A Beginner Wants to Make It, but Needs Advice

[d0n 10]

Hi everybody,

first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well.

 

I would like to ask for advice on how to become successful.

 

I am part of a little commodities trading group, where two succesfull mentors are teaching their strategy. It seems to be a great working strategy, but the problem is that the specific occasion occurs only 2-4 a week. (it is a special kind of bar, specific point on the CCI, eventually the MACD). It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week and thus makes it actually quite difficult. I would like something that I can do more actively, rather than be the hunter who waits for his prey for hours/days. Also, I understand that the commodities market can be riskier for a beginner. (even though I only try to start with eminis).

 

I am also curious to start with stocks now.

I talked to a good trader who recommended me that I could start with two things,1. look at the stocks in let's say NASDAQ that do the best or the worst in the first 4 minutes after the market opens. They should gain or lose at least 4%, then either buy or sell them and hold them for a few hours. Do this with 2-3 stocks.

 

2. use a slow stochastic (80 and 20), 3 MAs (20, 50, 200) and based on those enter trades. If the stochastic is over 80 then sell, if under 20 then buy. Also based on the 20 and 50 MAs to cross and follow the trend by the 200 one.

 

Does any of this have sense? would anyone improve that?

Where do I find good live stocks chart data for free to start with?

How do I find a working strategy for myself in the neverending amount of information that there is out there?

 

I plan to start with approx. 2000-3000 USD.

 

Thanks for the help.

[mike21 10]

If you're going to day-trade stocks you need to be aware of the PDT rule.

 

The PDT Rule | The Small Trader

[d0n 10]

damn, so that makes it basically impossible... what abou trading on the NASDAQ then?

[Tams 20]

Hi everybody,

first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well.

if you want to do trading because you don't like your 9-5 job,

then you are setting yourself up for failure.

Trading is worse than any 9-5 job.

Trading requires more studying and learning than any 9-5 job.

Trading requires more discipline than any 9-5 job.

Trading is more boring than any 9-5 job.

Trading provides less satisfaction than any 9-5 job.

Trading gives you more stress than any 9-5 job.

Trading requires you to work longer hours than any 9-5 job.

 

Can trading provide a better living than a 9-5 job?

well, it depends. If you want to do trading as an alternative to a 9-5 job,

it might not happen. Fascination doesn't get you anywhere.

 

:-(

 

I would like to ask for advice on how to become successful.

 

I am part of a little commodities trading group, where two succesfull mentors are teaching their strategy. It seems to be a great working strategy, but the problem is that the specific occasion occurs only 2-4 a week. (it is a special kind of bar, specific point on the CCI, eventually the MACD). It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week and thus makes it actually quite difficult. I would like something that I can do more actively, rather than be the hunter who waits for his prey for hours/days. Also, I understand that the commodities market can be riskier for a beginner. (even though I only try to start with eminis).

 

I am also curious to start with stocks now.

I talked to a good trader who recommended me that I could start with two things,1. look at the stocks in let's say NASDAQ that do the best or the worst in the first 4 minutes after the market opens. They should gain or lose at least 4%, then either buy or sell them and hold them for a few hours. Do this with 2-3 stocks.

 

2. use a slow stochastic (80 and 20), 3 MAs (20, 50, 200) and based on those enter trades. If the stochastic is over 80 then sell, if under 20 then buy. Also based on the 20 and 50 MAs to cross and follow the trend by the 200 one.

 

Does any of this have sense? would anyone improve that?

Where do I find good live stocks chart data for free to start with?

How do I find a working strategy for myself in the neverending amount of information that there is out there?

 

I plan to start with approx. 2000-3000 USD.

 

Thanks for the help.

[ratmpower 10]

Day trading is very tricky. I would not recommend day trading if you are just starting out with strading stocks mainly because of the following two reasons:

1. There are additional requirements for day trader

2. Day trading strategy requires very recent market data and lots of computing power, because you have to make buy/sell decision very fast. If you are 5 minutes late, your previous computation becomes obsolete very quickly.

 

I would recommend short-term trading strategies where you try to close your position in weeks/months rather than in the same day.

 

As far as resources go, there are plenty out there for free.

For chart and market data: yahoo finance, google finance, FINVIZ.com - Stock Screener are good.

For developing and testing your strategy, http://www.strategyard.com/ is very good.

 

Good luck

[d0n 10]

I'd rather get paid individually for my efforts and not based on an hourly pay that an employer gives me.

 

Well so where would I find good resources for weekly/monthly in and exit strategies?

So that I could start working on the psychologic aspects, be disciplined and eventually make it somewhere? If you're saying that daytrading doesn't have sense for me.

[wrbtrader 10]

Hi everybody,

first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well.

 

I would like to ask for advice on how to become successful.

 

I am part of a little commodities trading group, where two succesfull mentors are teaching their strategy. It seems to be a great working strategy, but the problem is that the specific occasion occurs only 2-4 a week. (it is a special kind of bar, specific point on the CCI, eventually the MACD). It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week and thus makes it actually quite difficult. I would like something that I can do more actively, rather than be the hunter who waits for his prey for hours/days. Also, I understand that the commodities market can be riskier for a beginner. (even though I only try to start with eminis).

 

I am also curious to start with stocks now.

I talked to a good trader who recommended me that I could start with two things,1. look at the stocks in let's say NASDAQ that do the best or the worst in the first 4 minutes after the market opens. They should gain or lose at least 4%, then either buy or sell them and hold them for a few hours. Do this with 2-3 stocks.

 

2. use a slow stochastic (80 and 20), 3 MAs (20, 50, 200) and based on those enter trades. If the stochastic is over 80 then sell, if under 20 then buy. Also based on the 20 and 50 MAs to cross and follow the trend by the 200 one.

 

Does any of this have sense? would anyone improve that?

Where do I find good live stocks chart data for free to start with?

How do I find a working strategy for myself in the neverending amount of information that there is out there?

 

I plan to start with approx. 2000-3000 USD.

 

Thanks for the help.

 

1) Trading as a newbie will be a lot more difficult and require more time & energy than most 9 to 5 jobs. Thus, its not going to get easier...professionally and personally for a long time during the first few years. :doh:

 

2) You're part of a trading group that has two successful mentors teaching you their strategies along with you having a support group (trading group) and you want to instead try something else that will require you to start from scratch. :crap:

 

3) You've been talking to a good trader that's giving you advice about his/her method involving stocks. Yet, you're now asking others if the method recommendation by that good trader makes sense. :helloooo:

 

4) You're undercapitalized. Save your money and only simulate trade and backtest the new method you plan on designing until you have enough money that equals a minimum of one year salary of your current job.

 

5) Your questions involving data, software et cetera are newbie questions and I highly recommend you aim them at the two mentors you're currently have or at least learn how to use Google (its all there). In addition, I highly recommend you don't abandon something that's already working well. Thus, when you're properly setup with capital...add day trading to what you're currently learning from that trading group instead of using day trading to replace it.

 

Learning how to trade profitably is not all about a trade signal. Simply, those profitable mentors you have will be able to teach you things that's arguably more important than a trade signal assuming you don't get lost trying to do something else.

[MCM 10]

"It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week and thus makes it actually quite difficult. I would like something that I can do more actively, rather than be the hunter who waits for his prey for hours/days"

 

Print that statement out. Show it to your current mentors. Really think about what you are saying.

 

"It is very difficult to watch the squigglies for hours on end, only for an opportunity that comes around 100X/year, and makes the people who I am learning for lots of money. Instead I would prefer to pay more commissions to my brokers, learn something entirely different than what my mentors are teaching me, and not wait around for stellar opportunities, but click a mouse button more frequently"

 

You have a huge advantage over most new traders - you were taught patience out of the starting gates. Your way ahead of the curve. Have your mentors help you understand that advantage and further encourage it. Congrats. It was one of the harder lessons I had to learn. Enjoy the stalking.

[d0n 10]

well how do I know if that trader is really that good? I mean it's always good to have more opinions and he is somewhere else now where I am. Considering that he is managing basically millions of dollars (not only stocks) and I am talking about not even 3k.

 

Yeah I am planning to follow that strategy, but I am also afraid that it is going to stop working one day (maybe soon?) so already now I am loking for something that would keep me even busier. Another strategy that I could try, maybe really something that would work for me for position trading, where the requierements aren't that huge.

 

Also, yes, I can talk to those two mentors, but they only talk to me about the specific strategy for commodities, which I only know quite well, now it is mainly about puting in the patience and sit and watch the graphs for hours/day.

 

Example trade from commodities:

Imageshack - 10271445us500.jpg

[curtisj76 10]

So you are talking about not having a FT job yet you have 2-3k? Do yourself a favor and quit while you are ahead. How old are you?

[Dutchie 10]

 

Where do I find good live stocks chart data for free to start with?

 

I plan to start with approx. 2000-3000 USD.

 

Thanks for the help.

 

 

For Free Stock Charts go here: FreeStockCharts.com - Web's Best Streaming Realtime Stock Charts - Free (You need to have MS Silverlight installed)

 

Good Luck!

[svb70 10]

Hi,

Your strategy is fairly mechanical and so should be able to be applied to all markets. Have you looked into forex? I only trade forex. Also I can tell you that, in my opinion, your trade plan should be scalable thereby working with a small account and a larger account. In my opinion it is very possible to trade a small account. Trading a small account requires you to be realistic and not try to make big wins. Risk management is crucial. Why is it that people think that they will suddenly turn into successful traders just because they have a larger account? It implies that they don't need to be as risk averse or disciplined. Newbies can gain much experience trading a small account, but not before seriously trading a practice account with your realistic start balance and trippling or quadrupling your account balance.

 

Happy trading

 

shawn

 

ps. I recently created a £2000 account and traded it, whilst blogging my progress. barrett's notes - my forex stuff and other titbits

[Handlowiec 10]

Hi everybody,

first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well.

 

I would like to ask for advice on how to become successful.

 

Thanks for the help.

 

Starting in day trading is more difficult then swing trading where you want to hold a position for a day or longer.

 

Personally I will say this. I started with futures back in the late 90’s thinking if I only focused on corn, wheat, pork bellies, crude that I would be an expert. I thought Yea! I can trade from home and get out of the rat race. How wrong I was that I thought trading could be easy. Man it is a tough game because it is a battle with yourself.

 

I used MACD, RSI, Stochastics, Moving Average crossovers…all the same traps beginners fall into. After making money, losing money I stopped trading futures. Then thanks to the internet boom I made money just moving money from one new mutual fund to another.

 

After that internet boom-bust was done I was back to trying to figure out how to trade.

 

I purchased AMIBroker software. Being a software developer I thought I would code and back-test a trading system. I spent hundreds of hours over many years writing trading systems. I also back-tested many indicators...

 

1. MACD crossovers

2. MACD crossing Zero

3. RSI crossing 50

4. RSI oversold/overbought

5. Stochastic

6. EMA/MA crossovers

7. VMA… and more

 

I even wrote a system that would combine many indicators and I created a “Consensus Indicator” thinking the More the Better. That failed too.

 

Out of all the back-tests the best was MACD crossing zero which what 33% win rate.

 

I let the market for years out of frustration and disgust leaving money in CDs, and some mutual funds when the market looked like it was going up.

 

Still, I really want to be in “the game” I enjoy it. It is a personal learning experience and a chance for personal growth. Now the only things I have on my charts is the price in black and white, with HLC bars, volume and a couple of MAs. NO INDICATORS! For me they just cause me to second guess myself and lead to confusion. Maybe some folks can use them but they are not for me. I needed to find a method that worked for me and went back to chart pattern analysis only.

 

In short this is what I am saying.

 

1. To learn how to trade you will need to put some money on the line and suffer the pain of losing

2. When you have enough pain you will see you need to find a system that works for you, and try to understand why you keep losing.

3. When you trade and you start searching all over the internet to see what people think, what the experts are doing, or other traders are thinking…STOP you need to build trust in yourself.

 

The best thing (in my view) is read many, many books on trading until something really speaks to you. Put some small bets on stocks, etfs, or commodity ETFs. Make small bets. 100 shares, 2 calls or puts. This way you can still suffer the pain of losing but you will not go broke.

 

The best books, in my experience are

 

1. Technical Analysis and Stock Market Profits (1930s’). This is where it all started. It reads like it was written today.

2. Technical Analysis of Stock Trends (1940) They got their ideas from Schabacker’s book above

3. Jesse Livermore: World's Greatest Stock Trader

4. Trader Vic

5. Trading in the Zone

6. Ahead of the Curve

 

Books such as #3 Livermore or #5 Trading in the Zone may not really ring true for you until you hit a brick wall and cannot figure out why you cannot make money in the market. Still they are good reads but should be read again when the pain of losing seems too much to handle.

 

Also, be ready to commit to many many years of trying to get it right. If you like challenges trading are the ultimate challenge. I am still working on it and working on the Trading Plan outlined in Trading in the Zone.

 

To speak about how long it takes to find a setup. Trading in the Zone recommends 20 trades to apply your trading plan. I am on trade #18 and have been at it for almost two months.

[dragon987 10]

After starting 8 years ago as a day trader, only now I am consistently profitable. My system only produces 3 trades maximum per day session, all in the first 90 minutes. I developed many systems though during the years, only the last one fits my psychology so I can follow it. It took endless hours to get that far and study, study, study, than life testing on a serious sim account where I could mimic the life trading situation under realistic conditions.In my experience 90% of advice available to you on the internet is useless. Few pearls may be found though, mostly on the forums like this one.

Consider your risk. How much can you risk with an account of 3000 USD? 2% per trade would be 60 USD. This is definitely very little, which instrument would you use?

My advice:

- keep your day job

-start trading on a sim account and see how you do.

-start with daily bars, and try to be consistently profitable with a small amount.

-you need to develop a strategy and a trading plan which fits your psychology, otherwise you will burn your account.

 

good trading and do not give up!

R

[Predictor 11]

I'm sorry to say but you aren't preparing to be great in this field. This is not trading. Great traders don't do what you are doing. Of course, we may build systems that are profitable but you're probably not even trading a profitable system.

 

I'm sorry to say but you aren't learning to trade. At 2k-3k dollar, don't step anywhere near commodities. That's not even enough to trade the ES!

 

I would recommend you do something else.

 

If you are really serious, the best thing you could do is to make a lot more money. You need more capital. Be careful of vendors but finding a strong mentor would be worthwhile. You should do own work, as well. Its only way.

 

Hi everybody,

first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well.

 

I would like to ask for advice on how to become successful.

 

I am part of a little commodities trading group, where two succesfull mentors are teaching their strategy. It seems to be a great working strategy, but the problem is that the specific occasion occurs only 2-4 a week. (it is a special kind of bar, specific point on the CCI, eventually the MACD). It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week and thus makes it actually quite difficult. I would like something that I can do more actively, rather than be the hunter who waits for his prey for hours/days. Also, I understand that the commodities market can be riskier for a beginner. (even though I only try to start with eminis).

 

I am also curious to start with stocks now.

I talked to a good trader who recommended me that I could start with two things,1. look at the stocks in let's say NASDAQ that do the best or the worst in the first 4 minutes after the market opens. They should gain or lose at least 4%, then either buy or sell them and hold them for a few hours. Do this with 2-3 stocks.

 

2. use a slow stochastic (80 and 20), 3 MAs (20, 50, 200) and based on those enter trades. If the stochastic is over 80 then sell, if under 20 then buy. Also based on the 20 and 50 MAs to cross and follow the trend by the 200 one.

 

Does any of this have sense? would anyone improve that?

Where do I find good live stocks chart data for free to start with?

How do I find a working strategy for myself in the neverending amount of information that there is out there?

 

I plan to start with approx. 2000-3000 USD.

 

Thanks for the help.

[d0n 10]

what about e minis in commodities?

Even the Emini S&p 500, 0.25 index points there is like $12.50... how can $3000 not be enough then? and there are more "cheap" e minis like that... I don't see why I wouldn't be able to trade those with such capital.

Probably much cheaper than most stocks. Setting SLs on about $150 a trade.. and there are many more minis than just the S&P... I can focus on a few of the cheapest ones.

 

Well Where would you suggest to get a good mentor? there are so many offering online, some of them are not even affordable how expensive they are

(I just watched the Wallstreet Warriors (Tim Sykes offers some lessons online)... but there are so many more

I am not saying I am not planning to put a lot of work in it... read a lot, paper trade, then eventually start with real money.

 

What is wrong more specifically with the strategies that I posted? Would be great to have some insight.

Also I was thinking now of just doing position trading, and not day trading.

[wrbtrader 10]

well how do I know if that trader is really that good? I mean it's always good to have more opinions and he is somewhere else now where I am. Considering that he is managing basically millions of dollars (not only stocks) and I am talking about not even 3k.

 

Yeah I am planning to follow that strategy, but I am also afraid that it is going to stop working one day (maybe soon?) so already now I am loking for something that would keep me even busier. Another strategy that I could try, maybe really something that would work for me for position trading, where the requierements aren't that huge...

 

Its an easy solution...

 

Backtest his/her trade method on what ever trading instrument you're going to trade. In addition, simulate trade it.

 

Also, there's "no guarantee" that any trade method will work forever. Thus, the goal is to exploit the method as much as possible until it stops working and then adapt that method for current market conditions at the time when it stops working. Hopefully, by the time when it stops working, you'll know enough via market experience and trading experience to be able to adapt the method to make it profitable again.

 

As to the capital you have...you don't have enough money for full time trading assuming you're living on your own. Yet, if you just want to get involved in trading as a hobbyist, being supported by someone else or you have another job to support yourself...

 

2-3k is OK to play around with.

 

Regardless, do not replace what you already have with those mentors and trading group have considering you've said it works...it may be your ticket to getting more capital, getting more trading experience and getting more market experience prior to going into day trading.

[Mr_You 10]

I'd rather get paid individually for my efforts and not based on an hourly pay that an employer gives me.

 

Well so where would I find good resources for weekly/monthly in and exit strategies?

So that I could start working on the psychologic aspects, be disciplined and eventually make it somewhere? If you're saying that daytrading doesn't have sense for me.

 

As many have mentioned. It can take years (I'm still not there) and requires a methodical and systematic approach to research and execution.

 

This is my "standard" response to those looking to get started:

 

No school is going to teach you how to trade profitably. You only learn how to trade (algorithmic or discretionary) by teaching yourself, learning from a profitable mentor, or working for an true proprietary trading firm (paid job). My advice is to do what I'm doing and spend very little money on (supposed) "education" and teach yourself by jumping into sim/paper trading (using a live data feed) with your own ideas and research or get lucky by finding a job with an prop firm.

 

The only way to be successful in trading is to put in the time. It could take years. Check into NinjaTrader for a low barrier to entry to getting up and running. Check out Evidence-based Technical Analysis for a primer into statistics-based technical analysis to give you a head start. Check out this forum and another "big" forum for very friendly and helpful people.

 

There are LOTS of people describing their profitable strategies online in certain forums. I suggest following the system of one of these folks until you find one or a combination that works for you.

 

Don't trade real money til you're not losing any in the sim. Post trading journals on the forums. Plan, plan, plan, plan.

[Predictor 11]

Tim Sykes has a profitable record. I do not know any mentor that I'd trust except myself. Actually, I know one or two other mentors who may know what they are doing. I would always demand a track record from any mentor and make sure that you understand how it was made. Now, realistically, just starting you don't need the best mentor and there are some vendors who offer free stuff that could be valuable to you.

 

Realistically, without a few thousand dollars you will not find any serious mentor that will help you.

 

I didn't look at the strategies but your approach isn't really the way to develop market expertise. Developing market expertise is more about thinking about the markets and studying them. There are some traders who develop systems and do well but they are always working on their systems. It isn't just throwing some indicator down but working, backtesting, revising, evaluating, and thinking why it should work. You need to think about the concepts.

 

My best trading systems and most other systems I've seen offered from other vendors require about 7k to trade the ES. Remember, it is $5600 just to hold 1 ES overnight. Even day trading margins can be up to $1500ish per contract. Even at $150 per trade, you would be risking 5% of your account per trade.This is a high risk to take without a significant edge. Also, I know many brokers who require 5k to even open a futures account.

 

I'm not saying its not possible but you will need to really know what you are doing to do this. You don't have capital to make mistake and learn. Honestly, you may be better off going to currencies. Sometimes I wish had I started with FX. You can trade FX with 3k.

 

I'd recommend reading traderfeed.blogspot.com. It isn't updated but if you study it then you can get some ideas about how to approach the market. You can also look if you are in US for a traders meetup group. You'll get exposed to a lot of different traders of varying levels and methods for free.

 

Basically if you going discretionary then you need a holistic and professional way to view markets. This is not easy to get and won't be discussed any indicator vendor. Ray Barros has a complex methodology that might help. I do not use his methods but I got the impression it would be a decent place to start.

 

If you are going systems then you need tools and programming ability.. stats knowledge.. stuff like that

 

what about e minis in commodities?

Even the Emini S&p 500, 0.25 index points there is like $12.50... how can $3000 not be enough then? and there are more "cheap" e minis like that... I don't see why I wouldn't be able to trade those with such capital.

Probably much cheaper than most stocks. Setting SLs on about $150 a trade.. and there are many more minis than just the S&P... I can focus on a few of the cheapest ones.

 

Well Where would you suggest to get a good mentor? there are so many offering online, some of them are not even affordable how expensive they are

(I just watched the Wallstreet Warriors (Tim Sykes offers some lessons online)... but there are so many more

I am not saying I am not planning to put a lot of work in it... read a lot, paper trade, then eventually start with real money.

 

What is wrong more specifically with the strategies that I posted? Would be great to have some insight.

Also I was thinking now of just doing position trading, and not day trading.

Edited January 9, 2012 by Predictor

[bestforexpartners 10]

Hi,

 

I think its a basic problem among the traders. Your first step should be to understand that you really want i.e. to follow the trading system routine you are making and you will continue to follow it for the long term. This could be a basic system for you for regular forex trading and will definitely work to help you driving lots of profits. You want a trading routine that can be easily followed and that is so sensible to make you earn good.