A Soldier’s Strategy
FTSEBeater – thanks for the table on timings. This naturally leads me to ponder how to select stocks that exhibit Postion/Swing rather than EOD characteristics. But this perhaps jumping ahead a stage…
Hullo NastyItch. Excellent post and if I knew how to vote for it then I would !
(and of course anyone else who wishes to join in)
Okay then. (However, in the time it has taken me to write this tonight, TBS has replied but, FWIW, I’m still going to post).
I have also been sorting through the posts on the IPT board (TMF) and would also recommend it. I have read some thought provoking posts on the psychological aspects of trading by, or involving, TBS over on Bullet Points too. What follows is not as knowledgeable as some postings on IPT but hopefully it will help (me) move forward.
1. What do you want to get out of this? - I know you have a target of replacing the day job, but in purely physical terms, how much hard cash do you have to make per year?
- I want to determine if I can ascertain a standard of TA knowledge and psychological well being level to facilitate making a living. As with NI: pre tax £150, after tax £100, a day would be targets.
- A life that I feel I am more in control of. Am tired of being at the whim of others and the daily grind that leaves me exhausted before I step through the front door at night. There must be another way. I have a genuine interest.
- Timing. I had initially thought that I’d see if I had the aptitude for successful trading by 31 Dec 2003 but 2-4 years…is this allowing for a day job too?
Why have I chosen specific markets
Well, at this stage I haven’t. The rudimentary steps I have taken thus far have been EOD paper trades on UK stocks, mainly because of familiarity. I have no strong preference for this, though, and indeed this is part of Trading Stumbling Block #1 – What to trade I realise this is linked to time available and my temperament etc, but until I find out more, I will stick to UK shares.
How much time do you have to spend on this?
First thing in the mornings (get in early before officially start work), lunchtimes and a couple of hours in the evenings (if I have enough energy – three ankle biters to help put to bed first). Currently tying to get into a routine to paper trade ‘what I see’ in the charts i.e. trends, support and resistance. I always think I’ll have a bit of extra time at the weekend but it rarely works out this way unless I’m selfish.
How much money are you prepared to lose learning?
Well, my understanding is that I’ll lose more trades than I’ll win but through FTSE Beater’s lead on risk/reward, I hope to actually make money. Let us say that initially that my losing trades will still wipe out any gains then I’ll concur with NastyItch and say a £1,000. I intend, from my learning thus far, that 20% will be directed towards TBS.
If I have lost this amount of money through dealing at 1p/point (for 8 weeks and then 50-100p/point thereafter) then perhaps this is not for me. Or rather I am not for it.
What is your level of risk tolerance?
I have two answers to this one
(a) High. Initially. Then. Low.
Or, ‘it depends’ on my capital. Which isn’t huge. Whilst I am working at the day job, I am prepared to be a bit more chancy. I envisage locking away ‘section gains’ i.e. make £1,000, pop it away in a ‘pot’ and begin again with original capital; make £1,500, put this away…
(b) isn’t the answer to this ‘Understand money management’ i.e. the general consensus is to bet no more than 1% of your capital. I recently read an article that you needed a capital base of £200,000. Now, I’ve some savings tucked away but …
This large capital base/just risk 1% of capital per trade is my Trading Stumbling Block #2.
Can you monitor prices during the day?
I can check from time to time but have to be careful here. I’d envisage employing stop losses because (a) from all the reading I have done/am doing, this is single most important rule – cut your losses, and (b) takes the emotion out of the trade.
As with NI, I am not sure of a trading style – given time constraints, I guess (from FTSE Beater’s table above) then position or EOD. Would techniques learnt from such trading be applicable to trading for a living strategies? I imagine this will develop as I progress.
Do you want to trade and fit it in round a job?
Ditto NI : Initially yes.
The ultimate aim is to replace the day job. I cringe as I write this, as, Trading Stumbling Block #3 rears its head : “90-95% of traders lose money”. Some days I think, given this statistic, what makes me think I can be in the winning 5-10%..?
Yep, interested to understand how you can have a day AND night job AND begin to learn about trading, NI…
And more to the topic, looks to me like Spreadbetting UK stocks with a D4F account and a swing trading strategy would stand you in good stead. A subscription to Sharescope and later on Pfscan would be all your would need to do a good job, you can monitor prices for free on ADVFN.
How does that sound?
Not sure when to invest in software.
There are several other factors, I guess , which come into play here. Not least of all family pressure for time and reliance on steady income.
This one is Trading Stumbling Block #4 – Can I seriously get myself into a position to support my family ?
What should buy / When should I buy / When should I sell / how can I reduce my risk
Building on this burgeoning interest in TA, which after flirting with FA (see above) somehow ‘feels right’. I am looking at trends and patterns, support and resistance. Buy just above support and sell as approach resistance. On every potential bet, am going through the risk/reward exercise (minimum = 2:1). Always think about what the plan is and then carry it out. Always know where my stop loss is. Always have a target price. Consider moving stop losses if trade goes in my favour. Money management = always ensure that if the stop loss is hit, the money lost will never exceed 1% of the capital account. Although I make never win big, I should always be around to play again. Small, sure and often to be etched into my monitor.
Can I psychologically carry out this strategy?
Not sure. Time will tell once the emotional aspect of trading kicks in.
Once you have come back with those answers then you can start to put together a plan of action which will start to form around these sorts of questions
Well, I believe I’m not an expert in anything in life - more jack of many things and master of none. But I have several characteristics that serve me well in my job and in my life in general – discipline, methodical, refusal to give up, enjoy researching new subjects before acting (this can lead sometimes to paralysis by analysis), self reliant and not afraid to ask (silly) questions for fear making a fool of myself.
Constructive comments welcome.
SoldierofOne
