New career in the financial markets

[jimmydean]

Hello everyone,

My question to you is: can a private investor i.e. joe bloggs earn a decent living from investing in the stock market?

Background: I'm a complete novice to the financial markets. I am currently working in a professional role in the community which pays reasonably well. However, I have become disillusioned with my choice of career and I want to change. I'm ready to change. This decision has been made after considerable thought. I have always been interested in the stock market. In the past I have made a small number of trades in my SS ISA but nothing major. Is it viable that someone, after research and study, can become a successful private investor? Enough to make a career out of it?

I'm 27 and not getting any younger :whistling

I value your thoughts and opinions on this topic and any help you can provide is very much appreciated.

Cheers.

Jim

 

[timsk]

. . . I'm 27 and not getting any younger :whistling

Hi Jim,
Welcome to T2W.

Without wishing to sound pedantic, you ask if it's possible to make a living from investing - as opposed to trading. Keep in mind that T2W focuses almost exclusively on the latter. There's a big difference in approach between the two disciplines; the only real common denominator being that practitioners of each attempt to make profits from price fluctuations in the markets. Assuming you meant trading, then the one word answer is yes - it is possible. However, just as it's possible to run 100 metres in under ten seconds, whether or not you can do it is another matter entirely. I realise this isn't especially helpful as you want to evaluate your own chances of becoming one of the ones who are profitable. Unfortunately, no one can tell you that, and those that do will usually say you can be profitable if you buy their course, DVD or seminar etc.

My recommendation would be to assume not unless or until you can prove otherwise to yourself. This will take time, probably quite a long time. You might be the exception that proves the rule, but most traders take years to get to a point of consistent profitability. So, in terms of a career change, trading probably isn't the best career option to attempt full time from a standing start. Other members may disagree, but I suspect most would counsel learning to trade in your spare time without the pressure of having to make a profit in order to pay the bills and put food on the table. If you're determined to press ahead regardless, your best bet to speed up the learning process might be to get on board with a reputable proprietary trading firm. For more details on this, check out this FAQ: How Do I get a Job Trading?

To help you further evaluate whether or not trading is the right path for you, read the FAQs and Stickies linked in the welcome e-mail you received when you joined.
Tim.

 

[jimmydean]

Thanks Tim. I really appreciate your input on this. It's clear to me now that I've made an error of judgment. I was in fact talking about investing i.e. the medium term and long-term investments. I know this forum is specifically for 'traders' I just hoped there was some advice for investors also. However, in hindsight I should probably find an investing forum.

Although, trading is quite interesting to me. It's probably the large gains that can be made that make it so attractive but I am also aware of the risks involved. If it is something I want to pursue then I'll make sure I have done my research beforehand.

Thanks again for your advice and guidance.

Jim

Hi Jim,
Welcome to T2W.

Without wishing to sound pedantic, you ask if it's possible to make a living from investing - as opposed to trading. Keep in mind that T2W focuses almost exclusively on the latter. There's a big difference in approach between the two disciplines; the only real common denominator being that practitioners of each attempt to make profits from price fluctuations in the markets. Assuming you meant trading, then the one word answer is yes - it is possible. However, just as it's possible to run 100 metres in under ten seconds, whether or not you can do it is another matter entirely. I realise this isn't especially helpful as you want to evaluate your own chances of becoming one of the ones who are profitable. Unfortunately, no one can tell you that, and those that do will usually say you can be profitable if you buy their course, DVD or seminar etc.

My recommendation would be to assume not unless or until you can prove otherwise to yourself. This will take time, probably quite a long time. You might be the exception that proves the rule, but most traders take years to get to a point of consistent profitability. So, in terms of a career change, trading probably isn't the best career option to attempt full time from a standing start. Other members may disagree, but I suspect most would counsel learning to trade in your spare time without the pressure of having to make a profit in order to pay the bills and put food on the table. If you're determined to press ahead regardless, your best bet to speed up the learning process might be to get on board with a reputable proprietary trading firm. For more details on this, check out this FAQ: How Do I get a Job Trading?

To help you further evaluate whether or not trading is the right path for you, read the FAQs and Stickies linked in the welcome e-mail you received when you joined.
Tim.

 

[timsk]

. . . Although, trading is quite interesting to me. It's probably the large gains that can be made that make it so attractive but I am also aware of the risks involved. If it is something I want to pursue then I'll make sure I have done my research beforehand.

No worries Jim.

As a general rule of thumb, to make 'large gains' from investing, you need one (and sometimes all three) of the following:
1. Patience
2. A large capital outlay
3. Luck

Investors are in it for the long haul; very few make or expect large gains to come quickly - hence the need for patience. Unless you happen to put all your eggs in one basket which subsequently does phenomenally well (think of investing in Microsoft, Apple or Google when they were start ups), you'll need a fair amount of capital at your disposal.

Picking out companies like those mentioned above - before they become big - will require a certain amount of good fortune. If I were in your shoes, I'd probably attempt to invest along the lines adopted by this chap:

Chris Camillo

Needless to say, it's probably a good idea to read up on Warren Buffet and, if you reject his ideas, have clear reasons for doing so.
Good luck!
Tim.

 

[gerryg]

Stock investing is not about 1-2 K dollars. You need much more to get reasonable profit out of there. On the first stages of your financial career I would advice you to gon into trading yourself. It is additional plus to understanding investment nature

 

[malaguti]

Thanks Tim. I really appreciate your input on this. It's clear to me now that I've made an error of judgment. I was in fact talking about investing i.e. the medium term and long-term investments. I know this forum is specifically for 'traders' I just hoped there was some advice for investors also. However, in hindsight I should probably find an investing forum.

Although, trading is quite interesting to me. It's probably the large gains that can be made that make it so attractive but I am also aware of the risks involved. If it is something I want to pursue then I'll make sure I have done my research beforehand.

Thanks again for your advice and guidance.

Jim

Hi Jim, I wouldn't be put off by Tim's words. I generally now focus on longer time frames as it suits my time constraints, however I'm still here until T2W kick me out for not being a "trader". thanks Tim

I would say a few things which differs from Tim's: Anything I've learnt about investing simply stems from what i learnt from the shorter time frames. We're only talking about a timeframe, be that daily, weekly, monthly etc.
"In it for the long haul" doesn't mean that I don't focus on every important aspect that every member here should look at:
Timing of entry, timing of exit, position sizing/money management, your choice of market, platforms to use, indicators to use (or not use)
Your (my) "strategy" may be slightly different, but I would advise you to still be a member of this forum and learn these parts just as if you were trading a 3 minute chart.
Its all about timing. Just because you may be in it for the long haul you don't buy a share on the way down, you buy when its on the way up. So you need to understand concepts of trend, sector rotation etc etc which is no different if you were holding for an hour
pm me if you want to discuss a bit further outside of this thread

and yes, its possible to make a living from investing

 

[timsk]

Hi Jim,
Apologies if I gave the impression that you're not welcome here! That wasn't my intention at all - so do stick around - and ask malaguti to expound his ideas on this thread so everyone may benefit. IMO It's always worth reading his comments!

Tim.

 

[jimmydean]

I appreciate both inputs!

No problem Tim I didn't get that impression at all.

Malaguti, would you recommend I utilise these forums to develop my own strategy which I can apply to 'investing' i.e. the techniques used in trading?

As far as I am aware, the term 'investing' involves buying and holding stocks, funds etc and gradually building up a portfolio over the moderate to longer term in order to make a profit. Whereas, 'trading' involves the short-term buying and selling of stocks/commodities based on leverage.

Perhaps I'm being far too generic here.

I'm sure theres somewhere in the middle where I might stand using the techniques and methodologies taken from trading and applying them to longer time frames.

Whilst we're on the subject. If you could recommend only one book\learning material for novice investors/traders what would it be?

Again, appreciate all the help and guidance!

Jim.

 

[malaguti]

I appreciate both inputs!

No problem Tim I didn't get that impression at all.

Malaguti, would you recommend I utilise these forums to develop my own strategy which I can apply to 'investing' i.e. the techniques used in trading?

As far as I am aware, the term 'investing' involves buying and holding stocks, funds etc and gradually building up a portfolio over the moderate to longer term in order to make a profit. Whereas, 'trading' involves the short-term buying and selling of stocks/commodities based on leverage.

Perhaps I'm being far too generic here.

I'm sure theres somewhere in the middle where I might stand using the techniques and methodologies taken from trading and applying them to longer time frames.

Whilst we're on the subject. If you could recommend only one book\learning material for novice investors/traders what would it be?

Again, appreciate all the help and guidance!

Jim.

without a doubt, Jim.
Try this thread for one of the best investment methods, and one of the most open and forthcoming threads on a particular topic
http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis.html
Go through the thread, all of it. and get the book. go onto the other site he created specifically for this topic
http://stageanalysis.net/

Investing is NOT about buying and holding. Any fool can do that, and then see his capital drain waiting for the trend to turn, realising he could have bought so much lower. or seeing his profits sink as the market tops and still he does nothing
The other fool will keep buying as the stock gets lower, thinking it has to turn. It doesn't, that's why timing is essential.

Secondly the book by duplessis, the definitive guide to P&F.
this thread is a great way of understanding P&F
http://www.trade2win.com/boards/technical-analysis/86964-learning-read-price-action-p-f-charts.html
Dentist (the guy who started this thread) focuses more on the short term, i focus on the longer term.
Both of these will give you the best grounding for investing in my opinion.

any questions on either of these, just let me know

good luck Jim