Trading Newbie advice.

[RogerM]

cdsjmc - You have had some very good advice here. Marconi was a complete fluke, and had nothing to do with skill. If you think that feels good, then you're already dangerous! Just wait and see what it feels like when you get hit by a profit warning and you lose 50% (or more) at a stroke. How would you be feeling if you had bought Marconi at 245 on 04.07.01 and seen it open at 112 the next day. Or if you had bought it at 18 on 21.03.02 and seen it open at 10 the following day.

Penny stocks are great when they go your way big time, but they rarely do. When they go against you who will you sell to? The institutions won't be buying them, and the MM's who were happy to sell them to you on the way up won't be interested on the way down and the spread will widen like you wouldn't believe.

Remember that if you lose 50% of your money on a trade the next one needs to make 100% for you to break even. If you have a trade that loses you 90%, then you need a 10 bagger to break even.

The only difference between stock A that has fallen 90% and stock B that has fallen 95% is that stock B first of all fell 90%, and then it halved!

Money management is everything. You can make lousy picks and still come out ahead with good money management. But even if you pick winners 75% of the time, you will still be wiped out with poor money management.

There is plenty of good stuff here, but the apprenticeship is long and hard, and expensive. Read how others do it. Start very small, or you won't last. And as Skimbleshanks has stressed, make sure that this is money you can afford to lose - I mean really lose, because there is almost an inevitability to it!

 

[BeM]

I can talk about my own experience... I had read many books and I had analysed the market for a long time. I started to spread-bet and won three times in a row, about 40% in 24 hours. That didn't seem difficult, but because of lack of money management I lost the following day three times I had made and it happened only in 10 minutes. Most people, including me, don't realize it before they are hit but you must be hit like you can stand up later. My hit wasn't painless but didn't affect me at all. Now I have very strict money management and I'm really thinking about keeping my money, not making money. Very good companies, institutions and wealthy individuals make about 30%-50% per year, if not less. If one could make that much trading then it's great. Some actually make over 100% but that's because of their extraordinary knowledge, experience and probably intelligence and no-one, including me and you, could say how good they are before actually they make that money. But proving how bad they are takes just a few minutes. No-one retreats after making some good money without effort, they all come back, become greedy and they all give back the market much more than they made "gambling" or playing just by luck.

 

[Trender]

oh dear cdsjmc - I fear you will be 2k out of pocket in the not to distant future. But hey, it's your money.

When I started "buying shares" as I called it then, I turned a 10k investment into just over 100k in about five months. How? Pure luck - the trend was with me. Try telling me that at the time though.

I then managed to buy and sell my way to a loss of all my profit plus my initial stake. Of course, tell this to anyone who hasn't been there, done that, and they just think you're an idiot. But talk to the people who have, and they'll know exactly where you're coming from.

The losses took about three years, and that's the crucial point - you can bleed to death slowly.

To cut a long story short, I worked hard to get another stake together, I was determined to succeed, and started swing trading this time, moving slowly into small profits. But without that initial loss, I would not understand how this whole thing works. You really don't believe how easy it is to lose money until it happens to you.

As an aside, you say that spreadbetting is "too like gambling". Well, unless you're investing for the long term, what is buying shares? You're "gambling" on them going up right? What will you do if they go down? Ok - either sell at a loss or hold until they *gulp* maybe go up again. So what's the difference between that and spreadbetting apart from the gearing? Beware - shares look safer - but that's all.

Sorry for rambling, but it's the frustration of knowing that you will make the same mistakes that we've all made, and just like the rest of us, you think you won't make them.

Hey, now you've made me sound like an old fogey.

Good luck anyway.

 

[cdsjmc]

Thanks, I appreciate the advice of you all. I am currently stuck. I've bought shares in intelek at 16 pence last week and Irevolution group also at 1.25 pence. The portfolio shows me being out of proffit, which i clearly am by about 4 percent. Could anyone even suggest what i should do now to try to balance my losses against my potential gains...

Be lucky,


John Christopher

 

[ChartMan]

You should not rely on the opinions of others as to stick or sell.
You must decide right now, what are you prepared to lose either individually or as a "pair". Make the decision. Then stick to it, whatever it may be.

 

[Skimbleshanks]

The golden rule of trading is that you should know your exit point BEFORE you enter the trade.

You need to ask yourself why you entered the trade, and if the reasons are still valid then hold. If the reasons have altered or are not valid, you need to exit.

You should never ever get into a trade without knowing when and why you will exit. Until you have reached that stage you should sit on your hands, and learn all you can.

 

[neil]

For Newbies

Here is some advice on trading. Not the holy grail but some advice from one who has been there ( The author Adam Hartley)

http://www.snapdragon.co.uk/resource/talk/talk30.htm

Keep reading, asking questions and getting your feet wet. Forget get rich dreams. A couple of years may see you making real progress.

Good luck