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Where should a beginner begin?

  1. An acquaintance with time on her hands and good head on her shoulders has inquired about trading. She doesn’t know where to start. I said I would get back to her tomorrow but, frankly, i’m at a bit of a loss. I know what she needs to know, but not clear on the optimal order of instruction. God forbid she should go about it the way I did, which was all wrong (indicator obsession).

    So any recommendations for sound resources to get a beginner off on the right foot?

    Begin with order flow? Support:resistance? Chart patterns? What...

  2. Trade MGC futures with one contract. Quick, clean, low-risk exposure. And if anyone here gives you guff about liquidity, tell them to bite your chode.
  3. This, after trying all kinds of markets, losing my head and my money on the larger contracts. I am now slowly starting to understand what is going on and make decent trades on MGC. I've come to the conclusion that its ok to live off my savings while I learn to trade profitably, rather then trying to make rent money trading big contracts and losing it anyway.
  4. Yes, this. It is a very inexpensive way to get into a trading instrument and feel it all out.
  5. Id also recommend keeping just enough money in the trading account to cover the margin and a few losing trades, otherwise you can click yourself into some trouble even with the micro contracts.
  6. Does anyone have any recommendations for a book—or a thread, for that matter—that would help her get started properly?
  7. Tons of threads on books here, and tons of books out there.

    Look at it like a business, and get feet wet with a tiny bit of money. Some days you will lose, some days you will win. But at least you will learn yourself which a book cannot learn you.

    Books may mess up your head if you are trying it with pure TA. Toss some FA in there and you have a healthy cauldron of thinking brewing. Figuring it out on your own might be the best way to start.

    I didn't read any books before I got into it, and have had successes and failures. If I had started a bit smaller I would be in a better position than I am in now. Lesson learned.

    But very well learned. No book could ever prepare me for the real deal. The real deal did. So start small and learn the market, and learn yourself.
  8. I get that. It’s the way I learned. But I would never wish the way I learned on anyone else.
  9. "So any recommendations for sound resources to get a beginner off on the right foot?"

    I'm going to go on a limb here and say Mark Douglas's "Trading in the Zone". It seems the party favorite in trading circles. Never read it myself.

    Your acquaintance would probably be best served by just going the Micro route. Alas, that's all I got. (Oh, and listening to lots of Pink Floyd will help immeasurably).
  10. Trading Price.
  11. Learn price action
  12. hundreds of pages of the gibberish.Just give her the candle quaters and you`ll be surprise how poor your at trading and how great she is.
  13. Have her watch www.tastytrade.com If she finds that stimulating and thereby asks you questions, then that will guide you to be able to direct her focus with your help.
  15. Ofcourse,that`s what they need...
  16. Study philosophy and life wisdom, first. -- kind of like The Karate Kid...you don't immediately just kick and punch, and expect to win.

    The market and business and psychology then comes next, and all of its collective, dynamic variables and technicalities.

    Trade to be a black belt, Elite, trader -- or nothing at all.
    Will you be part of the less than 1% that truly succeed trading...or a part of the 99%+ that flail around getting nowhere,

    Study the teachings of Bruce Lee, it's pretty good...the wisdom applies to more than just the literal field of martial arts. There are some on Youtube.
  17. If you are talking about trading, then one thing is a must: a proper understanding bout all financial market tools and techniques. In today’s world, derivative market is also increasing at an increasing pace, so if you don’t know about in and out of financial market how you can be able to trade? No pro trader will suggest that bond is better than equity rather he may say that you can invest where you will find better opportunities to trade. By the right now, I prefer currency investment in the forex market.

  18. I realised, reading your OP last night, what a very difficult question it is to answer (especially without knowing the person concerned!).

    This is about all I have to offer. [​IMG]
  19. is she cut out for a job like a freelance photographer, with infrequent gigs & hence erratic income? does she have a passion for trading? or if it is just to make $ cos trading seems easy? if the answer is yes, like 99.999% of us, save her the tears & time by gently discouraging her. it takes an average of 7 years to make a trader, without good mentors

    if she is not all the above, the fastest way to learn is to seek good mentors. from her social circle or online. she may need advice from you on how to filter BS. or you could just try mentoring her, if you are profitable

    giving advice on trading is tough bcos everyone is different. trading styles that appeal to you, may not appeal to her. to self discover a trading style, journal all her thoughts when trading, & seek a trade she can repeat, over & over. the best way to learn market structure is to observe price when it arrives at significant highs or lows. when is price likely to reverse vs when it is likely to breakout. ultimately as a trader (& not investor/ fund mgr), we are seeking to trade when enough traders are trapped in positions
  20. By developing your own philosophy of how the market works.
  21. Exactly my thoughts. Main question here is does she have time to dedicate, and even more importantly disposable cash.
  22. It isn't easy to know due to the reason Xela stated.
    Is she averse to risk? Is she thorough or does she prefer to take short cuts? Is she humble or is she proud?

    Generally speaking I'd direct her to find out first and foremost what drives prices.
    Study various markets.
    Study participants who trade these individual markets. How do the participants moving the most money trade? What do they focus on?

    When I first started I focused on price itself and indicators.
    When I look back I am very embarrassed at my ignorance then.
  23. Assuming she does have the time and capital, she shouldn't waste her time until she's done the above. No point playing a game if you don't know the rules of the game.
  24. What I say below is my opinion ONLY and should not be construed as trading advice. Each trader has to build their own road.

    My suggestion is: Spring for al brooks video course. Study it for 2 or 3 years over and over. Practice for a year on a live trading simulator. Then, and only then perhaps, consider trading with money.

    Finally, buy brooks books. All four books and spend the next few years (after the previous years of studying the videos) devouring them as she is trading (should she decide to in fact trade live after the videos and a year of practice). The books will make much more sense after listening to the videos over and over.

    This is my opinion.
  25. Are you long term profitable? Has she asked to/been shown your statements?

  26. It's quite a bit of my opinion, too ... if she's the right sort of person to benefit from them.

    For the right people
    , the approach you outline is a solid and excellent one, for sure.

    My only reservation is that some will perhaps find it off-puttingly difficult, as I nearly did myself, to be honest ... though you definitely have the order right, to minimize the risk of that happening - which I didn't, at the time (I don't think the videos were available back then).

    It's perhaps arguable that the people who get put off aren't really going to become traders anyway - I just don't know whether that's true. [​IMG]

    I'm criticising myself and not you, but I don't really know what this means: it seems to me that whatever it means, it's probably going to depend on acquiring quite a bit of knowledge and experience first, which kind of takes us back to the original question? [​IMG]
  27. Had to look that up. (I don't get out enough.)
  28. The market has "a way". Your (or anyone else's) "philosophy" about it is bogus.
  29. Begin what? Trading? Investing? Minding her own IRA? You should begin by finding out
    1) where she is, and
    2) where she thinks she is.
    Then, you might query her for
    3) where she might wish to go.

    From a lot of experience, you're likely to find out that
    1) she isn't where she thinks she is, and that
    2) where she thought she was is no longer the goal, and that
    3) where she might wish to go now is completely up in the air --
    and your throwing books, videos, and trading platforms at her will mess her up but good.:confused:

    The game you're entering is Financial Advisor, and truly and hugely, Step #1 is finding out where she's at. (AND, it's easy!) The rest will fall out rather plainly after that.
  30. The market has a "way" of behaving... buying and selling. Our objective as traders is to figure that out and get our bet in line with whatever the market is doing. Whatever "philosophy" anyone has about "the market anything... other than how it really works", is bogus distraction. IOW... you should not have a "philosophy about how it works" or "is supposed to work". You either "get it"... how it works, or you don't.

    The market is more of a physics problem than a philosophical one.

    As soon as someone says, "my philosophy of the market is ___________", I immediately understand he doesn't know what he's talking about.
  31. How does the market work then? Let's say, index futures...
  32. I don't mind informing you as to "where to fish", but I'm not going to bait your hook and cast your line for you, too.
  33. In conclusion...everyone is full of stuff currently at the present moment. -- But we all hope we get lucky and win the trade. and feel proud. and wise. and successful.
  34. Disagree. More like "hope we don't get unlucky"... otherwise, we're supposed to prevail.
  35. A slightly more poetic way of saying a coin has two sides. o_O
  36. Not a good analogy. A coin with its "2 sides", is always a 50-50 proposition. Trading the markets properly is more like a 98-2 proposition.
  37. That CME video I posted above is a very basic example. I think you've misunderstood what I was saying. Let's just leave it at that.
  38. Something that comes before the above is understanding the microstructure of markets based on factual information.

    Trading and Exchanges by Harris is an excellent text on the subject.

    By understanding the various participants, why they participate, when they participate, and how they participate, a map of the territory is differentiated. With this map one can navigate in the most efficient manner toward their goals and what unknown yet knowable obstacles (that exist inherent in market structure itself) that are in their way.

    However for a true beginner, there is nothing like the Wiley's series "The little book of,..." They are introductory, short, broad strokes in a variety of investing/trading/writing styles that one can digest very easily without being overwhelmed.
  39. Nani? (That's Japanese for "huh"?) Not relevant in the least.
  40. Trading isn't easy as you know because of the pressures in the market swinging from one side to the other and doing so amongst so many variables and unknowns. Every conceivable event can affect the market. However, its impact is unknowable until it happens. Then you got all the unconceivable events because they have yet to be thought of. Sooner or later these too can affect the markets.

    That said, learning to read price action as put forth by brooks, has the capacity or potential to help a trader more correctly "read" and "interpret" the pressures caused by the events as they have effected the markets. In short, the action of price itself produces a sort of conglomeration of roadsigns to certain destinations. However, detours happen quite often as new events in the very near, or longer term, affect market direction. Hence, the roadsigns are not certainties but simply more probable, or at least more feasible, instructions to a trader who understands them. It might be called "the language" of the markets. And anyone who has endeavored to study and speak a new language understands the task at hand. I say all this to say that the winning side of the pressures can to some degree be deduced. At least to some profitable degree over the long haul. It is actually quite useful to view the markets as having a language of its own with all its subleties therein.

    The road is full of potholes, and many are unknowable until one falls in the pothole, but there is a road, and it has a destination, and it can be traveled despite the many risks and adventures therein, good and bad. And I might add the destination can be reached successfully.

    Just this morning a trade that I took almost immediately hit what appeared to be a pothole. Prior to brooks I probally would have lost on this trade. I deduced the probable price direction correctly and read the roadsigns correctly but i missed seeing the pothole. Once I was in it I reassessed the situation considering the new factor involved i.e. the pothole (more than once I reassessed I might add!) and determined it was probally just a bump in the road that would not cause a tire blowout. Therefore, I took advantage of the situation and opportunity that was handed to me and I scaled in and added to that losing position instead of jumping ship. Then I added a second time. What looked like a "not so good" situation at first glance, actually became an additional opportunity.

    I kept my stop at a place and point that supported my interpretation of that market price action and risk level. Within a few minutes I was back to breakeven then shortly thereafter into a handsome profit. Prior to brooks training I probally would have just ended up with a muddy car from the pothole and another day at Mcdonalds instead of a nice steakhouse. Not to say anything negative about Mcdonalds as I do like the plain double cheeseburger with only pickles and mustard on it but most of the time i would opt for a ribeye over a hamburger..(any hamburger).

    Nevertheless, it is a long road to refine that skill and does take alot of study and practice to get good at it. In my opinion brooks has the best and most thorough explanations of the concepts but they are not easily and quickly grasped, without much mental exertion and practice.

    For the mentally lazy and the impatient trader probally best to not even look at brooks materials and training as you will undoubtedly give up in utter disgust and have nothing but criticism of the man and his understanding and his explanation of the markets and how to trade them.

    However, for the hardworking..digging..openminded..focused..trader with a mind trained for mental excertion AND patience then brooks training may indeed change your trading life.
  41. I actually agree with this which confirms the misunderstanding, probably due to the ambiguity of my initial statement.

    Given that it's not publicly available and you probably won't read about it in any books, it's really your own philosophy about how the market works.
  42. It's amazing the number of people who say "oh, I have always been interested in trading but just never had anyone show me how" and then expect you to chug away explaining stuff to them. When I ask what they have done about their interest so far, they just say they don't/didn't know where to get started.

    Then you see the same person a few weeks later and they say they are going to Portugal on vacation with their partner and have never been there, but they have visited 623 websites, joined five forums on Portugal, contacted 48 people about Air BnB, have checked 12 cheap air ticket sites, contacted their cousin who has a friend in Portugal, have bought a Rosetta Stone program to learn Portuguese, have learned to convert us dollars to euros in a second, and have already checked on apartment rentals in Lisbon in case they want to stay longer.....etc. etc.

    Bunch of bullshitters out there. Trading is one of the most self-directed activities on the planet- day in and day out. I tell people that I am always willing to meet with them to discuss what trading related activities they are working on, even if it is just beginning activities. That works out fine for those who are truly interested but most have a look on their face that says "wait, I was thinking we would have coffee, and you would talk a lot." Heh, whatever.

    A few months ago a person I know said he wanted to come by sometime before I started trading in the day to see some things as I started in for the day- even though I had sorta been trying to shake him off. Never came by...he changed his mind a bit when he found out that when I referred to 3 o'clock, that meant 3 in the morning, and no, you don't get used to it. :cool:
  43. While I don't want to share any responsibility for turning this into yet another Al Brooks thread, the idea of spending 2 or 3 years studying videos and another "few years" studying four books prompts an esophageal response. That so many vendors seek to make this so difficult (and only the vendor can provide salvation) is I suspect the chief reason why the failure rate is so high (there are of course other reasons, like laziness).

    Someone who knows absolutely nothing about trading, and, presumably, the markets, needs to understand demand and supply (which is a law, not a philosophy), and that prices rise when buying pressure exceeds selling pressure and fall when selling pressure exceeds buying pressure. Who's doing the trading and when and where and how and why is all important, but unless one understands that prices rise and fall due to imbalances between buying and selling pressures, the rest of it is of no importance. And it doesn't take years to understand this. Months, maybe. Perhaps even weeks. Some people get it in an afternoon. Granted the colors and candles and indicators and lines and shapes confuse the issue, but if one can sit down with a beginner with a simple line chart (to avoid being distracted by bars and candles and colors), the true basics can be grasped quite easily. Once the "why" of price movement is understood (price rises because demand is greater than supply and vice versa), there is a "conceptual framework" within which to fit all the pegs. And it doesn't cost a dime. If one skips these basics, however, and attempts to learn to trade "by doing", i.e., inductively, he not only will be spending a great deal more time in the effort but will most likely be faced with having to back up and relearn what he should have learned in the first place, all the while attempting to forget everything he's learned that has turned out not to be true.

    Those who seek to work with beginners would do well to think about the Hippocratic Oath: first, do no harm.
  44. Saying microstructure isn’t relevant is a very wide brush stroke. Many different types of players.
  45. Unless one is willing and capable of expending considerable time and effort and can endure frustration and failure along the way, it's best not to start at all.
  46. LOTS of different kinds of players, of course (mostly wrong). But their pursuits are not in tune with with the market's thingy, so it's all just pissn' into the wind.
  47. Yup. Might as well just go flip burgers. I hear they're paying $15/hr in some places now. :)
  48. Lol but they can't afford the rent in those places.
  49. Thank you for the link.

    Best wishes.
  50. Also:


    Start small. (Or "little," as the case may be.) It's good to start with an overview before getting into the weeds.
  51. You don't decide to start trading and Voila!, it works. Given that something like 90% of day traders blow out, don't encourage her.

    Speedo succinctly summed it up: "Unless one is willing and capable of expending considerable time and effort and can endure frustration and failure along the way, it's best not to start at all."

    The post by Tom McGinnis was also dead on. "Where is she and where does she want to go?"

    There were other good referrals but how will your friend benefit if she lacks a fundamental understanding of the markets? What good will come of it from spending time at tastytrade if you haven't read a good option book and have a sound understanding of them? It's like recommending that if someone reads Graham's "The Intelligent Investor" then they be able to craft a sound portfolio like Warren Buffet (slight exaggeration :). You don't start with the best books/courses and expect it to make sense.

    My suggestion is that she start at the beginning. Read some "XXX For Dummies" books. Find out what is of interest (ETFs? Equities? Options? Futures?) and then read some books on that topic. Once she has a decent foundation then she'll be able to converse with other investors/traders and have a better understanding of their suggestions and possible relevance to her.
  52. Easy to say but quite harder to implement. By pressures if you mean activity i.e. volume then one needs to understand price can also rise on declining volume and it can do so ALL day long.
  53. In general the concept of supply and demand is important and but even more important is how to DETERMINE which is stronger and that requires interpretation of something and it is not as easy as looking at a line chart. Of course, it is easy in hindsite looking at MOST ANY CHART.
  54. No, by "pressures" I mean those who are interested in buying vs those who are interested in selling. If sellers are offering few if any obstacles to buyers, price can rise on practically no volume at all. Today's activity in the NQ is a good example of this. What is most important to an increase in price is whether or not demand is greater than supply.

    As for being harder to implement, that depends on how much one knows and how much of what he knows is untrue. If one starts off on the wrong foot, he may never get it. And many never do. Those who know absolutely nothing about charts and indeed may never have seen one have little to no trouble with this.
  55. The only interpretation required is to determine whether price is higher or lower at point A than it was at Point B, even if those points are only ticks apart. If one can't do this in real time, then, yes, he's going to have trouble.

    You may want to look at the Trading Price link I posted earlier (post #10). The thread is only 25 posts long.
  56. Speedo is correct. The "where is she and where does she want to go" actually is quite easy to deduce. She is at zero. She wants to become a profitable trader.
  57. NQ volume is on the light side for a 100+ point rise, ES volume is pathetic but the RTY is approaching old ER volume range.
  58. Mine was actually slightly worst than 50-50.:(
  59. Actually it can be the exact opposite. Sellers offer an obstacle by backing off on their offers causing price to rise on very soft volume because sellers are backing off and buyers have to bump up to buy.

    Nowdays interested buyers and interested sellers doesn't actually mean alot because there is so much illegal spoofing going on so the "wall" on a dom means less than what it used to mean as htfs make and pull offers and bids faster than a trader can say jimbo.

    Price can rise because of increased demand. It can also rise on sellers backing away. And volume can stay the same, in both cases. The net effect is the same but the concepts are different. Actually today the sellers were probally backing off as opposed to buyers tripping over themselves forcing BO's
  60. That sounds awfully like a philosophy to me.
  61. Its not that easy. Sorry.
  62. You're introducing the DOM and buy and sell orders, which may be important to a scalper but not likely to be of concern to someone who is new to the markets. When one limits himself to completed transactions, which are all that a beginner is likely to be concerned with, the picture is considerably clearer.
  63. In the most basic sense, that's true. But where does she want to go involves more than just that. She might want to trade for additional income and that could be as easy as some covered calls for some extra yield. Or maybe she wants to be a day trading giant like many of those who post here all day long :D
  64. %%
    Well, XEla ,since it takes time to develop anything; i would for starters mention it takes most people years.And if she is not @ the top of the typing class in speed,that tells us a lot. If she is at the top of her class in typing speed, that could be one out of 100 development points:caution::cool:
  65. It can be.

  66. Lvbo’s (low volume break out) exist, but in liquid markets this phenomenon presents itself because it’s in a non-Dominant retrace of a larger Dominant opposing channel.

    PA making new highs on decreasing volumes are not sustainable. Volume will come in to the market to continue the BO or reverse in the opposite direction.

    The cases where this is not true are illiquid markets with wide bid/ask spreads, where a bluffer hasn’t completed their campaign or an instrument whose fundamental values are not well known. Spread traders might influence this as well but my understanding of spread trading is limited.
  67. ROFLMAO OOPS again ROFLMAO......any dipstick can tell that unless they have chicksh?t in their eyes. Wow that is deep..really deep...ROFLMAO...good grief....it probally doesn't mean chickensh?t to you but my respect for your trading was increasing until now...it has all flown the chicken coop now and I am back to zero...you begining to sound like whats his name that gives away those free indicators..actually i believe he might charge now..whats his name? You know him! Is it Tro? I think that is it???
  68. Oh boy!
  69. Are you saying that he's no longer the Karate Kid of Elite trading???
  70. One would think so. But then there are all those who've been shorting the NQ during the last 90 points. As I said, if a trader can't tell whether price is higher or lower at point A than it was at Point B, then, he's going to have trouble.
  71. Personally I will not train any friends - I may recommend the Market Wizards (original) if they seem really motivated and keep pestering me.

    Besides they may do a lot better on their own - I sure can't buffer them from the hard won & expensive lessons required to make it in this game.

    My X and I are good friends, never once has she asked for market advice. She has a knack for picking up the leading stocks during the big fire sales and holding, she outperforms me for years at a time. Good thing I didn't train her. We are both wise enough to know that mixing financial stuff with friends/family don't usually work out well.
  72. Sir, there is a study that said women were better investors/traders because they didn't take as much risks and were more patient, two critical elements of successful trading.:finger:
  73. How true, very easily can be ex-girl friend if you help teach her how to trade.:D
  74. They also have much less ego. They're more concerned about trading well than about "keeping score". Their focus, therefore, is more on the market and its dynamics than on themselves. Or perhaps I should say their "selves".
  75. What drives prices, volume and trends from a technical (not fundamental) perspective? That's essentially what you would be asking yourself when developing a theory of how the market works.
  76. Does she want to be a trader or does she want to make trades?
  77. Ideally both.
  78. I have known hundreds of people who trade for a living but I would only consider a handful of them traders.
  79. :rolleyes:
  80. If no one's mentioned it in 9 pages, investopedia is a good source for fundamentals. I've kind of been following Buffet's advice of going after strong companies with decent leadership but never really read anything by the guy.... May behoove to read up on FA I suppose.

  81. Does anyone either of you know currently make a living trading?

    If yes, start there.
  82. The right learning recommendation for anyone on any subject is only known .... in hindsight.
  83. %%
    That can be part of a big edge, not having a male Ego LOL:D I also see some danger for original posters female friend-what is that?? Quote''she has a good head on her shoulders'' As they say in Chicago--the smarter you are the longer it takes:caution::cool: Another female advantage, she may say like one-'' I've been afraid to get in the market, exspecting another 2008 crash.'' I told her, i know how you feel ,if i thought that, also i would not buy much ...... But really flash crash seldom happens, 2008 was a polar bear market

  84. I "liked" your post just by way of saying "I'm glad you said all that, so I didn't have to". [​IMG] [​IMG]
  85. %%
    Good green pictures,+Ela.....LOL Another advantage of having a male ego, eveen though some punks/system sellers are not polite; most men are polite but blunt... Save enough bullets, so if an elephant comes by fire away- as UK fund manager says