Well, here we go. I'm ready to take a shot at the markets again. I decided to join EliteTrader to hopefully learn from people who have experienced success at this. Get ready for a TL;DR... My "experience" with stocks dates back to when I was in sixth grade. I remember being fascinated by the indices moving up and down, and I would paper trade at home while my dad played with a small account with real money. I started to figure things out, read Investors Business Daily regularly, and got pretty obsessed. In eighth grade, for whatever reason, I decided to trade on my dad's real money account when he was in Las Vegas for a convention. We had discussed a potential trade in DYII, Dynacq, a health care technology company that has since been delisted. Dynacq had developed a cup and handle pattern, which I was big on at the time, and I was positive it would break out of its handle any day now. I checked my computer at school on a Tuesday morning and discovered that it had, indeed, broken out of its base. I suddenly came down with some sort of "illness," had my mom pick me up from school, and as soon as I got home around 10:00 A.M. I logged on to my dad's account and purchased $15,000 worth of shares in the company. The next five hours were the worst five hours of my life. My first mistake was doing this without my dad knowing. I still don't know what I was thinking, but it made sense to me at the time. But $15,000 is a lot of money for a 13 year old to be throwing around, ESPECIALLY WHEN IT'S NOT YOUR MONEY! Almost immediately after I purchased Dynacq, it tanked. By lunch time, it had lost 15% of its worth. The breakout had clearly failed. And I pretty much panicked. I tried contacting my dad, to no avail, and finally reached my mom, who was absolutely livid. I traded instant messages with one of my dad's trading friends, whoâsurely amused by this whole thingâtried to keep me calm and collected. I was getting ready to sell and take a $2,250 loss, but he assured me after he checked it out that he thought it would rally in the afternoon. He told me to hold on for the time being. At this point, I was a completely shaken 13 year old tearfully begging my trading platform to go up. And lo and behold, it happened. Dynacq rallied that afternoon and I ended up selling around 2:57 P.M. with an $800 profit. I couldn't have been luckier. My dad finally called at 3:00 P.M., and I told him everything, and needless to say I was grounded from trading for quite some time! Since then I've had some marginal success trading stocks over the long-term, but nothing worth writing home about. I haven't traded regularly for several years, but I'm getting back into the game utilizing strategies I'm learning from a mentor. It's going to be one heck of a journey. I deposited a decent amount today into my trading account, and I plan to focus almost exclusively on options. I'll make sure to update everyone on how my progress goes, win or lose. Any advice? I can afford to lose the seed money, so I'm looking for medium risk, high reward strategies. Any success stories?
Great you are back into trading! My view is : start with a DEMO for at least 3 months. Don't worry, the market will still be there in 3 months time.lol. During these 3 months, trade demo with tiny sizes, so that you get back into your brain getting used to the trading. You do not need to waste money just to get back in the market. Now, I would seriously suggest to you to get a trading coach AND one or even two CLINICAL psychiatrists. Start with the psy 2 or 3 sessions a week. And after the 3 months of demo, once a week should be enough - except if you find out really serious issues, where you will do well to increase the number of sessions. These people know how the brain works, in a way you have no idea. Trading : mental game. You have experience, so getting these people to work with you, no way you won't be consistently profitable.
No offense here, but this sounds like a guy walking into a casino for the first time trying to understand the rules...
3 months demo on tiny size + good psys will get the guy on the right path. If he has gambling tendencies, the psys will pick that up, and help him eliminate the bad pattern. In any case, he will be better off.
I'm going to start with a demo account for a month. I received that advice from a lot of folks and I think it's a good route to go. Quant, you bring up an interesting topic... Trading is a LOT like walking into a casino. There are a lot of -EV games to play--just like there are a lot of -EV trading strategies. I'm looking for the poker of the trading world so I can actually do well over the long haul.
Invest a modest amount in a charting platform using delayed data. Do lots of research and testing, build at least a dozen different trading systems, and paper trade them. Track your daily drawdowns - most important metric for you to consider. I think that just starting to trade without a really well engineered and tested trading system is just gambling and a road to frustration. This is a business and you'd better treat it like a business. Get your shit wired tight. Focus. Trading attracts alot of very bright people who apply ruthless intellectual firepower to the markets. IMHO, the success ratio for new traders is proportional to how well they are prepared and how disciplined and sorted out their emotional psyches are.
First, congratulations on your first trade at 13. And it was a nice winner for $800. It's awesome that you had the balls to pull off something like that. I had a good chuckle as I have young kids myself. And the whole image of the Etrade baby actually trading is quite amusing. I think you need to find what kind of trader you are. No one can really tell you because no one really knows you. However, there is always a style that will fit your personality. If you try to it someone else's style, it will be very difficult unless you have no preconceived notion about trading. First, look at yourself. Are you patient or not? What is your risk profile? Do you have a quick temper? After you figure that out, then you can start to look at different strategies that fit your style. If you are patient and have a high risk profile, then maybe long term trend trading would be more suitable. Or perhaps pairs trading where you hold the trades for days and weeks until the correlation snaps back. If you are not patient, then you probably want to go down to the lower time frame and scalp using the tape or some other quick strategies with small stops. If you are crazy high risk, then you should go to options. All I can say is good luck to you. I think you are just starting the journey to discover yourself and trading. If you want to list your traits, then perhap some of us can point out some strategies that might fit your personality. And Elitetrader is probably not the forum to get a lot of real help...haha...
Let's see if I can be perfectly honest about myself. Hopefully the EliteTrader sharks won't smell too much blood in the water... lol I'm 25, and frankly a little underfunded. I worked in politics the last three years, and while the pay was okay it certainly was nothing to write home about. My net worth (not including student loans) is about $20k. I do have a lot of gamble in me--that definitely could be a bad thing. I played online poker regularly throughout college up until the government shut everything down. I was able to do pretty well with that, making about $15k/year playing mostly 1/2 and 2/4 No Limit cash games. The online poker thing gave me a lot of bankroll management experience, and I screwed that up quite a bit, especially when I was younger. I learned a lot about risk of ruin and how important it is to account for the worst sides of variance. I'm hoping to apply those principles here. I like gambling, so I'm at ease with $500-$1,000 swings, but I'm committing myself to proper money management. The reason I was hoping to do options is because I'd like to never put more than 10% of my account at risk. I tried my hand at insurance, hated it, and got offered a pretty sweet job basically doing contract work (copywriting, web design, etc.) for my trading mentor's start-up. So that's what I'm doing now... working for him and trading at the same time.
True, but just do your home work so that the odds are in your favor, and ideally, give you, and not the house, the edge!