I've never traded before. Dont know much/anything about it. I am a financial advisor and my expertise is in asset allocation, financial planning, etc. I am interested in learning about daytrading, and opportunities trading proprietary money for a living. I read some of the threads on this site, and i am pretty lost. I guess my question is: If you knew nothing as i do, where would you go and how would you go about the process of starting to learn this game?
the problem you are going to have is this: many (most) of the guys here that know what they're doing and make money have put years and years into this. they've also probably lost thousands of dollars in the process. to top it off, a lot of us basically are risking our future by deciding to take this path and not a secure 9-5 job. but with risk, comes the reward...which is why we're all here. with all of the dedication these guys put into learning to trade, do you think they want to just tell everyone what they've learned? they've paid the price and you're trying to cut to the front of the line. (i'm not necessarily saying you, personally) the thing is, i don't blame you. i am guilty of asking questions and trying to learn from other traders too. i don't feel too guilty though because i've been at this for years and have lost multiples of 10k myself. anyway, i'm not tryin to discourage you, but just keep in mind what it's like for the people who you are trying to get answers from..that's all.
and take it for what its worth: a. I would spend 3 months doing nothing but reading books. Some recommended books are: i. the 3 Market Wizards books by Jack Schwager ii. the Essays of Warren Buffett iii. Contrarian Investment Strategies by Dreman iv. You Can Be A Stock Market Genius by Greenblatt v. When Genius Failed by Roger Lowenstein b. Then i would spend a year doing nothing but the following: 1. Look for stocks with the following characteristics: i. 60% selloff from 52 week high ii. no debt iii. Cash / Mkt Cap > 0.25 iv. EV/EBITDA < 12 v. insider buying or share buyback program vi. projected earnings growth 2. Take a position, using no more than 3% of your capital 3. Average down with 1.5% of your capital on every 15% move down 4. Take profits when you are 25% up on the trade. The idea is that you buy after all the institutions have dumped and, because of the lack of debt plus steady earnings plus buyback program, chances are stock is close to bottoming. Play it safe. Be patient. c. then, after a year of that, if you feel like daytrading then go for it and ignore everything else (including this post) that you see on these message boards. d. if you really feel like daytrading right now then take 25K that you can afford to lose, put it in a CT or IB account and buy the book "Failing Forward" by John Maxwell.
Gekko: I appreciate your reply, and your point is well taken. Let me tell you where i am coming from:. Thru my work, i met a guy that trades proprietary money for a livng. He told me that he started 10 yrs ago, and pretty much after an 8 month learning curve, has made pretty much 4-500k every year, since. He says that if someone like me comes in, i would spend 8 monhts watching the other traders, learning their proprietary systems, and then they would give me money to trade. But only small size till i prove i know how to make money. then they take away the limits. i could work as hard or as little as i want, depending on how much i want to make. He trades only listed NYSE stocks, goes home flat every day. Participates on the upside, and also on the downside, but only to the extent of his gains. (in other words gains offset losses) It all sounds too wierd. But i have two clients in my practice one who trades options on the floor of the amex (leases a seat) and the other who owns a seat on the NYMerc and trades commodiities. They both mmake that kind of money, and work when they want. So I dunno whether to trust this or say its crap. And I am a financial advisor for about 4 yrs now, so i put a lot of blood and sweat into my biz to walk away from it now, although it is tough now in what i do, obviously. The other risk is , i am in my 50's so like a ballpalyer, i can afford only so many mistakes / injuries, as i have alimited time frame to make money. So wrestling with the risk, and want to figure out how to best evaluate whether its a stupid risk or a calculated one. Any additional comments you might have would be welcome.
either find someone that you know makes a living doing it and have them teach you what they do ,, how they do ,,and why the did it . or spend 10-15 K on the so called classes or take 100K lose 25 K of it try to lean from your mistakes then lose another 25K trading and thinking you know what you are doing and testing bang now you have 50 K to really start trading good luck Or you could just trade futures alot less cash need more lev. but rember the leverage works both ways most have leand the hard way
ragman, i'd just like to say again that i wasn't implying not to ask questions here. if you look at my posts, i've asked many questions. all i meant was that you might not get direct answers. however, that is also totally fair in my opinion. nobody here owes me anything.. anyway, you hinted that you weren't sure if traders are really making the big bucks. a few weeks/months ago tony oz (i don't know if you are familiar with him) posted a pic of his monthly trading statement. it had a bunch of statistics too...looked pretty good to me. not that it is easy to duplicate him, but it's good to know that it is at least possible to make money at this. unfortunately, i do not know first hand. hehe
You have a guy in a firm, presumably a good firm if he's been there 10 yrs AND they're not asking for your capital to be deposited. what firm? You also have a guy on the Merc. Between the two of them you should be able to get a lot of good info. I am in your boat, albeit much younger. Also Take A LOT of time to evaluate this decision, and consider the not job related aspects besides the good aspects. ie health insurance coverage, morgage payments, etc. because the payoff may not be there early...
Just realize that you would be starting a new business and that you will take some lumps in the beginning. It is typical to go 6 months to a year without earning a dime before you learn the ropes enough to make consistent money. Definitely have enough money set aside to cover all your living expenses for that long. The good thing about trading is that if you are among the 10% or so who survive the learning curve and know how to make consistent money, the business is scalable (up to a point) so yes, you can make the mid-six figures. But of the survivors, you still have to be much better than average. 500k a year is not your typical take home for a daytrader.
1) Take a $100 bill, burn it and watch it burn - if it hurts you to see it burn, repeat until it doesn't hurt anymore - you have just lurned how to take a loss unemotionally [If you do this more than five times, don't become a trader - you are too gulible to see traps.] 2) If you have mastered 1) above, take $10000 in $1000 bills, also take $1000 in $100 bills - you are not allowed to replenish the stake. Go to Vegas and sit at the High stake Hold-em table or a similar Blackjack table - take note of your swings and your equity curve. Do the same then with $100 bills at the low stake game. Lesson learned, the more you bet, the greater the gains, but also the greater your loss. Also note that the cards don't know how much is being bet on the outcome... 3) Did you by any chance in 2) above lose your stake? Great! Lesson learned, if you run out of money you are out of the game, so bet your money in sush a way so that you only bet when you have an edge, and bet an amount proportional to your stake so that unless a meteor from outer space strikes you in the head and kills you instantly, you can come back tomorrow and play again. 4) If you can follow these rules/observations for 5 years and keep learning without blowing out, you have a shot at your 400-500K a year... nitro PS - the learning part is difficult and there are many routes to it - hang around here for a year, read as many threads as you can, and that will likely open an avenue for you...FWIW, I learned at least 50% of what I know at Bright Trading...