Learn to trade

Discussion in 'Professional Trading' started by magisana, Mar 24, 2009.

  1. magisana


    I am an aspiring trader and I am not getting anywhere, in fact I feel like I am going around in circles. Can anyone give me some advice... to learn to trade, once becoming educated on learning how to read charts etc does that mean that I could potentially pick any market to trade as in theory it can then be applied to any market. Also what is that best market to start in if I don't have a huge amount of capital to start with. I am interested in trading the S&P 500 Emini? Any suggestions on what I need to read and learn in order to start understanding the markets?
  2. When a new trader asks me for advice about how you should move forward I’m almost invariably going to ask you three questions:
    1) Have you figured out what is the best timeframe for you to trade?
    2) Have you picked the market that best suits you?
    3) Are you prepared to take on years of learning and losses?

    Your trading timeframe feeds into the choices you make regarding:
    • Market Traded
    • Instruments Traded (stocks, cash/spot, futures, options, etc.)
    • Trading Frequency
    • Market Analysis/Trade Selection Methodology
    • Risk Management Approach

    Don’t trade a given market because it’s the thing to do. A lot of people ill suited to Emini trading, for example, were sucked into that market during the last decade because it was the hot market. Most of them got spit out because it wasn’t a best fit for them. Starting out trading leverage can rip through a small account in short period of time. You have to be prepared for losing more than one stake (all of accounts funds) before you get the hang of trading leverage.

    Veteran traders will all tell you to be prepared for a long learning curve. I many cases longer than 5 years. Why? Because your trying to take another traders money who has already paid the price to gain there edge.

    But, what ever you do start with a solid risk approach to manage losses. The quicker you learn the psychology of losing to control yourself and your funds the sooner you will be success. The trader grave yard is filled with those who where “right” and failed to preserve their trading funds.
  3. lpchad


    Depends on the market. Futures/Options are Zero Sum. Equities are not.
  4. magisana


    Thanks a lot for the advice. I just don't know how to choose which market to trade. I want to trade a market that is volatile and I think that I am interested in Day Trading or short term trading. What other sorts of trading is there that is classed as short term as I want to keep and eye on what is happenin in the markets during the time I have a trade on.
    That's why I wanted to know if a starting point in my learning journey is firstly to learn technical analysis.

    What is cash/spot trading.... I know that I want to learn all about protecting my risk capital an managing the risk. The reason I said I was interested in trading Emini's is because it's only thing that I have really been exposed to and have traded in sim, I like that I can only lose as much as I put in and I also like daytrading with it.
    The thing is I've been trading following a moderators calls and have learnt to execute trades but I really don't know how to tell when to enter a trade and why?

    The only thing with eminis is that I am in Australia and it's midnight over here when the market opens in the US and I am just finding that I can't function both day and night as I have 3 small children to take care of I can't just sleep during the day... so it's not for me at the moment.

    I do believe that I am interested in the futures market.... I just don't know what else I could trade that would be as volatile.. I was thinking of maybe starting with Forex, but I really don't know to be honest. I am on a journey of learning and trying to figure this out. Forex has always appealed to me I don't really know why, I guess it's because I like the idea of trading currencies.

    I am committed to learning trading 100%, as Its taken me a long time to figure out that this is something that I am becoming passionate about. I know I have a huge learning journey ahead and I am wanting to make certain that I am very educated before making any big trades. I also do know that there is risk involved but there is risk with everything in life and I can't imagine doing anything else anymore. I just have this huge thirst for knowledge in learning the markets. I just need to find out where to start ....

    I know that I would love a mentor to help guide me on the right path or at least help me get started, but unfortunately I don't have the funds to put towards a mentor right now, let alone knowing how to choose the right person..... I am just kinda confused about where and how to start....
  5. I'll tell you what. I went to school 20 years ago with the intent to become a stock broker like the rest of my family. Everyone in my family is in one form of banking or another, whether that be the stock market, realestate or insurance. When I got out of school I started working for my cousin at paine webber and got my series 7 license (the US federal license to trade securities for others) and others series 58,59, etc etc. I worked as a broker for about 6 months before I decided I hated it.

    Let me clarify though, its not the trading I hated. I loved that aspect, its the salemanship that I hated. I am a terrible salesman and I have a hard enough time selling something tangible I truly believe in let alone intangible securities. I just had a real hard time with it. So I ended up getting into IT instead.

    Fast Forward to today. After being in IT (and also food and beverage management when things got tough) for almost 20 years, I decided to get back into the market. Things are a bit different, I mean the markets operate the same, but there are lots of new choices. So I have been educating myself in those choices, been paper trading for year or so as well as playing a game based on econmics that has NOTHING to do with real world markets or real life in general. On paper and within this game I do AMAZINGLY well. Within 1.5 years I have amassed 10 billion dollars. I am sure you'll agree it doesn't matter what currency we are talking about 10 billion of anything is massive.

    Now, getting back into the real world market let me tell you something...I am getting into it slowly. I am starting out with $1000 USD. Yep, that's it. I have confidence in myself yes, but I most certainly don't want to make a mistake in the real world that could blow my wallet to shreds. Steady as she goes. Each paycheck I am adding another $200 to that account to help bolster the capital a little at a time so I get more confident trading the larger amounts. Again this is real money, not monopoly money.

    I don't want to do the whole, get in with $25k and blow it as a learning experience. I want to work one security or fund or future or whatever at a time, and diversify slowly as the pot slowly grows larger and a large enough that when I am consistently moving forward and can afford to trade full time, I will make that leap, but not until my capital can support both continued growth as well as generating the income I need to support my family.

    Anyway, not that I think any of this is good advice, just sharing how I am entering the market.
  6. Perhaps I'm teaching the Pig to Sing, so to speak, but...

    If you're genuinely open to advice, I'd say study Support & Resistance. They can be found with STRAIGHT LINES on your daily, weekly & hourly charts.

    Avoid technical indicators & oscillators, as they don't work.

    Read a lot. Read bloomberg.com & other sites.

    Paper trade first.

    GL to you!
  7. magisana



    Thanks that is great advice. This is kinda where I am at also. I am thinking that I want to educate myself first, I don't know much so I need to find out how and when to enter trades and when to take profit. I need to figure out how to use indicators on charts or if I am just going to use price action as my strategy. I need some advice on maybe some books that can teach me these things as I can't afford a mentor or a monthly subscription to a live chat room right now. I would rather be saving my dollars to put towards my trading account and learning at the same time. It may take me longer as I really don't have the money to spend on mentors, however so be it, I know it's a journey and I am committed in learning it the correct way. I don't want to learn by blowing $25,000 in my first attempt to trade. I will be demo trading for a little while to gain some confidence and then slowly grow my account.
  8. magisana


    Thanks for your advice and yes I want to learn, so I am open to your advice. I am going to check out Bloomberg. Can you tell me why support and resistance and not price action or should i apply both? I know what support and resistance is and how to recognize it on a chart?
  9. I am bad at teaching but here:

    Let's say we just had few days where the price was in tight range. You have the coil fully cranked up. The pressure is up.

    Today the price opened under that range. Oops. 50% of the contracts are under water. And 50% are in the money.

    Assuming there are no upcoming news. Nothing to rock the boat.

    Now the price goes up but fails to brake the old range. It comes back but it does not reach the old high from today. It gets pushed back under the last low. You now have lower high and lower low.

    At this point you should start hearing the cursing and the moaning and the bitching of the traders holding the 50% of the contracts long.

    You go short. The wall brakes and the stream washes you down to the $$$$$.

    Something like that.

    You add money management to this. Your stop loss should be small. Your profit big. There should be room for your profit. Don't wait for 100 points or pips or ticks if the most likely range left is only 50.

    Finally add discipline. Do not move your stop. If stopped be happy. Or even better reverse and go long. Again with small stop and a profit all the way to the top of the range for the big $$$$.

    Be patient. Disciplined. Confident.
    #10     Mar 25, 2009