Newbie With alot of Questions...

[seelmand]

Hello All,

I am newish to this forum (I have been referencing it on and off for the past three months and just decided to register a few days ago). I am currently in college and am an active fixer-up real estate investor. This is a very profitable and relatively low-risk venture and it suits me well because I see myself as very ambitious and inclined to work for myself. I plan to continue to build my real estate portfolio, however I cannot shake my interest in day trading. My father has made his living entirely from day trading, originally in the Chicago Merchantile Exchange and more recently via the internet. I realize that this does not correlate in any way to me being a sucessful trader, but it is definetly a career choice that I would love to pursue. I completely self-taught myself how to invest in fixer-up projects from the time I was 15 years old and began investing when I was 18. The reason I say this is to paint the picture to you all of the fire that is inside me to learn about ventures that will be profitable for me and that I will not let the opinions of others shake me from pursuing a venture that I will believe will be sucessful. I feel this way about day trading. After my sucesses in real estate investing I began to devour any and all material I could find on stock market investing. I began by being very intersted in Contrarian Value Investing, but the extremely high start up capital requirement was obviously too high a hurdle to jump. However I have read all books by Benjamin Graham, Mary Buffett, and Joel Greenblatt about this subject. Then I turned my interest to day trading. I read books by Elder, John Carter, and the famous Trading for a Living, as well as many other less known day trading authors and books. I am currently interning at a proprietary trading office in my hometown for the summer and am enrolled in an Online Trading Academy Course on the weekends (aka Power Trading). Obviously I do not expect to be sucessful right away but if some sucessful traders could come forward and share their experiences at the start of their careers that would be great.

Some of my questions include: What books did you read? What did you major in college? What seminars did you attend? Did you have a mentor? How much capital do you recomend starting with? Do you recomend new traders start off using TA or should newbies just trade by price and value as to learn faster how the market truly acts?

My biggest questions are: HOW DO YOU CHOSE A STRATEGY? What are some ways that new trading can learn about trading psychology? Did you find it difficult and discouraging to lose for months before you began to understand the markets? How do you overcome this? What do you feel is the best way to learn to trade, is it practing, reading, observing, or a combination of all?

I know this post was large and sort of rambling... however I have a burning desire to learn to day trade and I value anyone who can recomend ways for me to improve my learning process.

Thanks in advance

 

[timsk]

My father has made his living entirely from day trading, originally in the Chicago Merchantile Exchange and more recently via the internet.

Hi seelmand,
Welcome to T2W,
The sentence I've quoted from your OP is the one that stands out head and shoulders above the rest (forgive the TA pun). If I was your dad, and I read your post here, I'd be asking myself why on earth my own son doesn't feel he can come to me with these questions. You are in the unbelievably rare and fortunate position to have close at hand someone who knows what they're doing and has your best interests at heart. It really doesn't get any better than that. I work for this site and I love it, so I really shouldn't say what I'm about to say - which is forget about sites like T2W - and go talk to your dad!

Tim.

 

[robster970]

My biggest questions are: HOW DO YOU CHOSE A STRATEGY? What are some ways that new trading can learn about trading psychology?

I have deliberately decided to answer this part of your questions as I think you know the answer to the other questions in that paragraph which is persistance and a winning attitude.

Your strategy and personality are inextricably linked. Your strategy finds you. If you start off with a particular strategy and you find yourself trading outside of this strategy, it is because something in you is telling you this strategy is not right for you. Don't fight it. Think about what it is you are trying to do when you break your strategy and ask yourself why. Eventually, it will come together. I know this sounds cryptic but eventually this may make sense.

Also, if your dad traded at CME, talk to him. He knows more than he probably talks about and his experience at CME would run rings around most of the info you'll find on T2W.

 

[MrGecko]

Hello mate,

I would like to add two (maybe three) points to those already made by Tim and Robster.

1a) Yes, go and ask your Dad for guidance, but do not expect a panacea. My Dad ran trading in Unit Trusts for a major UK bank during the 80's (including '87), and of course we have discussed trading - but to be honest I could write down what I learnt from him on a napkin. Perhaps this is because the developments in technology make our respective trading experiences very different, and this might not be such an issue if your Dad has experience of modern day (day) trading... my point is that you should ask him, but what is Gospel for him might not be Gospel for you.

1b) In the same vein as above - but on a slightly different tack - try to be fair about anything he is trying to teach you. I will use a Driving analogy... I always found my instructor easier to listen to than my Dad, even though they were both telling me to change into 2nd - you get the idea.

2) With reference to Robsters point "Your strategy finds you"... Yes, by and large this is true - however, it is all too easy to proclaim "the Glove don't fit!". Continuing the analogies, consider a boat race (rowing, not drinking). You are a competitor and you have to choose a boat to race in... you can spend a lifetime waiting for the perfect boat and go nowhere. To get anywhere in trading (as in life), eventually you have to just pick one and ROW*.

Good Luck!

* I don't mean put money on it ASAP, but get on trading it and take records. You can learn all sorts if you have been disciplined enough to take the measurements and record the data. THEN you have a better idea about the boat to hop in.

 

[Black Swan]

Hello All,

I am an active fixer-up real estate investor. This is a very profitable and relatively low-risk venture and it suits me well because I see myself as very ambitious and inclined to work for myself. I plan to continue to build my real estate portfolio....

Good luck with that...

 

[seelmand]

@Robster- I understand your point about your strategy finding you and you must tinker with it until you create one that matches your personality. That is essentially what I've been doing for the short time I've been paper trading securities, however I guess that question should have been worded more like: When developing your strategy, do you recomend reading of other's strategies and/or observing other's strategies and implementing that or jumping in and creating your own strategy after trial and error? I have a feeling its a mix of both...

Mr. Gecko- "but to be honest I could write down what I learnt from him on a napkin. Perhaps this is because the developments in technology make our respective trading experiences very different". This statement also rings true with me. My father learned to trade by working in the CME and observing and learning by trial and error. That is what he advocates for me to do. He traded largely off of the emotion of the floor and his indicators were largely different than what the new breed of trader uses. Like you said I feel as if it is a different game now that everything is electronic and while I have learned some valuable things from him, I cannot take everything he says as "gospel". I am determined to learn from anyone who can offer me valuable advice and that's why I came here. I also agree with you on point 1b- and I have witnessed this many, many times. Also your point about finding a strategy and rowing with it makes sense and I feel like I am in a stage of trying to find the "perfect" strategy. I feel as if myself and other new traders fall into a game of trying a new strategy and not seeing immediate sucess, then scrapping it or revising it, only to not find immediate sucess and repeating. What you say about sticking with a strategy, so that you can prove it is a sucess or failure, is very good advice and something that I will heed.

@Black Swan- Not sure if that was sarcastic or truly a wish of continued sucess, but I'll take it as the latter and I'll extend my best wishes to you and your ventures.

As if I did not ask enough questions in the first post I'll add just one more, hopefully summing up the rambling feel that my first post had. I have heard two main schools of thought as to the best way to develop a strategy and a sucessful niche in trading. The first is the crowd that says you must learn by doing, you must put your feet to the fire and jump in with two feet. The only way to truly learn to trade is to sharpen your skills and learn by doing, and reading books and attending seminars is secondary to trial and error. I mostly hear this methodology from traders who trading in the exchanges in person. The second school of thought I hear is that you must first learn all you can about the markets, what drives and moves them, you must learn all you can about chart reading, about the companies and funds in the exchanges. You must learn strategies and ideas from sucessful traders and then paper trade until you see continued sucess- all the while learning and reading as much as you can. I hear this approach largely from traders of the "new age" or electronic traders. So what do you all think? Should newbies learn by doing and jump in with two feet, that way hopefully shortening the learning curve and learn from your own experiences? Or should a new trader learn as much as he can before jumping in and making his own way?

Thanks guys for your help so far and like Black Swan I wish all you luck in your ventures

 

[robster970]

You do both simultaneously. Enhance your knowledge through reading, enhance you performance by doing. It's an endless feedback loop. You will be developing a cognitive skill. You would not improve your ability to drive by solely reading a book about driving techniques would you?

You will make money by trading emotion. All that is different is that your dad did it on the floor. We now do it by watching candles form and looking at DoM/volume. You can still sense the greed/fear/anxiety on the screen. Human behaviour remains the same despite the tools changing.

 

[Charlton]

You are a competitor and you have to choose a boat to race in... you can spend a lifetime waiting for the perfect boat and go nowhere. To get anywhere in trading (as in life), eventually you have to just pick one and ROW*.

Right on

 

[Konviction]

Here is my advice:

1) Forget about day trading, unless you have the capital and the skills to build an automated system (black box) to compete with the super fast computers hedge funds use to buy and sell thousands of shares a second before you have time to click your mouse. Do some research on "High frequency trading" , "flash trading", and "black box trading" .....your much better off swing trading.

2) Forget indicators. Period. I use a 200EMA and thats IT, but my method of trading is 99.99% price action only. If you rely too much on indicators, you'll never really learn how to trade. I've been trading 5yrs.. of those 5 yrs, 4 of them have been with indicators. I feel I would have advanced much faster if I never used them.

PM me.

kon