Serious help needed for eager beginner!

[mikea01]

Hi to all. My name is Mike and I have been registered with Trade2Win for just a few weeks now. I am just about to head out on that long road of being a trader and am starting out as an absolute beginner. I have already discovered over the last month of my research that there are hundreds of web sites out there offering their secrets to success in the stock markets all at a cost of course. I have not spent any money on these and do not intend to. There are no secrets to be learnt apart from hard work and that does not even guarantee you success. So far, the very first thing I did was to attend a free 3 hour Win Investing seminar and obtained a free DVD with some useful information on it. I did not sign up for a 3 day course costing £2000 as I feel I can find the information I need elsewhere for a fraction of the cost. I have decided that I want to swing trade because I am in full time employment. I have downloaded the Trading Plan Template from this web site and am now starting to do my trading plan. I have also purchased and literally just started to read ‘Marc Rivalland on Swing Trading’. I have also been looking at the Sharescope Plus software although I have not yet signed up for anything. I also search the internet for a few hours each night to try to find out as much information on the subject as I can. I have not even started to paper trade yet. I have a starting amount of £2300 that I can add £300 to each month. My main reasons for wanting to trade was because I needed an interest outside of work that would tax my brain, and that I could devote some time to every day and I know that trading will suit me. Long term, of course I would like to earn a steady income from this, but I am also aware that 95% of traders fail and so it will be hard work.

As an absolute beginner, I don’t know if what I’ve done so far is correct. I don’t know how to choose the correct broker (or even how to use one yet) or what markets or share types that would be best suited for me. My biggest worry is the wrong selection of reading material in my quest for knowledge. I don’t want to find say in 3 months time that all my work has been wasted from bad material selection. I would be really grateful for any advice out there. Many thanks. Mike.

 

[dbphoenix]

What you've done so far is absolutely correct, at least insofar as you haven't spent anything.

As for brokers, look to the reviews for help, but basically you want somebody who's fast, accurate, and cheap. Many people -- including me -- like Interactive Brokers, and if you're going to trade stocks, or at least nothing exotic, IB might be just fine for you.

As to the wrong choice of reading material, there probably isn't one. This isn't to say that what you read initially won't later turn out to be nonsense, but I suggest you not allow someone to tell you in advance whether it's nonsense or not. If you approach trading correctly, you'll discover for yourself soon enough whether what you've read is nonsense or not.

There's certainly plenty enough to read, from stacks of books on The Nature Of Markets to How To Make A Million Dollars A Day Trading Naked In Your Kitchen By Using This Proprietary Stochastic Setting, Yours For The Paltry Sum Of [$]. You can start with the "classics" a la Livermore, or you can delve into the psychology of it all with Douglas. If you're interested in a list, there are plenty. But you may also want to graze the Knowledge Lab here since many of the contributors -- such as Vad Graifer and Brett Steenbarger -- are authors or traders or both. And it's free. And the threads devoted to each article enable you to ask questions.

That should be enough for tonite . . .

 

[mikea01]

Thanks for your help. I'll carry on with what I'm doing so far then, while also having a good look at the knowledge lab too.

What you've done so far is absolutely correct, at least insofar as you haven't spent anything.

As for brokers, look to the reviews for help, but basically you want somebody who's fast, accurate, and cheap. Many people -- including me -- like Interactive Brokers, and if you're going to trade stocks, or at least nothing exotic, IB might be just fine for you.

As to the wrong choice of reading material, there probably isn't one. This isn't to say that what you read initially won't later turn out to be nonsense, but I suggest you not allow someone to tell you in advance whether it's nonsense or not. If you approach trading correctly, you'll discover for yourself soon enough whether what you've read is nonsense or not.

There's certainly plenty enough to read, from stacks of books on The Nature Of Markets to How To Make A Million Dollars A Day Trading Naked In Your Kitchen By Using This Proprietary Stochastic Setting, Yours For The Paltry Sum Of [$]. You can start with the "classics" a la Livermore, or you can delve into the psychology of it all with Douglas. If you're interested in a list, there are plenty. But you may also want to graze the Knowledge Lab here since many of the contributors -- such as Vad Graifer and Brett Steenbarger -- are authors or traders or both. And it's free. And the threads devoted to each article enable you to ask questions.

That should be enough for tonite . . .

 

[Tuffty]

Regarding the reading of trading books it's a difficult one. As dbp says you may well read nonsense but won't know it untill you discover for yourself it it is or not. Likewise if it's a good book then it won't be fully appreciated untill later on down the path. When I read the Market Wizard books (by Schwager) I didn't appreciate the message about the methodology must suit you until way down the line - it went straight over my head. (eg. You think swing trading will suit you because of your job, what you're really saying is that it suits your job, not you). The only way to find you what really suits is to try a few things on, make mistakes and learn.

Good luck.

 

[zagreb]

free route is often most expensive one (in terms of time and money lost). Rich families continue to be rich because new generations learn sound advices from experienced ones. They learn what works and what doesn't

FX on Net and in books contain 80-90% useless info for your profitability (including many famous books, but I do not want to start flame war, so 'no names please'). If you have really good mentor, you can become continually profitable in less than 6 month. Solution lies where you least expect it.

By reading posts on those boards, I see that great majority have choosen expensive route (that was my path too).

 

[dbphoenix]

The only way to find you what really suits is to try a few things on, make mistakes and learn.

Good luck.

If I may add, tho, there's no good reason to go bankrupt doing so. You'll have a lot of paper trading to do before you're ready to trade for real.

Take your time. The market isn't going anywhere.

 

[mikea01]

Thanks for taking the time to reply. All advice is gratefully received.

 

[dbphoenix]

One other comment, Mike. Get as much material as you can from the library. They might even have the swing trading book you bought. And they will often buy something on request if they don't have what you're looking for. And perhaps they will borrow from other libraries, as they do here in the States. You can waste hundreds of dollars/pounds on useless books, and if you do find something you want for your shelf, then you can go ahead and buy it.

 

[alpha_monkey]

Thanks for taking the time to reply. All advice is gratefully received.

This may provide a useful starting point.

1. Immerse yourself in books.
2. Come up with a plan of attack.
3. Paper trade your plan, which includes reacting to losses and accounting for them.
4. Use real money and small bets.
5. Stay in the game and learn over time. i.e. chop wood, carry water.

I found the following books useful.

Trading Psychology
Trading in the Zone - Mark Douglas

Psychology
Think and Grow Rich - Napoleon Hill
In Pursuit of Excellence - Terry Orlick
Introducing NLP Neuro-Linguistic Programming - Joseph O'Connor, John Seymour

Technique & Analysis
Technical Analysis of the Financial Markets - John Murphy
Japanese Candlestick Charting Techniques - Steve Nison
The Way to Trade - John Piper
Come Into My Trading Room - Alexander Elder
Street Smarts - Laurence Connors, Linda Bradford Raschke

Systems
The New Trading Systems and Methods - Perry Kaufman
Original Turtle Rules - Curtis Faith
http://www.originalturtles.org

Background
Reminiscences of a Stock Operator - Edwin Lefevre
Market Wizards I - Jack Schwager
Market Wizards II - Jack Schwager

 

[dbphoenix]

If we're providing lists, this is the one I have at my website. FWIW.

 

[TheBramble]

Psychology
In Pursuit of Excellence - Terry Orlick

That's an interesting choice A-M. I thought Orlick was a pure Sports performance enhancement type?

 

[alpha_monkey]

That's an interesting choice A-M. I thought Orlick was a pure Sports performance enhancement type?

He is.

I feel the book has applications for trading, though. Aligning the mental framework with success / achievement...

 

[TheBramble]

You know, just when you think you're through with your Amazon order for the day....

edit: mikea01 - you're never done learnin'...

...and books are absolutely the cheapest way to learn.

...and some posts by some members on some bulletin boards...

 

[timsk]

One other comment, Mike. Get as much material as you can from the library. They might even have the swing trading book you bought. And they will often buy something on request if they don't have what you're looking for.

Dbp,
Try to do as you suggest above in my local library and the fuddy duddies behind the counter will call the men in white coats and have you banged up in a loony bin in no time at all! If you would like to visit the U.K sometime, do PM me; you're very welcome, anytime. Once here, I will be able to enlighten you about the realities of this third world country 'across the pond' - otherwise known as the U.K.

Tim.

 

[dbphoenix]

Then buy it used from Amazon and resell it there. Or set up a local trading co-op in your town.

Where there's a will, there's a way.

 

[Charlton]

You're heading in the right direction

there are hundreds of web sites out there offering their secrets to success in the stock markets all at a cost of course. I have not spent any money on these and do not intend to. .

This is a great start - the secret is hard work, as I have just noted you say in your next paragraph !

So far, the very first thing I did was to attend a free 3 hour Win Investing seminar and obtained a free DVD with some useful information on it. I did not sign up for a 3 day course costing £2000 as I feel I can find the information I need elsewhere for a fraction of the cost.
.

Quite correct - The best things these freebies can do is to demonstrate to you that you can find all the material elsewhere at a fraction of the cost and by doing the research yourself you will probably achieve more. I am not sayin that a course cannot teach you some useful things, but it is all available elsewhere.

I have decided that I want to swing trade because I am in full time employment.
.

There are other possibilities such as forex where the market is open most of the week, but your choice seems reasonable.

I have downloaded the Trading Plan Template from this web site and am now starting to do my trading plan.
.

This is an excellent document. It needs to be a "living document", especially at first because it will need to be adjusted as you gain experience. However this adjustment should be made out of hours. This means that you trade in line with this plan and don't allow deviations caused by emotions. To protect yourself, then, the plan should be well-developed in the area of exit strategies and money management.

I have also purchased and literally just started to read ‘Marc Rivalland on Swing Trading’.
.

Others have made excellent suggestions for reading matter. To begin with a few good Technical analysis books should be throughly read and re-read. Then you need to apply the lessons learnt to charts. Don't be tempted to buy too many books at first otherwise you will be swamped by indicators, theorems, different opinions etc. Each one will appear to have its attractions and will seem to declare the ultimate truth. They will also be contradictory and this will lead to confusion. Concentrate on price, volume and the charts - try to analyse how these move and what patterns you can determine, before looking at the host of indicators available. Many people on this board do not use indicators at all, or if used, only as secondary confirmation signals.

I have also been looking at the Sharescope Plus software although I have not yet signed up for anything. I also search the internet for a few hours each night to try to find out as much information on the subject as I can. I have not even started to paper trade yet.
.

There are many sources of software and brokers. You can find recommendations on various threads. Some brokers provide their own software for both making orders and charting and these are generally free. Many will have demo accounts that you can sign up for e.g. 30 days. This is a good way to try out different brokers' platforms and to ensure that you don't buy when you meant to sell !! It also gives you the opportunity to try out strategies and use charts without spending any money on eitther charting software or trading. However bear in mind that when you trade with you own money then emotions can take over. Also look at other aspects of the broker such as their reputation, bid/ask spreads, account currencies, fees etc

Later you may want to purchase charting and other software if you find restrictions in those provided free. Again many of these can be downloaded in demo mode, so you can try them out. Many suppliers also allow you to download user manuals free. There are also often broker or software user groups, where you can guage the problems or otherwise that real users are having. Some of this software can be very technical - akin to a programming language - but if that is your thing then you might find it attractive, because of its flexibility.

I have a starting amount of £2300 that I can add £300 to each month. My main reasons for wanting to trade was because I needed an interest outside of work that would tax my brain, and that I could devote some time to every day and I know that trading will suit me. Long term, of course I would like to earn a steady income from this, but I am also aware that 95% of traders fail and so it will be hard work.
.

That is not alot to work with, so you have to be very fortunate/a born natural to avoid being hit by dealing costs and losses eating into your capital. You can increase your profits by trading on margin, BUT ALSO YOUR LOSSES WHICH CAN WIPE OUT YOUR ACCOUNT.

As an absolute beginner, I don’t know if what I’ve done so far is correct. I don’t know how to choose the correct broker (or even how to use one yet) or what markets or share types that would be best suited for me.
.

You seem to be doing all the correct things. Brokers, markets and instruments are all matters of personal choice and circumstances. As I said earlier you can try out different ones for free using demo accounts. Some brokers such as Interactive Brokers (IB) enable you to trade different markets and instruments from the one account. Others specialise in some area such as Forex.

My biggest worry is the wrong selection of reading material in my quest for knowledge. I don’t want to find say in 3 months time that all my work has been wasted from bad material selection. I would be really grateful for any advice out there. Many thanks. Mike.

Don't worry too much about this. Choose a few books from the suggestions already made, but apply them to the charts. As I said earlier don't overwhelm yourself with too much. Keep it simple and add to it later if necessary.

Good trading

Charlton

 

[mikea01]

Since I put my post up approx 24 hours ago, there's been a load of advice offered to me here which all of it I have taken on board. Thanks to everyone for that and to Charlton for your comments. I think one of the earlier replies from Zagreb said 'free route is often most expensive one (in terms of time and money lost)'. I'm not so sure though. If I read a book that proves to be useless, then I have only lost a small amount of time and money and I can then move onto the next book. On the other hand, if I pay for expensive seminars that do not live up to my expectations, then in monetary terms, that could be disasterous for me. I do only have a small starting fund which is money that I can afford to lose, but I don't want to lose it before I even start trading though.

To everyone, I try to log on to Trade2Win during my short lunch break at work but don't always get the chance to reply, so you may find that it can be up to 24 hours before I answer back. But thanks again. It's been good to get feedback on what I've been doing so far and the guidance and book recommendations.

 

[timsk]

I think one of the earlier replies from Zagreb said 'free route is often most expensive one (in terms of time and money lost)'. I'm not so sure though. If I read a book that proves to be useless, then I have only lost a small amount of time and money and I can then move onto the next book. On the other hand, if I pay for expensive seminars that do not live up to my expectations, then in monetary terms, that could be disasterous for me.

Mikea01,
This issue is one that I wrestled with when I started out. Tutors, coaches, mentors etc. can be very beneficial to some traders but, IMO, the best time to invest in one is when you have a very clear idea of the instruments and time frames that you want to trade. For example, a trader who ends up swing trading Forex might regret the time and money invested in 1-2-1 coaching with a Nasdaq day trader. There are well regarded coaches and then there are the out and out rogues and it can be hard for a novice to distinguish betweebn the two. Interestingly, the Win Investing seminar you mentioned is, I think, promoted by Darren Winters - a 'trainer' well known to T2W members. He has several long threads devoted exclusively to him which contain very little positive comment! (If you're interested, go to 'Search for a Post' in the drop down menu under the 'Discussion' tab at the top of the page). So, coaches can comprise a key part of any trader's development once the 'student' has a fairly good grounding in the basics and knows what they want to achieve with their trading as well as a reasonable idea of how to set about the task. Just my thoughts, others WILL disagree!
Tim.

 

[blackcab]

I think one of the earlier replies from Zagreb said 'free route is often most expensive one (in terms of time and money lost)'. I'm not so sure though. If I read a book that proves to be useless, then I have only lost a small amount of time and money and I can then move onto the next book. On the other hand, if I pay for expensive seminars that do not live up to my expectations, then in monetary terms, that could be disasterous for me.

I think what zagreb meant was that learning from free resources could end up costing you as you put poor learned techniques into practice in the market, and lose money. The equation 'you get what you pay for' doesn't apply like it does elsewhere. You could ask whether you'd rather get a learning resource for free, put it into practice, find out it's rubbish and lose £1,000, but learn from that loss and regard it as a £1,000 lesson, or just buy a £1,000 lesson in the first place which may put you in profit straight away. But then again it may not - it may be as bad or worse as the freebie; that's the risk in paying for education. And you may actually learn more from your loss, because it's first-hand personal experience, than you would through the better quality paid-for resource. But then again you may learn nothing from the loss and repeat it over and over again. Eee, by 'eck, so many possibilities.

 

[chump]

"Eee, by 'eck, so many possibilities"... aye lad tha's raight !

If you're smart (most are smart enough ..that is you have learned to count on fingers and toes) and you're young enough then you don't need to pay for what you need ...but you do need patience , discpline and some commonsense so that you learn at least the basics of what you need to know BEFORE you start your run for the all time rich list that you know awaits you.
Space between ears , engage , employ and don't open your cheque book until you have especially given your limited capital..use the learning period and work on accumulating capital whilst you are in it.