Advice for a US Trader starting out?

[Mr Flibble]

Thanks again for your input Mr Flibble. I used to be a banker. I am more interested in short term trading - does your advice apply to that as well?

So there's your target stocks but be warned they are highly volatile. Now for short term if you want to use technical analysis only do it in the absence of fundamental drivers i.e in the US i hear you have a report on Non farm employment figures this Friday, thats a day you may wish to avoid as its affects on share price cannot be known. In fact all shares are acting a little strangely even in the lead up to it. Also don't hold a position when quarterly reports are due to be reported - again unsure how this will affect the share price. AMD for example reported its first profits in 3 years and then dived 10% the next trading period. I sold before..why? Because I got bitten once before. If in doubt get the heck out.

When you pick a nice trade you won't second guess it so much as a gamblers trade. Anyway thats all my advice good luck to you and try paper trading without money first if you would like. Don't do what I did and put £20k in one trade as your first ever trade...even though I made a killing :cheesy:

 

[djmastro]

Do you know of a good broker to paper trade with? I looked at Interactive Brokers and they seem like a good brokerage to start with, but I don't know much about any of them.

Would it be better to use a US-based broker?

 

[LoveToTrade]

Do you know of a good broker to paper trade with? I looked at Interactive Brokers and they seem like a good brokerage to start with, but I don't know much about any of them.

Would it be better to use a US-based broker?

IB are rather problematic for a few people I know. Good for taking shorts (as the borrows are easily available) but crap for everything else.

I am Euro based, and would only use US platform now. Thinkorswim are good for paper trading, realstic platform and great customer support for new people. 😀

 

[djmastro]

LoveToTrade, thanks for the responses! I'm going to check out ThinkOrSwim now and see if I can learn their demo.

I would have to go into swing trading, as I don't have the $25,000 required for PDT rules here in the US. I want to stay in a shorter term, TA frame of mind rather than longer. Does anyone know of some good basic swing trading disciplines?

 

[LoveToTrade]

Remember, you don´t need the 25k to day trade Futures... So, it depends what you want to trade really.

Have you decided what you are going to trade ?

Depends how short term you mean ?

 

[djmastro]

Well, I'm more into the Technical side than Fundamental, and I'd rather do a lot of small-profit trades than a few big-profit trades, at least to start with. Then I can play the averages and stick to a system that will work for me.

I've been learning about the differences between stocks, options, and futures, and I'd really have to dig in a bit more to see if trading futures will be a good thing for me. I've really only considered stocks at this point.

 

[djmastro]

Does anyone here know if it would be better to create an LLC to trade under, or just do it as an individual?

 

[djmastro]

Bump in hopes of people reading the above 2 posts. 🙂

 

[LoveToTrade]

Does anyone here know if it would be better to create an LLC to trade under, or just do it as an individual?

I´m sorry. I wouldn´t know how to advise on this. Get professional advice please, this is an important legal issue amongst other things - Different circumstances for different people and I believe even from state to state.

 

[LoveToTrade]

Well, I'm more into the Technical side than Fundamental, and I'd rather do a lot of small-profit trades than a few big-profit trades, at least to start with. Then I can play the averages and stick to a system that will work for me.

I've been learning about the differences between stocks, options, and futures, and I'd really have to dig in a bit more to see if trading futures will be a good thing for me. I've really only considered stocks at this point.

With the short term you will obviously be better with the technical, certainly the way to go for me - Only time I really stay in touch with the Fundemental side is when news is due (and I stay out normally). I would go as far as to say I am 95% tech.

How long (short) do you mean, but short term ? You might want to check out the following resources, then helped me with getting some ground work.....


www.elitetrader.com forum (not so good, but there are some switched on people, if you can find them)
here.. :cheesy:
www.bontrade.org
www.cmegroup.com
http://www.mypivots.com

I did a few free mentorship trials, but to be honest never got much out of them, and by then I already knew the basics of trading, mostly learned by using the platform and reading the above sites along with others.

Finding your way between the instruments can be hard. I started with Gold and Oil for a few months, then stocks for quite a few years, then went to futures - I only regularly traded lower priced stocks below 10usd really (NQ) so completely different from Futures - All volume and momentum based. I am happy with futures for the moment but I do trade a few of my key chart stocks now and again. The liquidity with Futures always excited me though, got boring going on the search for ones on the move, and although it was a different learning curve from the stocks I was trading its just about screen time, screen time and screen more time, along with reading, reading, reading. PA is the way to go, no secret indicators allowed.

 

[djmastro]

Thanks LoveToTrade, I'll add those sites to my list to research. 🙂

Another newbie question: You said "PA is the way to go". What is PA?

 

[LoveToTrade]

Price Action.

People often spend a lot of time trying to find some miraculous indicator or "system". Indicators can be great but there isn´t one which is as coherent at reading the market like PA. Sure, I use indicators, but always used in conjunction with PA - In truth I have various things which I need to line up for me before I enter a trade, but in the main the trade will be based upon the recent Price Action.

It needs to be remembered that the markets are dynamic, and an indicator or "system" that works today may not work tomorrow or next week - This is especially so with "systems". The constantly changing markets require a Trader who is adept at reading the changes within, this can only be done with PA.

PA is what its about IMO.

 

[djmastro]

I see. Are you familiar at all with the broker thinkorswim ? I downloaded their demo to do paper trading and I am currently trying to figure out how the software works.

Also, would you recommend trading FOREX over STOCKS?

 

[FXTrend240]

another one of the PA herd...

 

[djmastro]

FXTrend240 - I hope that comment wasn't meant for me, as I'm still so new and just learning about the different types of "herds" I could join at this point. 🙂

 

[FXTrend240]

Well, I'm more into the Technical side than Fundamental, and I'd rather do a lot of small-profit trades than a few big-profit trades, at least to start with. Then I can play the averages and stick to a system that will work for me.

I've been learning about the differences between stocks, options, and futures, and I'd really have to dig in a bit more to see if trading futures will be a good thing for me. I've really only considered stocks at this point.

I made the same mistake when i started, a lot do as well, news/fundamentals with a good grasp of chart reading is the best combination. Fundamentals are, eventually, what moves markets, sure short time frames can be pushed here and there by those guys in the pits, but economics rules the markets.

Fair enough, you want small timeframe, techincal trading-why?

Of course, i haven't traded real money yet 😆 so i'm not much better off than you at the moment, but what i'm doing is learning economics (as i already have a good grasp of TA anyways) ...then once i go live....im going to wait for the perfect trade...absolutely everything lining up, fundamentals, intermarket relationships holding up, and charts looking good and scale in, 10% of my account at a time... ( this is currencies im on about )

 

[FXTrend240]

sorry, maybe i came off a bit harsh when i made you one of the 'herd'

its just people trade PA for the wrong reasons i think....

 

[djmastro]

When did you first get started learning about all this, FX?

 

[FXTrend240]

When did you first get started learning about all this, FX?

august 2008, watched pursuit of happiness and was like 'what's a stock?'.

went down a silly road of penny stock newsletters.

bought tonnes of books, i reckoned that if i just absorbed chart patterns and TA stuff i'd be made.

so in june 09 i put my knowledge to the test and traded demo on MT4....o dear...

 

[djmastro]

Well I've just downloaded a demo platform from thinkorswim and I am probably thinking the same way you did at this point. What made you decide to trade forex?