Starting to trade

[bypath3]

Right, this isn't really a statement or a comment or a question, it's just a ramble. Actually it's probably more like me sitting on the couch..

Ok, apart for some spread betting forays before, I just started to trade on a 10k self select isa. I've been reading up on trading for a couple of years now, and I know I need to take it live in some form to actually learn anything, so I decided to do it on my isa which as the cash is earning nothing, wtf, why not take a risk. At least I can turn any bad trades into long term investments and leave them run. Anyway, I've made a couple trades over the last 2-3 weeks

First went long loil, had a look at the charts, decided although it was high it had a bit left in it, went long, made 4-5% up until yesterday. Fair enough. Broker won't let me set stops for a dollar denominated fund even though it's traded on the ftse?!? i dunno, but anyway, watched it rally for a good few days now but today I had to go into college for the first time in a while and it tanked it while I was out. What do I learn from this? Don't trade anything your broker doesn't do stops on? Or make sure your watching all day while your in the market?

A few weeks ago HSBC was at about 563 trying 570 so set an order at 572.25. Thing is I made a limit order and not a stop limit order which is entirely my fault, and ended up going long @ 566. Ok it's my fault, but when I make the mistake of making a limit instead of a stop limit @ 572.25, when the underlying is @ 563 it should take place immediately, obviously they sat on it knowing full well they had something to play with until they filled it @566, 4minutes later. Anyway, I understand how broker's work so it's water under the bridge, anyway suffice to say hsbc never broke 570 and have continued all the way down to 510 and finished today @530. Anyway I'm in for the long haul, HSBC is the only bank with decent cash holdings compared to liabilities which is why i think it's the best of the bunch for an unavoidable appreciation in banks in the next 1-2years. Do fundamentals matter more then technicals when I'm considering longer timeframes? Does volatility matter in the grander scheme of thing ( as long as they don't go bust ) if i have 1x leverage?

Finally barclays. Took a gamble yesterday. Saw the fall, saw the reasons. My thoughts were an excess supply, this arab was already long billions, when his warrants convert he's gonna be long 2x as many billions, he doesn't want that kind of exposure, so he's just getting out and consolidating some profits. Anyway, thought it'd be a case of excess supply, lower price until it's mopped up; and when it is mopped up it'll again reach an equilibrium bar 1-2p. Again today I was away from my computer, but it droppped another 5%. Again I'm in for the long haul, it's an isa and i can wait until it comes back, even if it takes a year, i'm earning no interest on cash. BUT, if I was trading proper and not investing, is this a hint at technical being the bread and butter of trading?

I mean fundamentals are so subjective. Obviously there's something in me that wants to be that super trader that sits there thinking existing house sales + PCI => GDP => interest rate => exchange rate => £££ but then there must be traders that think the other way entirely, and who ends up right is right, and might not be next time. From what I feel at least, technicals are there, take them or leave them, it's subjective as far as you decide what your particular indicators are, but once you do it's almost surely objective and your in it for the long haul, does mixing in fundamentals increase the probabilities, or does it increase the volatilites?

And I don't like the look of that chair..

 

[HaloTrader]

1. At least I can turn any bad trades into long term investments and leave them run

2. What do I learn from this? Don't trade anything your broker doesn't do stops on? Or make sure your watching all day while your in the market?

3.Anyway I'm in for the long haul

4.Do fundamentals matter more then technicals when I'm considering longer timeframes? Does volatility matter in the grander scheme of thing ( as long as they don't go bust ) if i have 1x leverage?

5. Took a gamble yesterday.

6. Again I'm in for the long haul, it's an isa and i can wait until it comes back, even if it takes a year, i'm earning no interest on cash.

7.if I was trading proper and not investing

Right.

1. Bad idea, that basically means your gambling - Your entering with false reasons and then just hoping, hoping that its a long-term hold with no real understanding of whether a continuation will occur or whether the current price is the 10 year high.

Every time you enter a trade you have a specific place known as a stop loss that you have logically placed, which invalidates the reasons for your entries. And you EXIT and TAKE A LOSS at this level... If you hold several losing trades, you won't have any money to make any trades that win, and who knows they may turn into 10 year losing trades and in the end you've had enough you accept the loss with no progress.

Just to give you an idea, i enter and close trades by the end of the trade - When i enter, there is a technical reason for my entry and therefore my stop loss is where this technical reason is no longer valid... In general my target is 2 or 3 times my stop loss - Therefore even if i win 50% of trades... I still win cash.

There is no logic to having a losing trade and holding it - I call it incompetance.

2. You've learnt that you didn't have a plan for your trade, you didn't manage it properly because you had no plan. You learnt you haven't got the best broker by any means. If you are watching the market all day you must become much more productive in your entries and stop losses though.

There is no answer to why you lost on your oil trade - But i can guess that 1. You didn't have a very good entry reason other than guts and a bit of news that you probably don't fully understand the economical impact it would directly have on oil and 2. You didn't even have a manual stop loss that you planned to execute... You probably entered on momentum and far along the line, AKA a late signal and therefore become the 'Greater fool'. If i enter a trade i say. Stop loss 2% away, Target 4% away. Entry, above the consolidation breakout for example. Now my trade will either hit my stop loss or my target. That is the plan. The Plan.

You think someone like you with no plan, can take money off professional traders and others who have worked extremely hard in understanding all this to be profitable. I see it as you getting married and i turn up on the day, having never met your wife and despite you giving her everything she ever wanted etc etc, i say get your tits out and she goes and we go off for some fun. Bad example.

3. Your only saying that because you can't accept losing. That wasn't your plan, you just said that after to feel better. Your entry should be explosive and profitable, not a -5on the next day and ' Oh well, i'm in for the long haul now' - You need a plan. Plan.

4. Volatility matters if you want to make money. A trader i know who has called bear and bull markets, doesn't stay in it the entire time, every pullback he exits and re-enters for safety. You can make money on the ups and downs and if you look at any market that casually goes up, you'll see the pullbacks - If entered on the high could have very much damaged your account 20-30% +

This question you've asked all depends on your plan - Personally i use volatility to enter long and short etc etc - Whats your plan? Are you a long-term trader who enters with fundamental reasons and therefore regardless of pullbacks will stay in aslong as the fundamentals are there.

I've found that fundamentals aren't explosive, no quick profits in 3 weeks ... And at times, not even correct. The only fundamentals i use are the IBD100 specification and them stocks can fly... But ONLY AFTER a technical cup and handle has emerged. So personally i forget the fundamentals and search for the cup and handle.

Its all about your plan - Fundamentals aren't more important on a higher time-frame in my opinion, technical still prevails, fundamentals to me just seem... Random and those that make money from it, i think are lucky in that they enter a bull market on fundamentals in a stock with no stop loss and hold - I see it as ignorance but i can see how that works, in a bull market though regardless of fundamentals its difficult not to profit.

You need a plan of entry and exit, a selected number of chosen markets, a stop loss and target - You have to accept you're going to lose alot of trades, the winning trades will win more money than the losers lose, so slowly you'll make a nice amount when you get good.

5. Took a gamble yesterday... Thats not trading. Thats like a business coming to me and saying - The clothes were selling good, were in profit, going to go down Ladbrookes and see if old Yorke Shotgun can win this horse race.

Its a business. Businesses have a plan. Gambling has nothing to do with trading, probability yes, gambling no.

6. 'Even if it takes a year' Seriously bad.... You have no plan ... Thats just gambling by the sounds of it, i don't know cause i didn't study your entries but it sounds as if your making it up as you go along. Interest rates won't lose you money remember. You don't know how long it'll take to get up there, 1 year, 2 days... Its not the point. You need a plan, how can you expect to be profitable consistantly entering trades and when they aren't working, saying you'll hold them. Get your money out and take a trade that'll earn you cash in 1 week, not 1 year!

7. Investing, in my eyes - Is a word to coverup bad trading. Investing should have similar rules in my opinion - Entries, Stop loss, Target? Exit signal, psychological rules, money management a plan - And therefore its trading.
People say they invest when really they are just taking a gamble, entering the market, shuving money in, hoping for profits, like when i lost £20 on old Black Apalche in the grand national - Sure it was fun but ? I don't tell people that i'm an investor when i bet on Black. A


I was going to reply sarcastically to this thread, then i realised i always do that so i thought i'd try be more constructive for once. Hope you understood what i said and can take some of it onboard.

 

[HaloTrader]

One more thing.

I think a 'super trader' isn't someone who entirely understands fundamentals. Its someone with a plan, business plan. That they execute day in day out, for weekly profits or monthly at worse. With money management, consistantly and an edge. People that can make profits every month aren't gambling they know what they're doing. Those that don't really know when they'll make money are just.... Passing the time i guess.

 

[bypath3]

Christ, I didn't realise how bad I actually sounded.

Just got home last night after a few, turned the computer on, thought sh*t and fancied a whinge.

Of course your right on all accounts, I've just rushed to get the cash invested somewhere instead of it just sitting there. I know I need a plan, hell, everything I've read so far is about how important a plan and money management is, I just wanted to make a few trades while I was making one, but your right, without one it's just gambling.


Cheers for your reply anyway mate, much appreciated..

Guess I'll get planning

 

[Masquerade]

If you want to do stocks i'd recommend you check out a book called "The Naked Trader" - it's pretty basic and may help you out a bit. The Naked Trader: How Anyone Can Make Money Trading Shares: Robbie Burns: Amazon.co.uk: Books

You can even flick through it in Smiths or some shop before buying it. Also note you even said "Finally barclays. Took a gamble yesterday...." Try to stop punting on things. Trading's speculative enough as it is.

 

[bypath3]

I actually bought that book a couple of years ago, was dissapointed with it being pretty basic and obvious stuff, and it's not really ''trading' trading is it; although I understand why you recommended it to me with the cr*p I wrote up top!
I think at the moment I'm trying to do both the 'picking' stock thing, and the short term week/day trading thing, and it's not really going to work, I mean every £1000 trade I make I'm down 2.5% straight away from commissions and stamp duty. So I just need to stop doing things in my isa, stock pick and invest long term and then get some practice in doing proper planned rule based technical stuff on a small spreadbetting account.