The guy who mentored me and got me into this business always said, "the market is what the market is". I've never done well when I thought I was smarter than the market. Don't fight it. The price you see before you is the distillation of all known opinions and wisdom, fundamental and technical, that has the faculties to bet money about that company, commodity, or instrument. It's all about supply and demand.
Great thread so far. Here's my story: I first got interested in stocks in 96/97. I had a very basic knowledge of the markets at that time. I basically paper traded, watched CNBC and tried to get a feel for the market. And of course, what stock market education could be complete without our buddy Wade Cook. Actually, he was the first person to introduce me to the wonderful world of options. I read the Wall Street Money Machine and a few of his other books, and on a local tv financial station, I'd see his instructors praising the market (remember Steve Wirrick, Robert Hondell, etc). Those guys made it sound so easy. Thier "rolling stock" examples, their "20%" a month returns when writing covered calls,...I thought I'd be rolling in dough in no time. Fast forward to the fall of '98. After the Russian/Asian market debacle, the market started a serious climb. AOL, YHOO, AMZN, etc were jumping. Breakouts were happening left and right. I had been paper trading on and off and now my results were making me pay attention. Well, I finally opened a brokerage account in Jan of '99. I started small just by buying stocks that were breaking out ( I remember riding AOL from $90 to $120). At one point I had made money on 8 or 9 straight plays. During the first week of April, I decided to open an account to trade options. I was going into the big time!! I remember I had $8k to start the account. And after my first week in the market, I turned it into a little over $12k!! Wow, a 50% return in a week. And the following week the account hit an all time high of around $13,500 I believe. If you look at the charts, this early april time period was when alot of stocks were making big moves up, but, alas, they were peaking. I was making money both ways, buying calls on breakouts and puts on giant reversals (Etrade and National Discount Brokers were two reversals). Then my account went down to about $12k. And then the unexpected happened. I quit while I was ahead. I stopped trading completely except for a MCOM reversal play in July. Why did I quit: Too much money in each individual play. I remember having a horrible feeling in my stomach on an AMZN play over the weekend. I had too much money at risk. The market was changing. Interest rates were heading up. I wasn't ready for the huge swings in emotion you get from trading. Since then I've slowly gotten back into trading. Better methods, less emotion involved, better money management. I'll never forget being up 50% in a week and thinking...I could hit 6 or 7 figures in a year if this keeps up. Bottom line, don't trade until you're ready. And stay humble about it.
I had always been interested in the stock market but never had any money until 1999. The few times before 1999 that I had put money into the stock market was when I bought a 100 shares of T. Boone Pickens company in October 1987, the day before the crash, and when I bought 100 shares of Intel in Oct, 1997, the day before the crash that year. Not a great track record. I started a company in 1996 that became a rare bird: a profitable Internet company. My company built websites for other companies. It was an amazing business back in the day because everybody thought HTML was rocket science and forget about it if you actually knew how to program. Everybody desperately wanted a website and nobody knew how to price this stuff. In 1996 my partner and I charged 130K to build americanexpress.com and we probably spent about 200 manhours doing it. Gradually, we started to get more corporate accounts before the scam was over and within a few years we had done timewarner.com, hbo.com, marvel.com, newline.com, badboy.com, interscope.com and the list goes on and on. We had about 50 employees, offices in LA, NYC, London (well, we had a phone booth in London but on our business cards it was our "London" office). We were speaking at conferences and considered experts on the Internet. The bidding war started for our company and we eventually sold for about $5M to a public company that was Nasdaq smallcap. They owned a travel agency and also sold special burn resistant blankets to firemen. Now they were an Internet company. They promptly transferred over to Nasdaq NMS and their stock multiplied by 10. They started rolling up other Internet companies, big unprofitable ones. Everything would work out, right? I started playing around in the stock market in mid-1999. I took about 500K (pocket change) and started buying calls on CMGI, PCLN, etc. You know, the "blue-chip" internet stocks. Quickly turned it into 2.5M. My biggest hit was a company called XPDR/Expedior. I bought 100K shares of their stock at 15 and within two days it went to 25. The company has since gone bankrupt. I thought I was invincible. I bought and redid a 4400 sq. ft penthouse in Tribeca (business cards from the 100th floor of the WTC flew onto my roof on 9/11). I started playing massive amounts of poker. My wife and I rented a beach house near AC and I used to fly a helicopter down for the weekends from Manhattan. I flew to Las Vegas to play in Michael Jordan's basketball camp. I would leave $100 tips to cabdrivers. I was like a drunken rock star. I was immortal. In addition to non-stop trading at this point I became a VC, raised $200M. Started a couple of other companies and began my pissing away contest. How much money could I lose as quickly as possible. I was investing in every junky Internet company that came across my desk. I was the definition of the bubble boy. Bankers wanted to wine and dine me, VCs wanted to hear what I was looking at, LBO shops were afraid I wouldn't do deals with them. Now, of course, none of these people would return my calls even if I wanted to talk to them. Which I don't. April 2000 was, of course, a buying opportunity. Those "opportunities" continued for the next year and a half. Meanwhile, the company I had sold my company to went bankrupt. And every stock I touched turned to shit. Most private companies I invested in quickly went bankrupt. It was all downhill. I couldn't believe it. I had never experienced failure like this . I didn't know what to do. I was massively depressed and couldn't function. I tried a two-pronged approach of therapy and Zen meditation to pull me out of my funk. I would sit for hours at a time in the lotus position staring at a blank wall. When I would get up to walk I thought I would have to amputate my legs because they were either numb or in extraordinary pain. I just couldn't get over how much my ego had taken over and essentially destroyed my life. I didn't know what to do. The depression burned the soul out of me and I had to find some new light inside that I could see the rest of my life with. Despite everything, I was still interested in the stock market. I took a step back and decided to do what I had done with everything else in my life until my ego expanded to fill the universe. I took it slow and tried to learn everything I could. I read about 100 books. Every article i could find. I wrote software and downloaded data for every stock over the past 50 years. I tested out every technical indicator out there to see what worked and what didn't (the results were surprising). I still had one or two blowouts when the cowboy in me wanted to run wild and I didn't stick to basic discipline (position size). Basically, the main thing I do now is try not to lose money. I am terrified of taking a substantial hit. I am obsessed with finding the margin of safety on every stock I buy. I day trade, swing trade, and long-term trade. I use a combination of technical analysis (to identify candidates) and fundamental analysis (to build margin of safety). A stock has to jump through a lot of hoops for me to even remotely like it: a. it has to do a significant tanking that puts it 2 stds below its moving average b. it has to either have insider buying or a share buyback program going on. (Management has to think their stock is undervalued). c. the reason for the tanking has to have a high probability of being irrational (they missed by one penny on earnings is my favorite). d. after they tank they have to have an enterprise value / cash flow of < 10. e. cash in the bank with little or zero debt (so they don't go to zero unless they are a complete fraud). f. growth or strong potential for growth g. VIX should be higher than 25 (guarantees that people are irrationally panicking) or VXN higher than 48 before I make significant purchases (i.e. average down). h. if VIX is not higher than 25 then I require the company to have a preferred stock that yields greater than 10% (because the stock tanked) and I buy the preferred and short the common to lock in the yield. The higher the VIX rises and the more the stock tanks the more I "unbox" the short. i. I don't put 10% of my portfolio in anything. j. I usually don't buy before 2PM on any day. k. if any fundamentals change or if insiders start selling (when its not part of an automatic plan) I instantly get out. Those are the basics. I spend about 18 hours a day now researching stuff to make sure my ever-changing portfolio always matches all of these conditions. My goal now is not to kill it but simply make my living expenses (which are still substantial unfortunately) and build up a solid track record with little volatility. Up about 30% so far ytd and, knock on wood, I hope my road to recovery has begun.
Fascinating stuff. I have never been interested in the stock market from an investing point of view and have ignored it for most of my life. I got interested in daytrading about the time that guy shot up those people in Atlanta. Up till then I didnt know there were people jumping in and out of the market playing for short term profits. The more I read about it the more I felt this is something I was born to do. I opened an account March 2000 and have been trading every since. Hoping to become consistently profitable by the time I retire in a couple of more years. In my first account I was trying to scalp nasdaq stocks on a 56k at 29.95 a side. Talk about naive. It has been a long journey.
here is my story. In 96 I went through a divorce. I was 42, my wife kicked me out because she said my business was more important than she was. From a young age, my father taught me that in order for me to have his approval, I had to be successful in athletics, then business. I was good in budiness, and did allow my business to direct my life. In 97/98 I went through mid-life deal, chasing women,quitting my job, re-evaluating my life, dealt with some father issues. Outside of having my 3 kids, it was the most productive time of my life. Also had a lot of fun! Since I no longer had a job, but was dating attractive women who were used to being spoiled, I needed to make money. What easier way than trading? Whatever I attempted before I was good at, so what is the problem, a piece of cake. I was good and consistent from the start. Good at blowing up and consistent at losing money for 3 years. The fourth year I broke even, Now I honestly feel like I am in the door. I like this forum, good health to everyone. PS why the big deal about Jesse Livermore? HE committed suicide at a young age, leaving a wife and son with nothing. Is that the person traders want to model there life after? IN my humble opinion, if people think he was the best, the markets will present a wonderful opportunity for anyone choosing a simple and balanced path.
I recently came across this thread and liked it. Of course, by now it may be too late, but I hope not. Here's my story: Like many other people here, I went to school, graduated with a few degrees, got married and landed my first real job with a major company. Worked there for 18 years, got promoted a few times, acumulated lots of serious suits and white shirts in my closet, and felt almost totally out of place. The rat race was not for me, I knew that well. I had a lot more fun writing science fiction stories and investing my savings in mutual funds and some stocks I liked. Investment-wise, I did very well over the years. Our family life was great too, now with two wonderful little kids to show for. In 1998 I took the first good early retirement package that came my way and stayed home, still writing my heart out and studying what I called "trading science" seriously this time. In 1999, with a few of my stories published, I took the plunge and started trading full time. What a great year! I traded stocks and options, about 50-50. Everything came my way and finished with a very strong gain. The following year things of course went sour for many of us. The main reason I was doing poorly was that I could not let go of my basic paradigm that this was a temporary correction, and I bought every dip, leaving my gains of the previous year on the table. It was my wife who helped me see the situation more clearly, as always. "Wake up and smell the roses, my love," sort of thing. By the end of that year, I was selling more and more of the tops, and had started a much more serious effort to understand trading in depth. I read more books, went to more seminars, bought and learned to use more trading tools, practically everything available out there. It was at that point that I was drawn to trading futures, especially the ES and the NQ, which I found perfect: simple, elegant, well leveraged, relatively easy to understand, and of course (as time passed) profitable. I just love trading those. Still, although my personal trading was doing well, I managed to lose money in 2001 as well, because various systems that I bought and gave to brokers to trade for me did extremely poorly. Unfortunately I didn't manage to kick that habit until this year. Although I am a very positive person by nature, I now tend to think that a large part of that industry (broker-assisted trading) is a scam. Oh well, nothing to worry about, I keep saying, my personal trading is doing better and better every week and month, thank God. Now things are going very well and I'm very happy about it. I mostly daytrade the ES (some NQ) with my own combination of styles and tools I have picked up or developed. Powerful, simple stuff. I also use daily and weekly charts to trade stocks and options for our IRAs and other longer term funds. Remember, by now I've been to almost every seminar offered in the country and own practically every trading tool on the market. My next ambition in life is to train my very smart 13-year old son to trade (we have serious plans for the summer) so that he can have a totally independent profession and source of income by the time he finishes high-school, whatever else he decides to do with his life. My 9 year old daughter will surely follow - she already likes sitting with me to watch me trade, and never hesitates to claim part of the gains And my wife (still with a major company) has stopped crossing herself and looking elsewhere every time she enters my trading room, but for the most part avoids the topic. "When you are certain that you can teach me an easy technique to trade profitably from the deck of a cruise ship in the Carribbean, come and talk to me," she says. It's a tall order, but I'm working on it
well i was the one who started this thread some years ago. yes, years. and im still struggling, and im not the dumbest/laziest guy on the block. so this should say something to those looking to get into this biz. p.s. at least im honest with myself and others
My advice to you is to keep at it, find something that works, and then get really good at it. Papertrade in a notebook, and then show your results to someone and hope they'll give you a stake to trade. That's what I did after I blew out my first stake (my own life savings, 600 bucks left in that datek account now). I kept at it for 9 months in a notebook, and posted my results in it every day, all the trades, and finally my dad banked me. Make sure you tell them that you WILL LOSE IT. My dad knew to trust me to it cause I would figure it out eventually. I lost almost half before I finally figured it out though. Many people never master it. I've heard that it's 90%+, so make sure you have something to fall back on. That was my advice to you over 2 years ago. It still is my advice. Find something to fall back on, but keep at it. If you work hard enough, you can achieve anything. During my first 18 mos. I spent over 120 hours a week on trading. I now have cut back to about 100 hours, but I still think about trading almost all when not doing the research and work. Since my post to you then, I think my skills have improved by a few hundred %, yet my profits are about the same % wise. This market is hard. If you can get to break even, that's quite an achievement.
If you want it bad enough, you will get it! Thats the bottom line. The first time I attempted trading I lost 27k in 6 months...second time one bad trade...whoohahhh....was holding 12k shares of one stock because the guy I was trading for saw me getting great returns on small positions...so he basically forced me to trade huge...guess what happened. The stock got some bad news and dropped from 11 bucks to 5.25 in about 30 minutes. I am very lucky in that the same guy saw that it was more or less his fault for the trade. What I mean is I wanted to exit a few days prior because I had a really bad feeling about it, but since I was short calls he didnt want me to be naked. He let me off the hook and started me over on my terms. Now I am making money, it took me 96k in losses to learn. As far as i`m concerned that 96k is pocket change compared to the money I will be making the rest if my life......keep it up bro....have faith, discipline and positive thinking. Nothing worth having is easily obtained.