Hello, I'm new to trading and wondering if you guys can give me some tips. What kind of trading would you guys suggest for a first timer? (forex? stocks? futures? options?) I'm trying to learn forex right now. Which kind of trading did you start out with? thanks
Completely agreed until you learn a platform. Simulated trading does not teach you psychological barriers of trading. I was confident on demo, then I switched to live in Futures, and got creamed. My confidence was so high that I started with 2 contracts instead of one. Once you learn a platform, then move on to 100 shares of a stock of your choice and trade it for a few months and see if you made or lost money. You trade futures, you lose a lot more money faster, you trade forex...... well... forex is a difficult market to trade if you don't know what you are doing. BUT, if you do stick with it, and open up a mini-account or something like Oanda and trade in the lowest amount possible, who knows. Futures are just too highly leveraged. Either Equities with 100 shares, or Forex with the lowest amount possible. Do it for about a few months, see where you at. Take note when you get greedy and move up in position and how much it will cost you. Chances are you will blow up your account, so be aware of that and fund it with as little as possible. I'd of course recommend getting around 3k - 5k together and go to a prop shop and trade 100 shares, that way you don't have to stick 25k in your account and you can trade as much or as little as you want. I wish I started out doing that. So maybe you'd be the same.
Oh no, I've tried 'em all. Futures, Forex, Equities. The only thing I have tried live is options. I started with Equities, I didn't have enough money to do day-trading. I put 2k in an account, and then left my eTrade account *for reasons I wish not to discuss* with 1k. Then I went and funded a forex mini account. It was back and forth, but in the end I blew that out. Forex was my first market where I could day-trade, but didn't understand it fully. Blew out 2 mini accounts. Then I moved to Futures. I didn't last long, blew out a 2k account. Then switched to equities with a prop firm. Put down some money, they gave me the buying power and I could day-trade to my hearts content. Never looked back since. Since then I've been dabbling around with a Forex demo account, I want to learn another market incase anything happens, but I'm completely focused on stocks. Stocks offer the lowest leveraged vehicle you can trade. You trade 100 shares of a stock, you set a loss at $50 a day with 100 shares, you keep going until you start being consistent... first you stop hitting your stop on a daily basis, by limiting your losses. Then you work on breaking even, making a little, then you start making a little bit of money on a daily basis, still a bit rocky. Then you refine your thinking some more, and then you come out being consistent. I am no where near the traders that post on the Trader P&L threads here on ET. But I know what I have to do to be a good trader, and i have studied what I need to do. It's been a year since I started. When I first started, I saw a lot of people say it required 2 - 3 years to become a good trader. I did not believe it, I seriously thought I was a fast learner. But fact of that matter, that it is true. The more experience you have, the better off you are. I have talked to a lot of people here on ET, a lot via PM and such, asking the traders I know are successful what sets them apart from the 95% that lose in this game. Although a lot of times the answers are different, they all are similar in ways as well. So I know what I need to do to be successful. Consistency is one of the important things I have to be. This is what you need to aim for. So, take it from someone who has been there. I try to explain to all newbies I talk to what they need to do. What YOU need to do. Is preserve your capital. You need to take the money you are using right now to enter the markets, and make it last as long as humanly possible. Do not trade in more than the minimum. Use the money you have now as your money to learn the markets. You may lose it all, but it's better to spend a few months with the money you are putting towards this to learn how to trade, then to blow out in a few weeks and have to refund the account again, when you end up realizing that you could still have the money you first deposited. So, learn with the money you are willing to risk. Do NOT try to make money. Try to learn the markets. Do not care if you lose money. Try to pretend you are already going to lose all that money anyways. So use it the best you can now to learn the markets. Assume it will be gone, and just try as hard as you can to make it last. Try different things, different strategies. Learn to try to become consistent. If you go to a prop shop, set a stop for the day once you lose 50 or 100 dollars (depending on how much you want to risk). If you have 1k (like I did).... with a $50 stop loss for a day. You could have afforded to go a month straight of straight losses before you blew out. Fortunately, that never happened for me. But if it does happen, just imagine how much more experience you would have gotten than if you had lost 300, then 200, then 100, then another 300... and so on. http://www.elitetrader.com/vb/showthread.php?threadid=68647 That guy blew out a 30k account in less than a month. He could have not been crazy about it and he could have used that 30k for a year or more using that to learn the markets. But in the above thread, that is what you call a gambler. He can't control his risk. Read Trading in the Zone by Mark Douglas. I loved that book. It helped me tremendously. Read it all. Read it again and again. It might not help you now, but it will help you sooner or later. I made a mistake of not reading that book until I switched over to equities. If I had read that book when I was dealing with futures... who knows. But it doesn't matter, do whatever you can to preserve your capital, and use it to learn how to trade. Treat that capital like it's all you got. Treat it like you are going to lose it anyways. So why not make it last, and trade small, instead of blowing out in a few days or in a month or so. Make sense? Hopefully it does. Others might recommend other markets, but from my personal experience, I wish I had traded equities a lot sooner. Futures just gave me too much leverage.
If you actually follow this advice, your experience in the market, might not be less painful. But if it is destined to be of great pain to you, at least it will come slowly, instead of coming all at once. If you stick around long enough and thing start to "click" for you, then maybe you will come out as one of the 5 or so percent that make it at this game. Good luck either way. Be sure to ask a lot of questions on this board, not stupid questions, but ask for advice on books and stuff. Learn about risk management right now, buy books on risk management, you might want to start a new thread about that or use the search feature here on ET. The search feature is one of my favorite things about elitetrader.com It's like a goldmine full of information that probably not many people utilize. I have printed out so many things written here. Including that above link I posted to the guy that blew out the 30k. Learn from the losers, learn from the winners. Yup, so.... good luck to you. Don't let anyone get you down. Just realize, you are in total control. This was a quote I created, I wrote it as my senior quote: "YOU are the CREATOR and DESTROYER of YOUR SUCCESS and FAILURE. *Yes I did really have that as my senior quote* You only have yourself to blame, and yourself to congratulate in this business.
wow, thanks for the great info. Can you suggest some other good books to me? And is a prop desk the only place to trade equities?
Trading in the Zone by Mark Douglas (MUST READ, this book made me a better trader all on itself *or at least made me realize a lot of things about being a good trader*) The Disciplined Trader by Mark Douglas (I liked Trading in the Zone Better, but this one couldn't hurt) The Market Wizards by Jack D. Schwager (MUST READ) The New Market Wizards by Jack D. Schwager (MUST READ) The Stock Market Course by George A. Fontanills (Good intro to equities, but optional, can find stuff on net) Encyclopedia of Chart Patterns by Thomas N. Bulkowski (the encyclopedia of chart patterns... expensive book) Reminiscences of a Stock Operator by Edwin Lefèvre (MUST READ!!!) That's a good start. The MUST READS are MUST READS though... lol A lot of these I waited till much later on in my trading career to read, big mistake.
books are good as toilet paper... u better off if u don't read any; just study u instruments of choice'n'stalk 'em all day long for weeks on end.
You can trade remote. If you want a list of prop firms you could PM me if you like. Prop firms basically allow you to put down a small amount of capital and day-trade. Otherwise you'll need 25k to day-trade. Although you can put less money in a retail account and swing trade instead.