Single, Capitalized and wanting to get started

Discussion in 'Professional Trading' started by cubsguy81, May 31, 2007.

  1. If one was serious about trading on their own (strategy irrelevant for the moment) and had about $200K in capital, single and no debt how would you proceed?
  2. =========
    4-5]Apply edge/with well researched written plan, with $1,000 ;
    which wil make you a profit swing/position trade profit while you learn ,
    which will be 50[fifty] times safer than $50k.
    Feel free to ignore that one ,most of us did & paid a price.LOL

    Read/reread Jack Schwager 3 top trader books 6 times & more

    7] it may take 7 years;
    about the same as a medical education,maybe takes less time .Let us see
  3. toc


    90% of the new traders lose out in the first two years. With this probability in mind, keep your money in some safe place where it grows 6% net of taxes and down the road you will be happy that this route was taken.

    There are lots of mutual funds which have returned 15%/year gross over last 5 years and give no bullet wounds in the process either.
  4. stay liquid. Season stays like this, you might be able to buy the Cubs, and still have enough left over for the 50 grand account.

    Jesus, do they suck, or what????
  5. First, go listen to Baz Luhrman's Everybodys Free (To Wear Sunscreen).

    Second, put the $200K in a high-yield savings account. There are several on the web that are paying 4+%.

    Third, begin exploring. Figure out why you would want to do this. Keep a diary and write down your thoughts. Yes, it seems childish, but you'll wish you did later (I wish I did).

    Figure out diferent styles of trading, and what fits your personality. There are many ways to make money in the markets. You will only survive if you enjoy what you're doing.

    Open a paper trading account somewhere that demonstrates the mechanics of trading in the market you think you would enjoy. Do not attempt to start trading. Do not attempt to win. The purpose of this exercise is to begin learning the mechanics.

    Acquire a 3-ring notebook, and divide it into 3 sections:

    Trading System
    Money Management

    Begin reading articles that are focused on these three subject areas. Print them out and save them in their appropriate section. Don't be too afraid to read articles that may not directly apply to the style of trading you are exploring. Just remember these are people's opinions. They aren't always correct, and often contradict one another. Many times, two authors will contradict each other, and they both will be right. You'll learn that later in your career.

    Now your first month has past. Congratulations! Your savings account just earned you some spending cash. Withdraw some of it and buy yourself a nice dinner.

    Now you're ready to start working on your system. I started by researching several simple systems that others developed, and made my own. It doesn't matter if their system no longer works. You will learn a lot by figuring out why it worked, even if it no longer does. After evaluating a couple of systems, you should have a good number of pages in section 1 and some in section 2 of your notebook.

    Forward test your systems using your paper trading account. Here are the rules:

    Do not be concerned with the system being profitable. Concern yourself with the mechanics of how the system works.

    Note each trade in another 3-ring notebook. 1 page per trade. Print the chart. Note why the trade was taken, entry, stops, etc. Separate the objective (numbers) from the subjective (pattern, emotions, etc.). Be sure to note what the overall market was doing.

    Look at your past trade after a specified period of time. I swing trade, and look at trades 7 days after I closed the trade. I look for ways the trade could have been better.

    DO NOT CHANGE THE SYSTEM. If you see a way the system could be adjusted, wait. Do 20 trades before looking for patterns. Only change the system after 80 trades. These numbers are arbitrary, and what I use.

    Did you notice your mood swings while you were trading? How did you feel after you won? What about when you lost? Put it in your diary.

    It has now been another month. Celebrate your progress (win or lose, it's still progress), by withdrawing some of the interest from your savings account and have some good clean fun.

    It is now time to begin your real education. Here is where you will accelerate your learning. You will have to, especially if you're being charged monthly fees.

    Open an account with a reputable firm with the minimum required. Do not use margin to purchase anything, unless it is required in your market (i.e. commodities or options). I started with $5k in an equities account. Plan on trading with this amount for 6 months. Plan on this being your education fund. From this fund comes your commissions, books, and services related to trading. Plan on this fund not having much in it 6 months from now. But you will learn more in these 6 months than probably you ever have.

    Now you've spent 9-12 months, and it cost you about $5k. Congratulations. You made it to the beginning of the trail. I have confidence you'll know what to do now.
  6. find out what are the best trading books and READ READ READ...

    equities, futures, commodities, derivatives ....its a big world and that 200K can disappear real fast if you dont know what your doing. I have seen people lose over a million dollars in 6 months during a bull market.

    if you want to really gamble open a PDT account with 25K and see how fast you can lose it.. you'll either get spanked and learn a lesson or two or you'll get really lucky and get obsessed.
  7. no reason to start w/ 200k. go prop and put up 5-10k and use their leverage and trade small. if you already have 200k in the bank, you probably have or have had a good job where you made good money, or you just came into the 200k somehow. it might be hard to trade for small wins and even smaller losses if you are used to making more money from a job, but it is consistency you are after in trading, especially when starting out. you can always add size and capital later.

    this is the approach i'm taking. i don't want to blow out, and i don't want to go back to a "straight" job. i'd rather make 20-30k for my first few years and build a foundation for a lifetime of trading. the money will come later if you learn to trade consistently first.