Dry Feet

Discussion in 'Professional Trading' started by Typhoon, Jun 21, 2005.

  1. Typhoon


    I read the books and researched the web. This is my first attempt into trading. I'll be starting out with $ 20,000.00. I am familiar with long term investing and hold a handful of bluechips. Im primarily interested in familiar stocks companies. I'm looking to trade on a weekly and monthly basis. I'll be using scottrade. If any has any suggestions on research or any stock advice-i aprreciate it.

    Thanks for the forum and community.
  2. if you lost the $20 K would that mess up your financial goals ?

    what % of risk can you handle ?

    you might be best to trade small and diversify
    in diferent ETF's or sectors
    as opposed to betting it all on red or black

    good luck

    IBD sometimes has good reading for leading sectors and stocks
  3. Typhoon


    I can risk the whole amount without affecting my current financial position-the money has been saved for this purpose outside my other committments. I got my cue for this amount from Dr. Elders book-come into my trading room. I plan to put stops on my stock purchases to safeguard my capital. Thanks for the advice on IBD. Do you think Im on the right track with my plan? I'm assuming that you are an experienced trader-how was your first steps trading?

  4. Typhoon, i think your in the right track with having a trading plan. Its so important....it should be extremely detailed especially when it comes to money management...with 20k account you really have to use discretion on a stocks price. EXAMPLE: Suppose you buy 2 stocks...one is $15 / share and another is $80 / share... lets say you adjust your share size so that your only risking 200 dollars in each play... now in the unfortunate event that these 2 stocks gap agaisnt you one morning by ...lets say 8% each, ... do you see how even having equal risk for both ... a stocks price can have a huge effect in your account ? This is an extreme example but little things like this can nickel and dime your account to death. No matter how good you are..if you dont follow a good $$ management.....bye bye account.
    Hope this helps.
  5. That won't safeguard your account if you have a poor system and your stops continually get hit. You'll just bleed to death slowly.

    Don't risk a penny until you have a good degree of confidence in your system/strategy. 20K can vaporize very quickly unless you FIRST have some good sense of what you're doing, and why. Then, proceed with extreme caution and learn your lessons with very small lots. You WILL pay tuition. How much depends on you. Be patient.

    Elder is a good place to start.

    And don't forget the tremendous value of diversification, especially when swing trading. Always better, when possible, to be carrying a number of smaller positions rather than placing a large bet on one instrument.
  6. Typhoon


    lilduckling I see your point about the price differences.
    Truthteller can you point me in the right direction-for a trading system/plan that has brought you success?
    Thanks for your help.
  7. dchang0


    If you haven't paper-traded (a backtested system with a reproducible edge), do it first--for as long as necessary to build your competence, confidence and discipline.
  8. Typhoon


    I had just begun paper trading last week, with some success. However, i had risked a large portion-50% of my capital on one stock, although i made money papertrading, real money is a different altogether.

    What are your TA steps in evaluating stocks? Do you look at the stock chart over a 2 year period then to a 6 month period? What analysis method has worked for you-MACD, Stochatics, Candlesticks etc.? How much value do place on the fundamentals of a company? And what areas of the fundamentals are you looking at?

    Thanks in advance.
  9. dchang0


    Well, I'll tell you what I use...

    Personally, I like using daily bars and holding on the one to two week timeframe. Almost all of my successful systems are volatility-based ones that are basically breakout systems. Fundamentals are important only if I take a one-direction bias, but I usually use both longs and shorts so that I don't have to care which direction the price breaks. Paper trading of each successful system lasted for months or years.

    That said, I want to emphasize that the real key to successful trading is more with the process and with your psychology than with such-and-such indicator.

    I have traded several different types of systems in the past, and in every case that I did well, there were these characteristics in common:

    1) I had backtested the system rigorously to scientific (statistical) standards.
    2) I had designed the system to match my psychological profile and my mental and emotional capabilities.
    3) I paper-traded the system until there was "beyond a reasonable doubt" that it would work and that I could trade it as it was designed and backtested to operate.

    Makes sense, right? Even if you got the Holy Grail of indicators, it wouldn't do you any good if you couldn't actually make yourself use it properly. I've watched guys self-destruct with good, reliable systems that they couldn't follow (thanks to fear, greed, hope or laziness).

    Likewise, I've watched guys who are on top of the mental
    game crash and burn by using systems or methodologies that just don't have a proven reproducible edge.

    Develop and master your process and your psyche and you will succeed.
  10. Typhoon



    Thanks for your three characteristic points and input. Its obvious that your a seasoned trader. When you first started trading-did you make money?

    You mentioned that you trade within a one-two week time frame, when you pick a stock for long or short-what measure/methodology prompts you in deciding? Does market news weigh heavy on your decision? Or is it a combination of factors that prompts you?

    I hope you dont mind my questions-im trying to get into your thinking process to develop mine.

    Thanks again.
    #10     Jun 21, 2005