard earned money...

Tim’s got it spot on, but I doubt your brother-in-law will pay any attention if you tell him .

 

[mpups]

..He want's me to start right in with $1000 first week but I don't feel ready.

If he's making you feel under pressure to risk a certain amount of capital, maybe its best you don't team up with him at all. Chat about trading when you see him perhaps, but follow your own path. In my limited experience of a comparable situation its maybe better to subtly avoid talking to him about trading!

 

[Tesla.Lee]

Thank you for those invaluable words of caution...
I will definitely take them to heart, and educate myself as much as I can, before going live.

Enjoy the holidays coming up everyone.

 

[Atilla]

Thank you for those invaluable words of caution...
I will definitely take them to heart, and educate myself as much as I can, before going live.

Enjoy the holidays coming up everyone.

Have you considered taking trades in opposite direction to his. :whistling

:cheesy:

 

[neil]

scam setting up ?

"How I made $1000 per week" spam letters to follow shortly

 

[tomorton]

Thank you for those invaluable words of caution...
I will definitely take them to heart, and educate myself as much as I can, before going live.

Enjoy the holidays coming up everyone.

Be careful mate. No doubt every day-trader who went broke said they were doing it because they thought it was lower risk by not holding over-night. And they never got their stops hunted because they didn't enter any, they just watched their positions so there was no need. Etc. etc. And more such cr@p.

 

[timsk]

Be careful mate. No doubt every day-trader who went broke said they were doing it because they thought it was lower risk by not holding over-night. And they never got their stops hunted because they didn't enter any, they just watched their positions so there was no need. Etc. etc. And more such cr@p.

Aye Tom.
I suspect that Tesla.Lee's bro'-in-law has been predominantly long equities and/or equity indices. That would explain his success and, as you and I know (along with all the other contributors to this thread) - he's in for one hell of shock when 'the trend hits the bend at the end'.

Meanwhile, I've just taken out a 2nd mortgage and am now stuffed to the gunwales with Bitcoin.

 

[tomorton]

Meanwhile, I've just taken out a 2nd mortgage and am now stuffed to the gunwales with Bitcoin.

Finally! What took you so long to get on board Tim?

 

[neil]

Am I too late ?

Finally! What took you so long to get on board Tim?

Oh dear - am I also too late Tim

 

[KiwiPower]

this is one of them situations as i see it..
what works for me might not work for you
and what works for you may not work for me
all situations might be interpretated differently as per individual..
eg..i may see a double top and i think sell sell sell
someone may see what im looking at as a divergence in the market and think ..buy buy buy
even though we are both seeing the same thing..
best to work on your own stratagey and stick to what works for you..stratagies may be different or similar but it all depends on how the individual precieves them..hope i didnt confuse anyone with my ramblings..but i think you get my point

 

[Atilla]

this is one of them situations as i see it..
what works for me might not work for you
and what works for you may not work for me
all situations might be interpretated differently as per individual..
eg..i may see a double top and i think sell sell sell
someone may see what im looking at as a divergence in the market and think ..buy buy buy
even though we are both seeing the same thing..
best to work on your own stratagey and stick to what works for you..stratagies may be different or similar but it all depends on how the individual precieves them..hope i didnt confuse anyone with my ramblings..but i think you get my point

That's a great poem...