Trading as a part time job??

[poom]

Hi everyone,
I live in canada. I'm a second year math(honours) student. i'm 19 years old. I took some basic economic and finace course so i know a little bit about the market. I am interested in trading. I have been reading some book and article on the internet about trading. I have part time job. I work 6 hrs/week,$11/hr. My question, is trading a good choice for me? I dont know if it is better than the job I have right now. I have around $6000 in my account. Also, is it possible to trade as the full time job in the future because i don't know what i will be doing after i graduate. I just study math because i like math and i'm good at math.

If I'm going to trade, should i trade stock or forex? Btw, do you suggest me to take any course for next year?

Thank you

 

[Shakone]

Hi everyone,
I live in canada. I'm a second year math(honours) student. i'm 19 years old. I took some basic economic and finace course so i know a little bit about the market. I am interested in trading. I have been reading some book and article on the internet about trading. I have part time job. I work 6 hrs/week,$11/hr. My question, is trading a good choice for me? I dont know if it is better than the job I have right now. I have around $6000 in my account. Also, is it possible to trade as the full time job in the future because i don't know what i will be doing after i graduate. I just study math because i like math and i'm good at math.

If I'm going to trade, should i trade stock or forex? Btw, do you suggest me to take any course for next year?

Thank you

Trading is unlikely to pay you £11/hour, and it's more likely to cost you £11/hour, so keep your part time job, and if you're really interested in trading, then study it, but don't risk money.

 

[NVP]

Job Opportunity (Trader) :-

Brutally Long Hours
No Guarantee of any income at all (High Probability of losses)
No Pension, Healthcare or Employee benefits at all
Isolated Location
PC Based
Employee to provide own equipment

sounds great ?
N

 

[poom]

I have been open the demo account. I find that I like trading stock more than forex. I feel like I understand stock but not forex.

 

[I'vereadthemall]

I would say you're right to focus on stocks poom. For part-time purposes the forex market isn't particularly convenient for you because it's 24/7.

If you trade an end of day strategy on individual stocks you can keep working and trade part time. Learn a mechanical trading strategy with a historical edge and you should only need to spend 30 minutes or so analysing the markets each evening.

Be completely realistic regarding your expected returns. On a $6000 account you shouldn't really risk more than $150 per trade and if you could turn your $6000 into $8000 in a year you'll have done bloody marvellously.

The one issue with trading stocks on a small account is that the commissions will hurt you in percentage terms.

If you really want a job in trading you're right to study maths. I don't know any traders who have gotten work because they knew how to trade a technical indicator system for forex.

I do know traders who have gotten jobs because they knew how to formulate a correlation matrix and portfolio var. also learn the benefits of portfolio diversification amongst uncorrelated assets and also the benefits of trading uncorrelated strategies.

Don't forget that successful trading is basically successful risk management.

While on the demo make sure to have specific rules. Religiously stick to them. If you can't do that on a demo account.....you definitely wouldn't be able to in real market.

 

[I'vereadthemall]

What books have you read? I would always recommend avoiding the sales books...'forex for beginners' etc. go straight to the good stuff. Inside the house of money by Steven Drobny. All of the market wizards books, especially hedge fund wizards. For light reading...reminiscences of stock operator.

 

[poom]

I would say you're right to focus on stocks poom. For part-time purposes the forex market isn't particularly convenient for you because it's 24/7.

If you trade an end of day strategy on individual stocks you can keep working and trade part time. Learn a mechanical trading strategy with a historical edge and you should only need to spend 30 minutes or so analysing the markets each evening.

Be completely realistic regarding your expected returns. On a $6000 account you shouldn't really risk more than $150 per trade and if you could turn your $6000 into $8000 in a year you'll have done bloody marvellously.

The one issue with trading stocks on a small account is that the commissions will hurt you in percentage terms.

If you really want a job in trading you're right to study maths. I don't know any traders who have gotten work because they knew how to trade a technical indicator system for forex.

I do know traders who have gotten jobs because they knew how to formulate a correlation matrix and portfolio var. also learn the benefits of portfolio diversification amongst uncorrelated assets and also the benefits of trading uncorrelated strategies.

Don't forget that successful trading is basically successful risk management.

While on the demo make sure to have specific rules. Religiously stick to them. If you can't do that on a demo account.....you definitely wouldn't be able to in real market.

Thanks for your advice. Recently, I just opened the account with TD waterhouse, which they have the demo account that I can try on. The problem that I have right now is that I was overwhelmed by the all the data, strategies and technique form many books that I have read. Do you have any suggest about the rule I should stick with? For instance, when should I trade?, What indicator should I look at?, Is swing trading a good idea for me? Also, you said I only need only 30 min per day to analyze the market each evening. What should I do in that 30 min?

Thank you in advance

 

[I'vereadthemall]

This is a brief overview of one of the strategies I use when trading U.S stocks.

Weekend: Compare individual sector performance against the S&P500 over the past 3 month period. Only allowed to buy stocks the following week from sectors that are outperforming the S&P500.

Run a fundamental screener for stocks that have a positive net profit margin, market cap of at least 350 million, ROE over 15%, positive sales growth this qtr vs qtr 1 year ago and also sales growth this qtr vs qtr 1 yr ago higher that's higher than industry average.....remember that the stocks should only be from the sectors that are outperforming the S&P 500 as well.

From my experience you will usually have about 10-25 stocks in your short list that meet all of the above criteria. Check if any earning releases are due the following week on the stocks in your short-list. Don't take a trade in a stock that has earnings release due the upcoming week.

Sunday night and each weekday night: check each of the stocks in your short list for a technical set-up.

I'll share a basic one with you (daily charts);

Plot a 60 day ema and a 120 day ema. When buying stocks the 60 ema must be above the 120 ema.

Next you want to use a 20,3,3 period stochastic indicator. You are only allowed to buy if the stochastic is under 20.

Plot a 60 day donchian channel on your chart. This will show you to easily scan the highest price of the last 60 days.

Put a 20 period ATR on your chart. The stock price must have pulled back at least 5.5 times the value of your ATR from the upper donchian channel.

Once ALL of the above criteria are met you need to place your orders. Place a buy order 1 penny above the high of the day that met all of the above criteria.

Stop loss is 2 x the value of your ATR away from entry.
First Profit target is 2 x the value of your ATR away from entry.
Once first Profit target is hit close half of your position and move stop loss to break even.
2nd profit target is 3 x the value of your ATR away from entry.

If you don't get filled but all of the above conditions are still valid change your buy order and profit/stop orders for the next day with the same rules as above.

You can repeat this process each evening while markets are closed. Depending on the stocks you already have open positions in you can add more positions if all rules are met. Having said that, recognise that the stocks market has a pretty high internal correlation. Especially in our case because we have already singled out specific sectors that have been beating the market.

There are ways of calculating correlations between stocks and sectors but that will have to be another post!

Diversification will only protect you to an extent. A good idea is to also repeat the technical process I've mentioned on a number of commodity ETFs as well as some currencies. For example, agricultural markets have recently seen low correlations to each other so have been offering a good way to diversify.

Make sure the commodity etf's you add to your list have a reasonable amount of liquidity or slippage becomes an issue.

While you are on a demo take every trade that meets all the rules I have mentioned and don't worry about issues of having a highly correlated portfolio. The idea of a demo is to get used to a certain platform and to learn a strategy without risking your hard earned dollars! The more trades you take the quicker you'll learn the strategy.

The more trades you place the sooner you will learn how the markets being traded are correlated. As I said before though, don't be slack with rules just because it's a demo. Stick to them precisely.

The only issue with what I'm sharing with you is that you will go some weeks with only 1 or even no set-ups. This is obviously not optimal on a demo because you are trying to learn.

I'm just sharing with you one of the strategies I use. There are literally hundreds of others you could try.

To summarize the answers to you questions: swing trading is perfect for you because of your other work commitments. The above strategy falls I to the swing trading camp.

The 30 mins a day is to scan the charts for the setup detailed above. It takes a short time because the rules are completely mechanical. Most of your work is done on weekend compiling the short-list.

Any further questions please don't hesitate to ask.

 

[I'vereadthemall]

I forgot the most important part...only risk 1% on each trade.

 

[BeginnerJoe]

You have a chance if you stare at charts 24/7 for 2 years and do continuous real trades, assuming you are very sharp. For the less sharp, make that 24/7 for 5 years. Size of trade doesn't matter. A $0.000001 trade is as good as a $10,000 trade. Demo is no good. If you don't put in money, the "guy" on the other side of your trade won't be motivated to show you all the magic tricks "he" can do to entertain you. I bet you didn't even know there's a "guy" on the other side of your trade. Like in buying a car, buying forex or stocks involve someone doing the selling. The "guy" on the other side is not necessarily the broker. The broker is usually just a middleman taking a cut on the deal.

You are going to lose money on all the "strategies" you are going to find out there. Once you get tired of losing and start to wonder why you lose, that's when light bulbs starts to light up.

All that sounds a bit too much work doesn't it ? Its far easier to get a good degree and find a normal job like everyone else.

 

[I'vereadthemall]

I agree about how long it takes. I also agree that you need to put real money on the line to understand what the hard part of trading is...sticking to your rules throughout a drawdown.

 

[poom]

I forgot the most important part...only risk 1% on each trade.

First of all, thank you so much for information.

So, I just went to my TdWebbroker account to try out this strategy.
For Screener,
Market Cap > 350M
ROE >15%
EPS growth ( Last quarter vs prior year) >0%
EPS growth ( projected this year vs last year) >0%
Bullish indicators and Oscillator >1 (0-5, 5 is very bullish) I want to narrow the searching.
Sector = Technology ( I believe)
Total = 19
What do you think about the price performance 4 or 13 week and % change from 52 week high?
There is no sale growth for my screener, there are only revenue growth and EPS growth. Also, I can’t check whether sales growth this qtr vs qtr 1 yr ago are higher than industry average or not.

For the chart,
The choices I have are EMA, SMA, MA, Bollinger bands, Parabolic SAR, Volume by price, Price Channel, time series forecast, linear regression, weighted MA, Chalkin’s volatility, MACD, Mass index, Momentum, RSI, ROC, Fast/slow Stochastic,Ultimate osc, williams & R, DMI, MACD Hist, P/E range and Ratio, ADX and Volume.
I don’t have exactly what you recommend. So, I use fast stochastic. You said,“ You are only allowed to buy if the stochastic is under 20.” Do you mean value of both %K and %D are below 20? For Donchian channel, I use price channel. I don’t have Average True Range. Can I use another indicator instead of ATR?

Much Appreciated
Poom

 

[Ivan88]

First of all, thank you so much for information.

So, I just went to my TdWebbroker account to try out this strategy.
For Screener,
Market Cap > 350M
ROE >15%
EPS growth ( Last quarter vs prior year) >0%
EPS growth ( projected this year vs last year) >0%
Bullish indicators and Oscillator >1 (0-5, 5 is very bullish) I want to narrow the searching.
Sector = Technology ( I believe)
Total = 19
What do you think about the price performance 4 or 13 week and % change from 52 week high?
There is no sale growth for my screener, there are only revenue growth and EPS growth. Also, I can’t check whether sales growth this qtr vs qtr 1 yr ago are higher than industry average or not.

For the chart,
The choices I have are EMA, SMA, MA, Bollinger bands, Parabolic SAR, Volume by price, Price Channel, time series forecast, linear regression, weighted MA, Chalkin’s volatility, MACD, Mass index, Momentum, RSI, ROC, Fast/slow Stochastic,Ultimate osc, williams & R, DMI, MACD Hist, P/E range and Ratio, ADX and Volume.
I don’t have exactly what you recommend. So, I use fast stochastic. You said,“ You are only allowed to buy if the stochastic is under 20.” Do you mean value of both %K and %D are below 20? For Donchian channel, I use price channel. I don’t have Average True Range. Can I use another indicator instead of ATR?

Much Appreciated
Poom

I hope you can now see why others are now suggesting a period of 2 - 5 years learning in this business.

Whilst I agree with others that you can only experience the true market whilst trading a live account, from the questions you are asking it is clear you are not yet ready to trade live - only trade a demo account until you think you have backtested a strategy that you think works - and I would suggest you are several months away from that at the moment.

Also, don't expect to be given a strategy from someone else! Most successful traders develop their own strategy - developed through these many hours of learning this business, often putting together bits and pieces from other strategies.

You have been given several pieces of good advice already which I support - develop good money management controls (e.g. target decent risk/reward ratios, risk 1% max of account on any one trade), always trade with the trend and I would add always consider support and resistance.

As to indicators, remember these are mostly just derived from the price and are telling you nothing you can't see on just the price chart.

Also, for your information, revenue is turnover, is sales!

 

[I'vereadthemall]

Hi Poom,

The exact indicator settings are almost irrelevant. They simply provide us a quantifiable way of knowing if we are sticking to rules. I cannot stress this enough. There is nothing predictive about TA in my opinion.

I have a general method if you will...I.E, I want to buy things that have been going up over the long term, but have gone down in the short term.

All of the indicator settings could be slightly different and it wouldn't really change the results much. If it did change the results by much it would imply that the system has been optimized in some way which is never a good thing.

You could swap the stochastics for rsi, swap the donchian from 60 periods to 50. Change the MA from 60 and 120 to 40 and 80. As long as they give you a measurable set of rules that will tell you when a stock has been going up over the long term but has recently come down in a statistically unusual pullback it doesn't matter what settings you use.

Believe me, the important questions are to do with money management and not to do with indicator settings.

ATR is just a simple way of ensuring that your stop-loss will dynamically change based upon the average volatility of whatever it is you are trading. I have used it for so long that I genuinely can't remember which other indicators do roughly the same thing.

Sorry to dissapoint. There really is no 'system' that will ensure from losses or prolonged periods of drawdown. I was merely sharing a quantifiable strategy for you to understand the benefits of having a plan and strict rules.

 

[I'vereadthemall]

Hi Poom,

To illustrate that the idea behind the technical set-up I highlighted above can be applied to forex as well as stocks I thought I'd let you know it just happened in the EUR/GBP cross. I am taking the trade and thought it was worth posting so you can get an idea of how they can pan out.

Roughly 50% of these trades will win. Average holding period 10 days. Having a slightly larger target price than stop loss is where we make our money. Bear in mind that

Short EUR/GBP @ market 0.8561

Stop-loss @ 0.8657
Target 1 @ 0.8465 (close half position and move stop to BE)
Target 2 @ 0.8417

 

[I'vereadthemall]

Bear in mind that I am only risking 0.5% of my account on the trade.

 

[gerryg]

to start trading you should know at least interface of metatrader and click buy and sell in right times. But the point is if you understand where is the fine moment to click buy and where to sell. Seems to be easy, but people lose billions on that.If you ready to have losses for a start, then go for it and trade.

 

[bhavin987]

Hi everyone,
I live in canada. I'm a second year math(honours) student. i'm 19 years old. I took some basic economic and finace course so i know a little bit about the market. I am interested in trading. I have been reading some book and article on the internet about trading. I have part time job. I work 6 hrs/week,$11/hr. My question, is trading a good choice for me? I dont know if it is better than the job I have right now. I have around $6000 in my account. Also, is it possible to trade as the full time job in the future because i don't know what i will be doing after i graduate. I just study math because i like math and i'm good at math.

If I'm going to trade, should i trade stock or forex? Btw, do you suggest me to take any course for next year?

Thank you

GOOD LUCK mate! but remember 90% lose money in this game
I suggest not to jump into it, take 1 year to learn about the markets
work on trading psychology / mental fitness as that is the key to success

 

[robertofx]

to start trading you should know at least interface of metatrader and click buy and sell in right times. But the point is if you understand where is the fine moment to click buy and where to sell. Seems to be easy, but people lose billions on that.If you ready to have losses for a start, then go for it and trade.

That's why we have demo accounts to get an idea about Meta Trader and understand important concepts like risk/reward,margin and leverage.

 

[pro_fx]

If you are truly believing in you then go with stock trading first on full time. But that would even need all the attention you would pay for the actual job anyway. Not just that be ready to loose yourself some money in worst situations because time is not yours always. Then after mastering the indices trading go for forex, unlike indices it needs so much of strategy with tons of knowledge to execute an order and also studying of all the historical patters is important.