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akin

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Hi there,

I've always been interested in the stock market and would like to take the plunge and start trading shares... i work full time so am not sure how I can go about putting on trades, would you say doing research in the evening, screening stocks in not the right way to go about it...

can anyone advise how to begin, baby steps, i have a general understanding of the markets and with time am sure can get to grips with the indicators...

I saw an ad for Tom Cat which allows you to pick shares, relatively cheap, has anybody tried this system? Is this a good way to start...
 
Hi akin,

You can trade shares around your job by screening stocks in the evening and setting up your trades for the next day, but you have to be committed and disciplined to follow this process every single day without fail.

Is this the first time you've looked at the financial markets or have you tried trading before?


Thanks

Damian
 
Hi Damian,


Thanks for your reply, great, I'm ready to be committed, i've been looking at the financial markets for about a year now, become more engaged in it off recent. I play with yahoo financial and pick stocks of companies that I know a little about, and play around with their graphs, etc, to look at the direction of the stock, i guess its not knowing enough about signals and when to buy or to sell, i was looking at the GES stock and had a strong feeling that it was going to rise, when it was around 45 or so, its rocketed over the past few months..i never bought the stock as i wasn't sure if I was intepreting the graphs correctly...

do i need a stock screening software or something, or is this jumping the gun ...

how does one screen stocks?

what does one use as buy and sell indicators?

Thanks
 
oh, in answer to your question, no i have never traded before, i have opened up an account with scot trade and have a little bit of funds in there just sitting idle...just would like to put my first trade on...
 
The best advice I can give is to take it into your own hands as entirely as possible. There is money to be made, but keep in mind that the stock market does not create money (ie: print out bills) -- the money merely changes hands in one form another. The amount of money in the stock market which is distributed by companies via dividends or share buybacks is fairly small, so it's important to realize that if you are seeking superior inflation adjusted returns relative to the market average, one group of people is losing their money while another group is winning that money. (And you could easily find yourself in the losing group!)

The reason I say this is because I believe that once a person realizes that the money from the stock market doesn't grow on trees and that the market is a dog eat dog environment, they will be more skeptical of public systems such as ones which offer to 'make you rich' with their stock strategies after you pay them a $500 a year subscription fee. It also demonstrates that, while working strategies do exist out there, you have to do your own research to find them. If a public strategy existed which claimed to make you a millionaire (and actually was legitimate), it could only work for so long. (remember: for each trade, there must always be both a buyer -and- a seller. Tons of people may want to buy into this strategy to get rich, but for how long will the sellers be willing to sell at discounted prices?) Soon, the startegy ends up more or less arbitraged away into market average returns.

So, for a few starting tips:
1) Do your research and develop your own strategy. Try to avoid people who are selling their own systems, because they are often frauds. Ever hear the phrase: "Those who know how to trade get rich. Those who don't, become teachers"? There is a lot of truth in that.

2) Once you find a working strategy, automatically assume that it is wrong or that their is some flaw in your methodology. If you merely take it and run with it, you could easily be chasing a pipe dream. Work on it as if you're trying to crack a safe -- do everything you can to try to find a weakness in it. Triple check to make sure your calculations are not wrong. Fiddle with the parameters of your strategy -- does it fall completely apart when you do so? Test it over different time frames to make sure it holds up and is steady. Factor in the costs of trading (commissions, spread, and slippage.) Is it still considerably good? Give it a margin of error -- for instance, assume you can't get in the trade immediately but have to wait.

3) If it passes all of these tests and more, dive in, right? No... Set up paper trades and follow them for a considerable length of time. Factor in the costs of trading while doing so, too. Is it still holding up? If so, you might have a winner.

4) Don't throw all of your eggs in one basket though. Perhaps you can diversify among stocks to test your strategy, but the best of both worlds is in diversifying in your strategies. Discover three, preferably four or five winning strategies and split your money between them (and perhaps again between the individual stocks in each strategy.) Strategies can and do become worthless over the course of time, and it's wise not to have everything invested in only one of them.
 
Hey MarkSA,
Where were you when I started out? If I'd had this advice five years or so ago, I could have saved myself a shed load of wonga. ;-)))
Excellent advice and very well explained!
Seasons greetings,
Tim.
 
Hi Akin,

MarkSA has given some excellent advice.

It is important in trading that you find a strategy that will suit your personality and lifestyle. Although you are probably keen to get going, you should take some time to decide on what type of trading you think would suit you best. For example, would your personality take to a long-term buy-and-hold strategy, or would you prefer a shorter-term system, or does your personality need the all-out action of a tick-by-tick day-trader?

You need to ask yourself these questions so that you can get some general initial direction in your quest for trading knowledge.


Thanks

Damian
 
Hi All

Thanks for your advice, I really appreciate it.

MarkSA I will certainly attempt that which you have guided me on. The only issue I would forsee is if I am not using the indicators in their right context, I hear things like breakout, or pullback, I can only assume that there is something that one has seen that indicates the stock is about to break out as in right or shift from its normal trend and will reach a point where it starts to pull back to its normal range of prices (if thats a correct intepretation?).

It may be a case of the blind leading the blind with me, are there generic things I should look out for or to start out with as I become more familiar with what is happening and I can add/remove things that I don't believe is working anymore?

I will forgo a stock screen focus on my own research and paper trades in the short term. do you have an example of a strategy that has perhaps worked in the past that I can use as a sample, just so I get an indication of what types of things people look out for so I know how the mind should/could work when developing strategies.

I don't have a benchmark to work from

Thank you all once again...
 
I suggest you go to the "first steps" forum of this site. The first 4 "sticky" threads should keep you occupied for a while with plenty of ideas of how to go about it.

If you want to spend some money on a book for a beginner then my personal recomendation would be "Come Into My Trading Room" by Alexander Elder. Others would have different suggestions for a first book I am sure.

Best of Luck

Gareth
 
Fantastic,

Thank you so much Gareth, never stumbled across the First Steps Forum before.

Sounds like just want I need to review as I paper trade in the short term.

Thanks everyone!
 
Hi Julian,
SOUND ADVICE! As always . I too need it though I am trading for a few years now.
Happy New Year,

newtrader22
 
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