Here is your answer on WHAT to trade. As a newbie there is no better way to learn how markets move by watching either index ETF's or index futures. Dismiss the recommendations to trade individual stocks or currencies. Stocks are probably the most challenging to trade because of the reasons given in Specterx's post (and you won't be able to day trade them anyway unless you have the required 25k). It's too much for a beginner to start with who lacks the fundamental knowledge on why and how markets move. A few have mentioned it already. You will most likely lose, so by all means you should try to hold on to your capital. Start in a simulated account and learn how to trade there instead of risking your own money. It's not worth it. Don't make the same mistake.
you are exactly where i was when i started. you didn't just get divorced did ya? if so we got one more thing in common. before i go any further, you don't know me from Adam. so be skeptical of everything i write. this is only to get you to thinking, researching, and forming your own opinion. beware of the your knack for taking risks. you need to understand the risk and not be afraid of it. but don't take risk for the adrenaline rush. practice time will depend on you, and how quickly you get away from hunting the elusive holy grail and actually start learning. trading at its core is really simple. but walking the simple path is one of the hardest things to do. the longer your time frame, the more fundamentals come into play. but why buy a stock of great company if its not moving up? why buy oil if its crashing through the floor even though the recent inventory report indicates a shortage. fundamentals are more of a screen. the technicals of when to buy/short/cover are the way. price is king in this game and it doesn't give a damn about the balance sheet. since i don't know anyone personally on this board, i cannot comment on if anyone is making money or not. i can only comment on my performance. but would you believe me is the question. 100k is not out of the question, but you are not going to do it on 10k. i could live off trading, but i have other interests too. software makes it easier, but only after you truly understand your method to the madness. start out with excel and go from there. i started out with pen, paper, and adding machine. man i am showing my age. do they even still make those things? and if push comes to shove, i can still do it with pen and paper. and throw in a corona. the one thing to watch out for when you get that first piece of software is all those freaking indicators and pre-packaged systems. the only indicator i use is a 21-period adaptive average of a pivot. trading is like learning to play GO. you can learn how to play pretty quick, but it takes a lifetime to master. final advice....on the razor's edge between chaos and order lies opportunity. always remember everything that occurs, wins, losses, system failures, crashes, shark bites, you name it should be planned for. they will happen. and to make it even more bizarre, you are responsible.
I am newbie as well, however actively trading one year now. So my experiences are fresh. I have one advice to you: Paper trading is waste of time. If you are not able to be profitable in paper trading you are doing the wrong thing, anybody with a minimum of talet will be able book profits after few weeks. In real trading it will be different from several reasons. You do not know if are futures or stock trading better for you, it depends on what your "strong side" will be. My advice is: go to the cheap broker that charges per share. Fees will be your big enemy in long run. Start with papertrading but after week/month when you will be profitable start real trading but with very little quatities, just one contract like E7 or YM or with 100-200 share lots on stock priced $10-20. Preserve your capital, cut your losses /if you have doubts out of trade, later you can re entry/ but play with real money but just with small amount. Do not be greedy if you start be profitable, hard days will come. If you have talent do not worry you will be succefull but it will need time. I wish you succesfull career.
"1) How long should I practice before I start trading for real?" Doesn't really matter - paper trading has nothing in common with trading real money. I personally think paper trading is a waste of time. "2) I expect to get a lot of varied responses on this one but which strategy is proven to work better?" It's a controversial subject. The total population of fundamental investors underperforms a simple S&P Index fund, therefore fundamental investing does not perform well. Technical traders on average lose money. So there is no proof that *either* approach works. IMO individual skill, knowledge, and experience are what leads to profits, not which approach you use. So choose the approach you feel comfortable with. 3) How much should I realistically expect to make? I know this is a vague question requiring more information (how much are you going to risk? are you going for big gains or small gains? etc.) but from a brief glance at the threads in this forum, it's hard to figure out who, if anyone is actually making any money. Are there people on this board who make a comfortable (>100k) living just by trading? Or is that a pipe dream? If you are one of those people, how long did you work at trading before you became successful? What system do you use? Any advice? As a beginner you should expect to lose all your starting capital at least once, unless you manage to find some market inefficiency/niche that others haven't discovered, and that approach works well for the next 3-4 years. I make a comfortable living from trading, I've ranged from down $90k to up around $850k over a calendar year since I went full-time about 9 years ago. 5) How helpful is software in this job? I'm a computer freak so I'm leaning towards anything that involves software helping me out. Is there software out there that traders just can't live without? The software that recognizes trends and, I assume, gives you probabilities on when to buy a stock is something I'm intrigued by. But I don't know if it works. Does it? IMO software does not provide any edge in terms of profitable signals. However, depending on your method it can give you an execution edge, especially in areas such as scalping, spread trading, and options market-making. I trade on a medium/long-term timeframe mostly, so I don't use any special software - a simple chart and ticker quote is enough for me to trade. I started out as a futures daytrader and good software & hardware (just as important) definitely helped then. 6) Finally, any general advice? Maybe you can recount your earliest mistakes so I don't make them. Yes - trade stocks on minimum size at first. With $10k you don't have enough to trade futures safely. Expect to lose money for 2-3 years before you get any clue about how to trade, and don't be surprised if you blow out at least once. Any profits you make in the first 2-3 years are 90% likely to be pure luck or favourable market conditions, so don't get an ego and think you are good if you start off well. If you actually *are* that good, you will still achieve great success staying humble and controlling risk carefully, it will just take 2-3 years longer. Who cares if you retire at 37 instead of 40? Whereas if you take loads of risk, you will most likely blow your account and then you are back to square #1 except with less money. The key thing as a trader is to develop the skills. Making money should not be your goal at first. Because once you have real trading skills, you can really make a lot of money. 10 years ago I didn't really know what I was doing. Now I can pull off trades like going 200% long and loading up on calls at the exact bottom of a market panic, or riding a commodity as it goes up 100% in 9 months (of course not all work that well, but some do), something I never would have thought was possible back when I started. A trader with real trading skill and $50k is much more likely to make $1 mill+ over 5 years than a trader with $500k and no trading skills (this guy is more likely to lose the entire $500k). So, focus on experimenting on small size, and learning lots of lessons in your early years. Survival and learning should be your two main goals early on. To learn, you need to have an account active and be trading real money to develop these skills through observation, trial & error, and lots of losing trades. It's also very important to analyse all your trades, especially losers, and draw lessons and identify your mistakes. Keeping a journal and trading diary, and formulating a plan for each trade and for your trading career in general, is very useful. Finally, just bear in mind that right now you really know nothing about trading. In 5 years time you will look back and shake your head at how clueless you were. Then after another 5 years you'll look back and realise you were still pretty clueless after the first 5 years. It's a continual learning process, and the best way to learn is to stay active in the game, which means surviving first of all, and making profits 2nd. Most beginners, like you are doing ("I'd like to make a lot of money"), focus on the profits first, and ignore survival and risk control. When your attitude changes to "I'd like to get experience at trading, and learn everything I can about the markets", then your chances of making money will become a lot higher.
One thing to consider when you begin to develop what will be your main income stream for life is to approach the opportunity thoroughly. When it comes to trading there are amateur limits in different markets. The same limits apply to big money and as a consequence big money doesn't make much money, relatively speaking. the amateur niche is a very pleasant one and onlt requires distributing your capital over three income generationg system of trading. I my case all use the same template that simply works from day one in each category. The categories are: stocks position trading and sector rotation. commodities. Roughly speaking, the critical path to follow is learning to trade effectively and efficiently. I only responded to you since you chose stocks as a first venue for learning. It is a slow motion experience that has a nice curve of compounding which I noted was 80 cycles@ 10% a cycle. a cycle being three days is informative and slow and very educational. A template is created for making money. It is limited at about 100,000 shares of capital per stream of capital. That is about 2.5 million dollars per stream and the stream is traded every three days to make about 10% per cycle. When you have learned to make 10% per turn every three days you will find that you are not very busy since the universe, the hot list and the trades are all done automatically or by consulting 1 piece of paper with a chart on it. (see attached). At this point you can learn to do commodities which are leveraged by about a factor of 50 for money making purposes. One fiftieth of three days is a matter of minutes; about 24 minutes. During the 24 minutes you may do as many as three actions and you are severely limited in the capital you can apply before you come to the partial fill limit of retail trading. I recommend ramping up to about 25 contracts on the ES e mimi to do about 10,000 dollars a day profits half split on budget for living and half for capital lifestyle acquisitions. I could chat with you on this at the next Trader Monthly get together in February if you wish. you may add another 25 contracts so you can transfer 50K a week into your stock trading streams to grow them; this is like adding 2,000 shares to one stream of capital on the way to the 100,000 share limit. You can graph another equity curve on top of the stock position trading curve to see what the 25 contracts looks like that is not the 25 used for living a given life style. At some point you have to lay off captial out of the stock streams since too many streams are required at the 100,000 share limit. here you ue sector rotation with large blocks of holdings where you have to spend days to switch from one holding to another. A narrow universe here is one that is showing fundamental projection of 250% ROI annually for the next three years minimum. Count on holds of 4 1/2 weeks per turn. So you have a question. The underlying question is that you have to learn to know the markets down cold. By following a critical path to do this, you get to have three systems running concurrently for the rest of your life. choosing where to trade is not a possible critical path if you are thinking trading one market is the main possibility. For most poeple it does not matter. It certainly doesn't matter for employed persons in the financial industry. there it would only metter if the person were going to quit after picking up a good bonus that was high on the equitiy curves you are plotting to understand what is possible. These people do have to start over as private retail amateurs since the curves they envision through trading are more like those of Greenspoon, et al. (he uses 400 ES mini's to make under 3mil a year). In my example you do the same with 50 contracts. The income ratio is not a linear one since you are laying off the commodities earnings (50%) to make money elsewhere. As of now you are reading and maybe looking at assembling a functional computer(s) with a few screens and the proper feeds at a cost of 300 to 400 bucks a month. You have not written a business plan nor a learning schedule nor travel plans to go anywhere to see anything happening. I have never dropped in on a functional system for monitoring the markets. For amateurs this is expected. For pro's it is not possible over a few consecutive days to get a system up to monitor effectively. Here I am just letting you know that you are in the prelearning stages; learning doesn't start until you get set up properly. A person in this thread noted that I misjudged him on his efforts which I had observed through his posts and a few phone calls since we live in the same town. You can say the same since I have only seen a couple of your posts. Don't waste a year not getting profitable on stocks and learning the stock market. And by all means don't start looking at differnt kinds of markets until you catch on to one market and are really banging out the profits. Get set up promptly with a few screens and the data feeds. Don't invent anything just use what is there for you.
Everyone needs to find their own way, I'm not there yet but I've realized the only way I'll get there is by automated trading. Now that I've switched to a completely automated system, I think I'm finally headed in the proper direction. My advice would be to get a good sw package, spend a ton of time learning to create strategies and test, test, test. You can use NinjaTrader for free with live data and run very accurate simulations on real live data. Their simulation engine seems very good to me (at least on futures, haven't done stocks). Open an account with IB or anther broker that has decent data, but don't trade the account, just trade in sim mode. You may pay inactivity fees but you could do this for a year very cheaply. Come up with ideas for trading, then learn how to program them and see if they are any good. Most won't be, some of the stuff I thought would work, didn't at all. Sometimes the exact opposite tested better than my original ideas. It's a long road for most. I know it has been for me so far.
do not trade until a bull market exists. practice and learn like trading is a 500 level college course for the next year or two until the market turns around. Why? David Zanger made and holds the worlds record for % percentage gains. he succeeded in a bull market and lost millions in the immediately following bear market learn from others mistakes. if you plan to trade right now could you please just send me the money instead? or go to Las Vegas you will have a lot more fun