Newbie says Hello

[Tun]

No worries, I didn't think you were. I'd prefer somebody put me off slightly that encourage me into something unprepared. For me you don't have to worry about what you're saying if it's what you believe.

You've shown me a few things I definitely need to be aware of that I might've been caught out on if I'd rushed in like a bull in a china shop.

I'm just going to mull things over read more info, paper trade, demo accounts etc. If you hadn't pointed out the capital issue I may have started a demo with 10,000 hit a few lucky trades and thought "this is easy" then when it came to my own capital get caught out.

Fingers crossed

 

[seagreen]

Hi there,
Sorry to come in so late to this discussion, but I have just been reading the origional post by Tun, and I thought "that's me" almost to the last detail, except that I am freelance and able to check the markets in the day. I have found the replies very helpful and thought provoking however I have a couple of comments that I would really appreciate someone giving me their more expert opinion on.

You have been discussing how restrictive it will be starting up with such a relatively small amount of capital, and the options open, like more capital ,certain types of shares etc. but nobody has mentioned risking slightly more of the starting capital, maybe about 5%. This was going to be my plan because
1. It will give me more experience and I am treating the initial £1000 as part of my trading education
2. Losing all my capital, should it happen, would just mean that I would have to save it up again, paper trading in the meantime, the family wouldn't be out on the street.
3. I don't want to feel as if I am in a straight jacket, I'm scared enough as it is.

I hope it doesn't sound too reckless, as I know all the books say never risk more than 1-2% but can't this rule be more flexible when you are talking about a small amount of capital which it wouldn't be the end of the world to lose.

Just another comment about being emotionless about wins and losses, I've read this a lot as being one of the things a good trader has to cultivate to be successful. Surely any human being is going to be a bit miffed if they lose money. Isn't it more healthy to switch off the computer and go to the gym and hit something. Then start again the next day with it out of your system. Bottling things up gives people heart attacks. Sorry if this has been discussed elsewhere.

I know I don't know anything and you all probably think (if anyone is reading this) that I will last about a month if I am lucky, but I would really appreciate comments. It's not too late to save me as I have'nt committed any money yet.

Thanks for listening

 

[chump]

5% at the very start will just be more likely to shorten your educational experience by wiping you out that much quicker.
Education takes time.Using the lowest viable % to begin trading maximises the amount of time you are giving yourself to learn how do it consistently well.
If your results shows you are a proverbial 'rocket scientist' then that would be the most logical time to increase initial risk and or position size. If like the rest of us you are a mere mortal then going small to start is the way to go.

Cheers

 

[TheBramble]

Seagreen - Chump has covered the capital risk issue, but as for unemotional trading - there is a difference between being 'miffed' and feeling any of the stronger emotions such as anger.

Trading with money you wont miss is essential. But if there's any emotional attachment to it (next month's mortgage, school fees, massage parlour subscription etc...) on the line, it becomes impossible to be unemotional.

And, with anger comes the 'need for revenge' as you ramp up your next position size to 'get back' what the market 'took' from you.

If it's the education you want, keep the risk to the 1% range and use a sub-£ SB...

If you're starting with low capital, it wont matter if your trading 1% or 5% in terms of profits, but it will mean you get to stay in the game longer if you're wrong - giving you a chance to adjust your trading appropriately.

 

[seagreen]

TheBramble
I see what you mean about having emotional attachment to the money involved in trading. Its almost as if it is not money in the usual sense but stuff you use to trade with. Possibly thats not exactly what you were getting at but its given me something to think about.

Thanks guys

 

[Skimbleshanks]

Seagreen - no matter what you feel right now, when you actually put real money on a trade and manage the trade you will probably be very surprised by your emotional response.

It's just one of those things that you have to experience for yourself to know and understand how profound an effect it can have on you.

 

[RAMOUTAR]

Seagreen - no matter what you feel right now, when you actually put real money on a trade and manage the trade you will probably be very surprised by your emotional response.

It's just one of those things that you have to experience for yourself to know and understand how profound an effect it can have on you.

Excellent, Skimbleshanks!