Jack, How did you manage to get started in 1957 with $300?? I'm thinking of how high commissions were then. What/how were you trading? ges
You have got the right idea - about being near good traders. Most likely you can do that in NY or Chicago. The real question is which firm? Which firms have you looked at?
NY or Chicago seems like the best place. but I think the living expenses in NY will be extremely huge compared to Chicago. I really heard some good things about ETG from couple of people who know their stuff.
I was fairly systemmatic. I read the fourth ed of Magee and determined TA was a very easy method for an amateur. Since then I have improved by a factor of up to eight doublings of the rate when everything remains in sync. I will outline my beginnings and you can probably see that I am weird or out of the box. About 4 out of 5 dissagree with my views. I started at 24 and now I am 70. Odd lots where all I could do at the beginning and I had to make a chart (17 dollars divided into 8ths by 6 months of 5 day weeks.) Below that I plotted volume. I pencilled in the HLC and wrote three sig figs of volume. I got the WSJ daily (In Poughkeepsie, NY (I worked at IBM)) and saved the last page using two wooden clamps so the papers could be used to back plot graphs if an interesting stock came up. I built an universe of stocks that were easy to make money with. That is they moved a lot and at regular intervals with patterns that were repeatable. I found the P, V relation from Granville as part of references reading Magee. Not many people here are using the basic price volume relationship. I always have and it gives you variable that precedes the price movement so trading is a snap always. I added a corrolary to complete the relationship. Once I determined from the market using the EOD data what the half cycle of a cycle was (6 to 8 days), I was able to increase from one cycle a month to about three. At this point I was forced to understand how important having money available was. This lead me to learn to rotate through stocks selling one to buy another. You will notice here that there is little of that so far. After a while I learned to only have so many streams of money so I could concentrate on one stream a day as the other streams traversed their cycles. Because I had an indicator that preceded the price movement, I learned right off that anticipation was the key to making most money. This answered the question regarding perdiction too. Prediction by it's very naure is not a viable thing. You can see that all I was doing did not deal with the Macro aspects of markets but just with a reliable micro universe that was very productive. and I was in anticipation meaning that I was focussed on lining up stocks that were going be bought as they began their upward cycles. Starting in 1957( broke and just out of college), I was able by 1960 to buy a 190SL mercedes in Kopenhagen and from then on I always vacationed in Europe in the summer. The first benchmark for me was having a "natural cycle" universe, pencilling daily charts with reliable formations, rotating capital using a number of threads so that I could focus on one stock per dayand having an anticipatory indicator using the P, V relationship. By 1960 my weekly pay check was about equal to my payment of commissions per week. naturally I paid commissions out of gross profits but it reminded me that working was not too important as a way of life. As time passed changes did occur but the market did not changed nor has it to this day. By doing the first years of my investing by hand, I have been able to get ingrained in me an ability to optimize the manner of making money. You can see one byproduct of this was to take out my original capital repeatedly and at ever decreasing intervals. Not many people here speak of how frequently they take money out of the market. Since I began this simple process I have augmented it as things have been invented to help amateurs out. My great aunt who insisted upon supporting here self by using fundamentals only and an emphasis on dividends died at 94 on my 40th birthday. She lived comfortably without working for her lifetime. I just did a catch up sort of thing she told me. All in all we used to discuss many aspects of the markets. When theXerox was invented copying for me changed from brownlines and blue prints. I printed my inked chart master and then just copied my pencilled charts for others. as computers changed from mainframes (my IBM experience was there) to transistors, languages advanced. I began with 17 instructions in 1957 on the 700 series and an O24 card punch, so pencilling was easier. The nature of the market based exclusively upon molecules also changed. The byte became as important the molecule for making money in the market. The failure of the financial indurtry to change it's fundamental emphasis upon investing was another advantage handed to the TA folk. The advent of PC's and indicators made life easier so I used the TC2000 to come up with seven equations to do the cycle sequencing. From this C language was used to reduce the method to a floppy. The first 6 months of its early performance was 6.6 day cycle and 11.1% return per cycle. This was improved by 20% the first update. I used three variables and two indicators on the TC2000. At this point the use of PC's software caused all the default settings of the indicators as propased by their various originators to be totally screwed up. I used the Book Technical analysis from A to Z to systemmatically go through it and revise all the default settings to the new market periodicities and particularly to the response times of the market to change. By 2000 the TC2000 and its versions went sour because version 3 was no longer supported. Thank God for programming. As futures indexes were invented, it became apparent that the attendant leverage of commodities was a better way to appreciate capital. The result was about a 50x's increase in capital appreciation. Now there are eminis for the futures indexes and the liquidity problem is being solved. There are limitations for making money. As you advance your investing and trading paradigms the market comes into play at some point. I have two superb paradigms that work incessantly. the limitation on the equities one is as follows: Limit of 100,000 shares (think 30 dollar stock) per traidng thread of capital. and never exit or enter a stock using more than 10% of the cummulative trading for that day; never trade in blocks to get the partials fills that are blocks larger than those on the T&S. (A typical entry requires 20 trades and a typical exit requires 30 trades). If you want to see a sequence of posts (30) for one day google me on raging bull. I posted 5 to 15 minutes inadvance of market movement on a stock I have one prior day of observation on. The stock moved from 20 to 22 and then to 11 and then to 16. at least five traders there were able to handle trades at all significant points during the day. A glider pilot friend of mine asked me to post so he could handle the exit at peak and the rentry. I did approvimately the same thing for the stock with fewer posts two weeks after that. Currently I trade using fractal pairs and I vary my trading as the market pace varies since the same rules do not apply to all paces. I know this seems like a long answer, but there are several levels a person goes through becoming wealthy. The base level I detailed out is followed by several other levels. In short, a person starts out simply, then removes intial capital and adds iteratively to the paradigm. Optimizing income comes along at a point where you excede the capacity of your paradigm and you start causing market drawdowns. whgen you get to that point you have to be satisfied with the momentum you have. Strategies for "making the market" (manipulation) are very complicated by two things: the requirement to show intent and the SEC surveilance of trading. I have maxed out a about five SEC citations (all of which are withdrawn as their mistakes) per year. generally good trading with a super paradigm shows up in SEC land as insider trading. I have so far been unable to get their monitoring programs for some reason they feel is important to them. If I could have someone glance at it the problems they create could be minimized perhaps.
Althoug I think books are excellent and a necessity for getting a good background, they will give you a false sense of security when you begin trading. It is important to understand the principles they discuss: money mgy, charting, risk/reward, etc, but the books are simplistic and the examples they give of winning trades are handpicked. In other words, it takes more than books to be successfull. Learn from other traders what works and what doesnt. Also, what works for one or 2 months might stop working, so it is always important to be aware of new ideas and strategies and toss ideas around. So unless you have a strong network, dont trade from home unless you get to know what you are doing.. just some advice. I am learning the hard way by the way