After 12 years of owing the man, I am proud to say I will finally be out of debt in March. To accomplish this, I set myself a strict budget and severely cut my costs. No cell phone, I use a MagicJack to avoid phone bills. I walk to work to avoid car insurance, repairs, and gas. Paper bag lunches and buying in bulk to survive. This allowed me to make $560.00 per month payments toward my debt. I never consolidated my debt, negotiated to reduce my debt, defaulted (except for a few late payments years ago), or declared bankruptcy. Every penny of my debt I paid back with hard honest work. I am a strong believer in being responsible for my own actions. And now getting out of debt, I value money more than ever and hold a strict rule living within your means. I never go to the casino or buy lottery tickets. I hate to gamble. Habits are hard to break. After I get out of debt, why stop there? If my lifestyle doesn't change significantly, there is no reason why I couldn't invest $500.00 per month. Trading online is something I always wanted to do since 1996. For the first time in my life I will finally be able to begin to do it. I expect losses in the beginning, as from what I read, the learning curve is harsh. Even if I do manage to get efficient enough to turn a profit, I plan on only making a very tiny bit. I have come up with a general plan I feel would realistically be reasonable as a new student of the online trading world. My plan: In June open up a $1300.00 brokerage cash account. After comparing many brokerages, I have concluded that OptionsHouse would best suit my needs. The trading platform is all browser based and simplified. I noticed nobody reviewed it, so while getting my feet wet, I can give back to this community with a review of it sometime down the road. When making a trade, I will always operate with a 30% buffer. Hopefully, this 30% buffer will be enough to fund my learning curve. With the initial $1300.00, I will only trade with $1000.00, leaving me with $300.00 to cover losses from my trades so that I can continue to make $1000.00 trades. If my trading equity ever gets near $1000.00, I will stop trading until I put more capital into the account. Each month after June I will transfer an additional $500.00 into the account. Of course by doing this, my trading limit will increase each month, and my 30% buffer will increase as well. Allowing me access to more stocks or higher priced stocks as time goes on. I never plan on trading stocks valued below $2.00, mainly because the fees will become too expensive for me. My very first trade I plan on being 500 shares slightly above $2.00 in a slow moving stock. If it increases by 2 cents, I should be able to make a 4 dollar profit (before taxes). I will try to limit my losses to around 2 cents per share - which would be a $16.00 loss. I will take all day on this one trade if I have to. I am in no hurry. I will ease myself into this. One day trade per week I think I can handle. I won't make myself any promises until I get the feel for it. I may dabble in short-term trading at some point. I do know for certain that I do not want to ever try long-term trading. My ultimate goal is to eventually get to a level where I continuously turn a 0.5% profit per month. But that is a pipedream. The journey will be the experience. Weather I make money or lose money, for me personally, It will be worth it. With my work scedule, I will be available during the morning hours EST, so I have a good opportunity here. I am excited for June to get here! Thanks for this site. I am leaning alot. I will be a fly on the wall for teh most part. But if I have an important question I will not hesitate to tap into your experience wisdom and knowledge. P.S. Buzzed is just an internet persona. I don't do drugs or drink. Nice to meet you all. Any tips, advice, criticisms, and life lessons are welcomed.
My sincere best wishes for your success. The best advice I can offer is to avoid stocks and to trade one, and one only, high liquidity stock index future. You will learn a little, and that very slowly, by trading many different stocks. You will learn much more, and much faster, trading one instrument, like an index future, which reflects the will of the market faithfully and with minimal manipulation. There are also tax advantages, whether you make or lose money.
From experience... If you have the discipline to follow the plan you have created and you don't dabble around, you should be able to figure it out within a year and a half, give or take several months. Understand the T+3 settlement rules may make it tough for you to put on very short term trades, so you should stick to trades that have holding times of over 3 days. Best of luck.
With the guy starting with only $1300 I believe your advice is very wrong. Futures are way too leveraged for him and to start out learning on those is suicide. I like his idea of starting off with stocks making one trade a week much better.
Mindtrade, consider that if he jacked his account up to 3 grand and traded at IB he could survive a long time and learn cheap lessons trading, say, NQ, with a hard 3 tick stop, ideally only a 20 buck hit with each loss. The occasional big win with a hyperbolic move would keep him alive.
Why not trade the currencies? That way, your $1,300 tuition could go further. Then you can take the $500/month and put it in a USD saving account. If there is any emergency or opportunity, then you have the money in the saving account for your usage. PA
What chance does someone who has never traded before have scalping futures or forex? I think close to zero with such a small starting base. The way the market has been going up it may be in the ops best interest to look into a company he likes and "go long" with his $1300. In the mean time he can continue to save up for a real trading account. While he is saving and doing research in the market he might be able to determine which market or style he might have the best chance with. This is the method I think he should take... or maybe this is just the route I wish I took?
Mind, no disrespect intended, we are just friendly joshing. I believe that the key to profitable trading is to avoid MM and company manipulation as much as possible. I believe that an index future exhibits manipulation to the least extent.
I hope ou were kidding suggesting futurs with a $1300 account when he hasnt traded. And currencies are the hardest market to trade.. If it were me, I would start with a few shares, maybe 10 of the SPY or QQQQs...at least he could give then a $2 or so stop. OP they claim they trade, but in reality only about 1% of ET posters trade anything at all.
Spinn, kindly note that I suggested a 3K account, and no, I wasn't kidding. I think that NQ, for example, is easy to trade. It is all a matter of identifying its idiosyncracies and exploiting them.