Dos and Donts
OK OK OK.. enough... MAN.. too many issues.. not enough grounding from some people.. heres my contribution from experiences on the basics.. Im really sorry if its too long but ive been told it contains a lot of timesavers for those very green to trading:
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From my experience Spreadbetting is a mugs game for those looking to trade rapidly or even intraday.. just dont do it. The only way you should consider spreadbetting firms is for swing trading or holding positions for say three days to 2 or 4 weeks looking for gains over that time frame. Anything shorter than that and you will experience the skulduggary of these who will do things like stop you out of a trade, deny access to the platform/trade, distract you or provide meaningless or ridiculous graphs that may mislead the novice.
First thing you must know is that many markets offered by these companies are FAKE!! ie they are weighted to improve volatility and to entice your trade.. so you end up loosing.. This is the same with nearly ALL CFDs.. these are repackaged deals that are offered completely independently and are simply a contract between YOU and the Broker who has simply decided to make a market for you. This means your CFD position is not traceable or of any value to anyone else not even another broker offering CFDs be warned!! thats why the Fake markets offered by spreadbetting form and the CFDs never ever seem to tally properly with the REAL values of the market...BECAUSE THEY ARE MANIPULATING THEM!!!!!!!!! TO SKANK YOU OF YOUR MONEY!!!!! CFDs can be good though if you use DMA (Direct Market Access CFDs.. its mainly a platform thing where you get actual market quotes but usually the firm will take its cut based on a % of the total trade.... never do CFDs without using DMA..insist on DMA!!)
If you start winning a lot and regularly expect to be denied access intermittently or at market opening. Avoid fancy products like Binary bets, these are one arm bandits in disguise, unless you are 1. very knowledgeable on the fundamentals for the outlook you you are positive will happen AND 2. Disciplined to leave those flashing lights alone.
If your serious about trading open one of the following accounts and forget the rest
Interactive Brokers many markets low commission and low spreads no fake markets
Etrade US account... good for general trading esp swing trading.. not so good for intra day
tHINK OR SWIM: THE WORLDS GREATEST OPTION PLATFORM IN MY OPINION
Optionsexpress excellent for WEB options trading
Schwab excellent for help and advice but youll pay for it. online general broker
Tradestation; The rolls Royce of platforms.. ultra low commissions for futures options and stocks (with a fully automated platform base and charts that are tick charts not just basic 1 min charts)
Saxo bank: Only ask for thier DMA version not the general platform otherwise fees are too high use them for Forex, CFD trading (which works out cheaper in margin terms but very similar to Futures trading in a very general sort of way..) But be careful here, like many other brokers they make markets in CFDs meaning if you want to trade indexes as I do, their market prices can be different from the underlying.. ay you say? this means for example opening breakout profiles on some indexes are not made available to you to enjoy.... but of course that cannot be the case ( I think ) when you are dealing with a DMA CFD platform... Ill update this shortly... NB ASWX (australia) will soon add Exchange traded CFDS!!!!!! that will hopefully mean no skulduggary by brokers masking this market opening profits from us.. ( f'=0ing B*574rds)
Spreadbetting: dont touch it with a barge poll unless you have less than a £1K to invest
Subscription services to follow others trades: dont be fooled... if they can do it.. so can you dont follow anyone.. trade yourself.
Other great tools: Worden charts.. subscribe to Gold service for end of day charting of US stocks and indecies. This is the best charting tool around if you want to trade stocks US in a traditional way, e.g. swing/momentum trading style holding positions for say 3 days to a month or two. This tool is a real must. Also if you need wide range of Realtime charting you can subscribe to platinum service. Remember with this style of trading you can can then also get into Options trading as well, as some of the best option strategies involve the holding of stock. For an overview of option strategies go to optionsexpress.com and checkout the world class section of option strategies for FREE ! If you need any other charting realtime tools for accurate tick by tick data that so many firms annoyingly for me do not easily provide perhaps try Proquote or e-signal products. but really you wont need them unless you are full time trading.. or trading intra-day (which by the way isnt necessarily more profitable than holding longer positions so dont be fooled).
The best places to go to learn how to trade are the free places!! e.g.
www.CBOE.com etc etc ie always go to the website of the EXCHANGE for everything you need about understanding an instrument before and during trading.
Apart from just perhaps one or two other non mentioned companies like Mann financial and GNI this really covers it all. Others are morte obscure or simply glorified rubbish.. for example: CMC markets.. ohh Please.. the platform for CFDs I demoed was being at kindergarten and really bad graphing tool reminding me of some of the worst spread(your wallet you gullable fools)betting companies. IGMarkets; good market coverage but the DMA platform did not work properly for me and I was disappointed to see in their IGMARKETS platform (the pro) was still offering Binary bets.. (cmon guys grow up).
WARNING: when you start trading I guarantee you you will lose and lose and lose again. Be prepared to lose 3/6 months worth of trades before you begin to realize a. you dont need to trade everything. b. your personality really matters. c. anyone asking for money outside of a platform or direct access should be viewed in the same way you perceive snake oil salesman and some second hand car dealers. Realise that you must learn from every loss and re-live what you could have done differently. d. You will learn that you must have a strategy that defines when you will place a trade and when you will exit and how much you will always risk on trades (that figure will not change very much at all regardless of the instrument you trade because it is set according to your initial size of your account..
Courses: I really can recommend only two courses for those interested 1. Anthony Robbins Wealth Mastery will enlighten you and it cuts through the crap of trading with people like AJ Monte (pit trader from Trading Places & huge contributor to Etrades help pages!!!) making appearances and teacvhing about stock and Options trading safely . A real must for those looking to overhaul thier lives financially and set trading in its proper context by sorting the rest of your financial life out first over 4 days costs around £1200 and worth every single penny..(expect to meet loads of people, dance on chairs root out your financial habits that dont serve you, make more money, engage in true learning games, and be prepared to be shocked by the quality of the whole experience and be moved to tears from the extra special speakers and participants forget the rest because the adage.. those that cant teach" becomes very apt with them all and thier boring courses. Next is an add on to this course where advanced Option strategies are taught for a huge price tag in Davos or Marbella for those who need to know the REAL deal behind options trading.
Hints for options trading:
dO NOT START TRADING OPTIONS UNTILL YOU HAVE A FEW MONTHS LIVE STOCK TRADING UNDER YOUR BELT AND YOU HAVE READ AND READ UP ON ALL STRATEGIES AND THIER RESPECTIVE FOLLOW UP ACTION..ASSUMING THIS IS THE CASE READ ON Its really simple, an Option is like a Pizza coupon ..thats it!! either the coupon will allow you to buy pizza or you can make the coupon and sell it ( but if you sell it of course you must have the pizza (the stock) readily availble in case the coupon buyer decides to use it..SIMPLE ISNT IT?? Remember go to optionsexpress and learn for free all you need to know.....thier are many MANY strategies but you will need to focus primarily on perhaps 2 or 4 at most... you dont need to do more than that to be successful, some institutions stick to just two strategies one of which is the safer but excellent WRITING COVERED CALLS strategy ie selling/going short against a stock (or a LEAP in place of the stock which is always required in case the option you sell (WRITE) is excersized against you. Dont worry you will learn this in one or two days.
hmm.... why you say?... because most options expire worthless!!!!!!!!!!! thats why!!!!!! and if you write an option you immediately receive a premium into your account someone will pay you for untill ithe option you created expires!!!!!!!! Also, kNOW THAT YOU CAN USE A leap OPTION TO ALSO ACT LIKE STOCK!! and save you the money involved in buying expensive stock.!!!!! LEARN ABOUT ROLLING UP AND ROLLING DOWN AND THE CONCEPT OF STRANGLES AND STRADDLES.. and calendar spreads . All these do is allow you to profit from various scenarios whilst making sure you losses are limited, otherwise you could BUY coupons without protection and believe me that is so very risky because option prices fall like stones. If you buy a CALL or PUT option alone dont hold for more than 3 days!!! and watch like a hawk. simple.!! REMEMBER YOU ONLY NEED ONE OR TWO STRATEGIES THAT YOU WILL PLAY OVER AND OVER AND OVER AND IF YOU START WITH £2000 AND MAKE JUST 15-20% ON YOUR MONEY PER MONTH AND COMPOUND THIS YOU COULD MAKE A MILLION IN 5YEARS. SO DONT BELIEVE THOSE PEOPLE WHO CLAIM TO DO MORE..THOSE ARE THE PEOPLE WHO WILL WIPE THEIR ACCOUNTS CLEAN as if just opened..
Magazines: Traders magazine & commodities & stocks ( I think) magazine are musts.. forget the rest for now.
Lastly.. some of this you will know but you wont internalise it until you actually make losses, then the impact will hit home.. no amount of paper trading will necessarily help you. because you have to feel the loss and that will force you to learn.. I'm still yet to make consistent monthly profits. You will know when it gets better because you will approach trading in a zen like state of mind where you wont celebrate wins or losses so much.. but when you observe your trading results out of trading hours you will feel pride that your begging to master the markets.... if your trading brings about heart thumping in your chest you havnt got your money management right and although thrilling in the short term you will eventually wipe your account, dont even think about being clever enough to avoid this one.. this one will clean you out baby... CLEAN!!!
Please read again and dont be sucked in by the thousands of idiots who believe they can help you for a small monthly fee..DO IT YOURSELF my friend..After the Anthony Robbins course I learned that the even the brokers at these firms did not know as much as us. Your skill level is all about your perception because whatever you are told thier is no holy grail only thousands of different ways to eek out profits over time...
So the musts are as follows:
You must know in advance your chosen strategy, ie exactly what signal or combinations of EXACT signals will cause you to enter a trade, or exit a trade, otherwise you dont have a strategy, you have a financial-blow out plan and I give you 3 weeks till it blows...
You must work out how much to risk on a trade (I say maximum 5-10% of all your money on any single trade.. including margin.. even many think thats too high and use the 1% rule. This area is called money management. Bad money management, e.g. trying to double up the stake on the next trade to win your losses back is often called gambling. Gambling will wipe your account clean in minutes why.. because your being too emotional, l trust me.. . dont trade think.. the market will always be there tomorrow and next week .. no rush.
To begin with Learn about Bollinger, Stochastic and MACD indicators first... these indicators (and there are many more) form the apparatus upon which you base your strategies for entry and exit, however in most cases you don't need more than three..simplicity is the key.
Dont think you need to trade everything in site, get to know a market like a new partner, stick with it and understand the markets personality over time..
Avoid brokers fake markets or markets where they "make a market." I mean would you really bet on a horse race if you knew the organizer was doping the horses at random? ..really?
Always choose Direct Market Access tools, you will save money and have more control.
Upgrade to a business account on your DSL line to reduce contention issues if youve hd problems recently
You will lose probably 50% of the time (95% in the beginning) profits will come by simply slightly reducing the losses and slightly improving the volume or value of the winners
Your ability is really about your own perception of your capabilities.. there is no holy grail so dont be intimidated by pushy well rehearsed brokers who unlike you require the security of a firm to trade, ask to speak with someone else or threaten account closure.. remember especially if they are spreadbetting with you they are not necessarily your friend if the firm makes a market and you trade in that fake market, they are fleecing you!!! and your a mug for betting on doped horses without clarifying first.
You are better than you think.. because where there is spread there is a company taking a tax from your work before you can even take profit for yourself. They win even if you lose!!
The best institutions make perhaps 35% on their total account values because they must excersize good money management, thats still a whopping 30mil on a 100mil size account thats about 0.6% a week on thier total capital employed.. so you know people who talk about 50% consistently per month are jokers.. you must run run run from these pretenders especialy the ones with photos of themselves and a poor quality one page oversell followed by payment methods..
Trading intra day isnt necessarily more profitable than Swing or momentum trading sometimes its worse. The very best trading system will trade mainly on technicals but always have an eye on the fundamentals (news, earrings calender, buy outs and economic progress or retardation indicators.. yep sorry guys no short cuts but the good news is fundamentals only take 10 mins followed by keeping an eye out through the day.
when buying simple Call or Put option alone, you really do need to get rid of it within a couple of days before the price drops... options trading is very much about how long you hold that option position and offloading it quick at the hint of a drop This does not neccesarily apply if you are using constructed option strategies like spreads or strangles etc goto optionsexpress web site, sign up for free and learn thier first. then buy books best rated on Amazon. Options trading if you get it right wil astonish you for the returns it can provide but your losses are also magnified... hence various strategies exist to limit any potential loss (however these reduce the returns.. hint dont get greedy and buy too many calls and puts individually.. you will lose!!
Always set a mental stop loss e.g.5% or 10% drop for options. Most options expire worthless so any strategy involving you selling (writing) will have advantages if you structure it right e.g. SHORT strangles and straddles and some diagonal calender spread strategies.... nice!!
For all other trades it is a sin of the highest order not to use stop loss or trailing stop orders (but never rely on them completely because they can sometimes be missed by the system.
When swing/momentum trading Always place your money in the direction of the movement, because guessing market tops and bottoms is a mugs game... what goes up does not necessarily come down unless the indicator has repeatedly shown the cycle at least 3 times..always go with the price... PRICE remains the single best indicator of them all..
Never hold too many open positions 5 max!! or you will forget why or when you need to exit them..especially if options are involved. When options are involved write down why you bought what return your looking for and when you will sell or you will lose!! wipe your account and have to answer questions about the ware abouts of the family savings....whilst depressed.. not nice trust me... Ive been there...
Just my tuppence worth
... I hope other people are benefiting from this thread as much as me... and I hope I am asking the right sort of questions for this thread...
