New - questions on news and first trade

[tom.paper]

Hey everyone!
I'm right in the beginning to this whole journey and after looking around the forum I still have a few questions stuck in my mind. My questions may be asking for subjective 'answers' but I don't feel I'm learning efficiently at the moment.

Briefly, my current situation is I'm in my early/mid 20's, don't have economics education 'yet' (interested in studying after I finish my accounting course), small capital but want to paper trade currently anyway, I'm interested in a majority of < 1 year holds in my portfolio (as specific I can be with my knowledge) and possibly more importantly I'm not yet familiar with many companies.

I am based in Australia and decided with the overwhelming amount of global stocks that I'd first get comfortable with local ones, which brings me to my questions:

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1. Taking the initial steps to trading how many different sources of news is realistic to look at and to what depth?

Right now I read the business section of Australia's Age paper every day and Financial Review on weekends, but by the end of the week I feel I've barely learnt anything of value. I don't know what I'm really looking for in the news (other than profit results) and I don't know if I should be reading every word of every article, or if I'm reading about nearly enough companies.

2. To begin my paper trading, and being as familiar with companies as an exchange student in a new school looking for friends, what approach would be a relatively decent one?

I understand many things are subjective and personal but I'm at a complete loss of how many companies to choose and how to narrow a selection down. At this point I'm thinking of a top down view, looking at sectors and choosing about 3-5 companies from different sectors to start with until I'm familiar with them.

3. Lastly, after choosing some companies, is it necessary to not only follow each particular company but their competing rivals in depth as well?

This may be a given that you should follow the rivals but as I'm very new I'm not sure how in depth I should look at them and again, what to compare other than net profit.
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After looking through the sticky posts and some other questions in this forum I still don't feel competent with my understanding on how to treat these questions above (perhaps overthinking things).

I apologise if these have in fact been answered and I failed to find them but it would be immensely appreciated for response and/or guidance regarding my concerns.
Sorry for the wall of text.

Thanks for reading!

 

[malaguti]

you probably need to focus on what your objective is going to be
trying answering these in red, let me know how you get on

I'm interested in a majority of < 1 year holds in my portfolio (as specific I can be with my knowledge) and possibly more importantly I'm not yet familiar with many companies.

<1 year could be anything from 1 second to 364 days, you might want to narrow that down. are you looking to hold for minutes, days, weeks or months and what exactly is your hold criteria? you hold til when?


1. Taking the initial steps to trading how many different sources of news is realistic to look at and to what depth?

I don't know what I'm really looking for in the news (other than profit results) and I don't know if I should be reading every word of every article, or if I'm reading about nearly enough companies.
you have to know what you're looking for or stop reading. why are you reading what are you trying to get from this other than acquiring an encyclopedic knowledge which still has no end in mind? what are you hoping to gain?
results by themselves are meaningless. if a company makes a loss, what does that mean is it good or bad? its all relative is the answer. its great if that loss what
substantially smaller than last year. so a result means nothing
are you only interested in fundamentals, or are you ever going to look at a chart and perform technical analysis?

2. To begin my paper trading, and being as familiar with companies as an exchange student in a new school looking for friends, what approach would be a relatively decent one?

I understand many things are subjective and personal but I'm at a complete loss of how many companies to choose and how to narrow a selection down. At this point I'm thinking of a top down view, looking at sectors and choosing about 3-5 companies from different sectors to start with until I'm familiar with them.

its all relative again. you should start with the overall market, what state is it in. of up then you would then look at the top performing sectors, if its down you would look at shorting the worst performing sectors. dependng on how many sectors, try choosing the top 5 and from there, what do you think? the top performing companies within those top performing sectors..its all relative

3. Lastly, after choosing some companies, is it necessary to not only follow each particular company but their competing rivals in depth as well?
this was just answered, you have your top performing sectors, you have your top performing companies you can now stop reading and start focusing on your objective. which comes back to the first part. what's your objective making a profit isn't a good enough answer as its all relative? your profit should potentially outweigh any risk you would have potentially have incurred
which is again back to the first point, whats your holding criteria. when do you exit which means you need to know at what circumstance are you going to enter?
answer these questions, you might know then what you are looking for in your reading

 

[tom.paper]

you probably need to focus on what your objective is going to be
trying answering these in red, let me know how you get on

Hey malaguti. Thanks for the reply, you made some good points.

Yes, I should elaborate. My time frame would be larger than 1 week, not really looking at day trading. Maybe holding for 3-6 months would be more appropriate. I'm less interested in dividend shares and more concerned with capital gains (not disregarding them but I'm talking about the majority of my portfolio).

You make a good point regarding my first question. When I hear fund managers talk, to me it is as if they ARE an encyclopedia of companies and their history so I thought that's what is required. I suppose once I'm following a company the news related to it will be clear in what I look for, but when other traders read the daily news what do they look for? Just whether a company sounds like a potential investment, or major events?

Regarding analysis, and I'm learning about both, I like the idea of fundamentals primarily, then a chart or two. But at this point it's less about TA. (I've just began going through NASDAQ's 12 steps on considering fundamentals for a company).

I do have a habit of overthinking things when learning for the first time. I get worried of learning entirely wrong or inefficiently!

I'll keep the thought of "what is my objective?" in my mind at all times and continue to clarify/revise it over time.