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Welcome to the Personal Development for Smart People Forums, the place for lively, intelligent discussion of all personal growth issues -- physical, mental, financial, social, emotional, spiritual, and more. You're currently viewing as a guest, which gives you limited read-only access. By joining our free community, you'll be able to post your own messages, access many members-only features, see the new messages posted since your last visit, and of course remove this header message. Registration is fast, simple, and free, so please join today. If you arrived here from a search engine, you may want to explore the main site first, which includes hundreds of deep and insightful articles on a variety of personal development topics. |
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11-25-2006, 01:28 PM
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 Stock trading -- you've convinced me...now how to start? Hey, y'all -- I was going to post this as a reply to someone else's thread on whether or not trading the markets could be spiritually rewarding, but I thought this deserved its own thread. Okay, you've certainly convinced me that stock trading can be spiritually rewarding and lead to enhanced personal growth. And I'm so happy to see a group of people who find it spiritually fulfilling...I always thought it could be, now, through this board, I'm meeting people who are living that! Wonderful! May you all continue to get richer and richer!!! Anyway, I'd like to learn how to trade stocks. I'm ready for the accelerated personal and spiritual growth that comes with it. Now my question -- where do you think I should start? I've done a little research in the past, I know that technical trading suits my mindset. I know I'll need to papertrade for a while first. But there are sooo many systems, it's mind-boggling. People trade different indicators. Everyone and his brother have started different software systems. So I'm confused -- where do you all think I should start my education in stock trading? What to do first? Thanks in advance for your responses! - v PS. I just came across another thread that is similar to this one...so I'm editing this post to prevent asking you for redundant information. The gist of the other thread seemsto be first read books on trading psychology, then open a demo account. So next, which system to use? Don't you need to use someone else's system before you develop your own? By the way, I'd be happy to combine all the answers from both threads into one article to post as a sticky, so it doesn't have to get asked again, if you wish. Thanks! Last edited by Valeria : 11-25-2006 at 01:42 PM. Reason: update info      |
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11-25-2006, 03:01 PM
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| The Motley Fool: Fool.com: Investing, Stock Research, and Personal Finance is a good site for novice investors.
__________________ Swim with dolphins in the Arid Ocean Marine Life Simulation |
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11-25-2006, 03:37 PM
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| investment books When I first started investing I picked my own stocks, but this was too time consuming and I wasn't very good at it. Don't believe anyone who claims they can sell you a "system" that will make it easy to pick stocks. There is only one way to do it right: hard work. It takes a lot of time to do the necessary research and dig up information that other traders may not have. And don't forget that you're competing with experienced traders on Wall Street who have more information and inside connections than you'll ever have. Next, I tried paying an "investment adviser" at one of the large financial services companies to choose stocks for me. He did a decent job because he had access to a ton of information and research provided by his firm. Unfortunately, he charged ridiculously high fees for his services. Some of the fees were hidden so it took me a while to figure this out. The bottom line was that, after his fees, I was making less than the market return (S&P 500) and I never felt comfortable some of my investments because I didn't understand them. Recently, I opened and account with Vangaurd and decided to move my money into index funds. I'm resigned to passive investing because I don't have the time to pick stocks and I realized that I need to avoid high (sometimes hidden) fees. If you want to pick stocks then go for it, but start your education with books like "A Random Walk Down Wall Street" and the books listed below. DO NOT start your education with a "system" put together by a stock trading guru. You will not be able to sort through the hype and identify the information worth learning. Remember that the best investors don't sell a system. They make money trading stocks. If you don't have a significant amount of time to spend managing your investments, then stick to passive investing. If you really want to learn to trade stocks dedicate the next year to reading the right books before you make your first trade. Otherwise, you'll learn by losing your hard-earned money. Here are my recommendations: A Random Walk Down Wall Street by Burton G. Malkiel Amazon.com: A Random Walk Down Wall Street: Completely Revised and Updated Edition: Books: Burton G. Malkiel The Four Pillars of Investing by William Bernstein Amazon link: Amazon.com: The Four Pillars of Investing : Lessons for Building a Winning Portfolio: Books: William J. Bernstein Unconventional Success: A Fundamental Approach to Personal Investment by David F. Swensen Amazon link: Amazon.com: Unconventional Success: A Fundamental Approach to Personal Investment: Books: David F. Swensen |
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11-25-2006, 04:09 PM
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| With all due respect, the repsonses so far all seem to be about investing. I think the original question was about stock trading. I am a professional trader, and have a number of articles on my blog about how to break out of the newbie stage and be consistent. You may want to check those out. I actually go against the grain and say, don't start with a demo account. You won't know what it's like to risk your money, that way, and it makes a world of difference. Instead, risk very small amounts and build up your comfort and confidence. You can read plenty of blogs out there of traders that started out with wonderful paper-trading results, and then did nothing but drained their accounts when they tried the real thing. You've already seen the other thread re: trading psychology so I won't repeat that stuff here, but that is some of the most important things you'll need to understand once you know the basic mechanics of trading. Then: get to know some real traders. I can't overstress how fast this will speed up your learning. If you are lucky enough to find one near you, see if you can sit in with them in person and watch them trade. Plenty of them are amenable to that. Short of that, IM with them. The goal isn't to follow their trades, as if they are a free stock picking service. Rather, it's to get a feel for how they think about their trades as they take them and manage them. Feel free to ask more questions as you go. I think you'll find the trading community is very friendly and helpful.
__________________ Move the Markets (www.movethemarkets.com) -- my stocks/futures trading website. Unaspected (www.unaspected.com) -- My tarot/astrology journey, and readings offered to the public. |
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11-25-2006, 05:14 PM
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| guilty as charged Quote:
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11-25-2006, 05:21 PM
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| I think the best thing you can do as someone who wants to start out (I am too!) is to educate yourself on the fundamentals and "timeless" aspects of trading and investment. Build a strong foundation and overall awareness of how the markets work. Dwelving too deep into technical things like Elliot waves and DCF will only confuse you and they might not even work! I think reading good books is key, the knowledge that you will gain in those books are fundamental and they allow you to appreciate what traders are talking about if you talk to them. My fav books are: A random walk Liar's Poker Market Wizards (both books) Trading in the Zone (psychology of trading) |
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11-25-2006, 11:06 PM
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| To add to the good advice already in this thread it is worthwhile doing some research into what markets you want to actually trade. Stock trading is certainly the most easily recognized form of trading to the average person. You also have the choice of trading in the futures market or in the currency market (also known as forex). Each market has its own characteristics. Picking the market that most closely matches your temperament and style can be hugely beneficial both in the short and long term. Forex is my speciality and I would recommend checking out babypips.com to learn about the currency markets. I'm sure others can recommend good starting points for other markets so that you can make an informed choice to get your trading career off on the best possible footing.
__________________ ForexSpirit - consistent, profitable trading |
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11-25-2006, 11:37 PM
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| Do most traders specialize in certain stocks and play the fifty cent fluctuation game? Do you know of more traders who play just one or two sectors, much like a hedge fund? |
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11-26-2006, 12:25 AM
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| Thank you, Richard, Coma, Colin for the info on trading. Thank you Fox, Nemo, Mustard, Fortune for the info on investing. I will look for the random walk book. Richard, I've bookmarked your site. I'll admit, it's a little intimidating because of its wealth of information (pun intended...and i don't care that it's a bad pun, either!)...I had already bookmarked it before I started this thread. But I will make a point of absorbing something from it every day. Colin, I checked out babypips. Thank you! I've long been curious about forex trading, but wasn't sure where to begin to learn about it...now you've shown me a site that looks like they start from the very beginning...precisely what i need. I can already see that i need to take this quite seriously and prepare for it as a complete and intensive career change. I can do it...I'm ready, fully ready, to redesign my life. There's another thread somewhere on your purpose in life. Mine is twofold: 1) to reach the absolute pinnacle of financial and spiritual success -- to master both the spiritual and material realms...that is, to have amazing relationships, a life full of the things and people I love, to be richer than I ever imagined, to live in joy and bliss...and 2) to teach others how to do the same. And I feel very blessed to have found this group of people, people with amazing minds, who are so kind and generous with their knowledge. It shows me without a doubt that all my dreams are coming true right here, right now. Thank you again, Richard, Coma, Colin, Dave, Fox, Nemo, Mustard, Fortune! - v PS. I know I'm gushing. I admit I have a tendency to be a little overly ebullient at times. But gosh darn it -- it's hard to exercise restraint when you see your dreams materializing around you! LIFE IS GOOD. |
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11-26-2006, 01:12 AM
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| 1. Definitely read and learn as much as you can before trading. 2. Practice trading using "fake money" with a site like Virtual Stock Exchange - Home 3. Join an investment club in your local community (they are out there!) 4. Get started! You are going to learn more by doing than points 1 and 2 and 3 so when you are ready, take the plunge (just make sure it's money you really can afford to invest with)
__________________ Devote each day to the object then in time and every evening will find something done. -- Johann Wolfgang von Goethe |
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11-26-2006, 02:58 AM
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| Realize that anything you read in any book that's not related to the psychology of trading is most likely totally useless to your cause. Conventionally known technical analysis doesn't work anymore, you have to figure something out for yourself. First, define these questions for yourself: What markets are you interested in trading? Note that trying to trade options without first knowing how to trade the underlying is generally a very, very bad idea. What time frame? Do you want to daytrade and watch markets move tick-by-tick, do you want to swing trade and hold for 3-5 days, do you want to hold positions for a few weeks? Keep a trade journal, and watch the markets. Reading will give you information overload. Starting is really hard because you don't know where to start and making trading decisions without knowing anything seems silly. You have to think REALLY outside the box, come up with your own ideas, realize most won't work, and just test them out without losing real money. If you have the discipline to keep at it for a long enough time that you find a method that works on paper consistently, maintaing a journal, you'll be good to go. It's hard, slightly boring, possibly a huge waste of time, and you have no one but yourself. DO NOT read "A Random Walk Down Wall Street", because it's useless. Read the book "A Non-Random Walk Down Wall Street," maybe, but you can't expect to succeed if you fill your mind with doubts about the fact that it is possible to make a living from the markets. A lot of people do that, it's not just luck, and markets are not brownian motion; even academia is moving away from teaching the efficient market hypothesis and into the field of behavioral finance, which suggests that investors don't behave rationally (which they don't). Find traders somehow whom you can meet in person and become friends with so you can learn from them. Trying to find out what they do won't help you - even if they are able to articulate it perfectly, you won't be able to impliment their method yourself. That concept might seem really strange and non-truthful, but as you progress as a trader, you'll see it's true. As for trading being not spiritually fulfilling... remember... at least you're not a lawyer. |
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11-26-2006, 04:22 PM
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I do recommend "A Random Walk Down Wall Street" for investors, but I don't know if it would be useful for a trader. |
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11-26-2006, 04:28 PM
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| ^ Isn't A Random Walk Down Wall Street about how no one can beat the market? That's lies. However, I do have a copy of it out from the libary to get an understanding of the argument. I'm also going to read A Non-Random Walk Down Wall Street. Reading both can't do much harm.
__________________ Mind-Manual If you liked Blink or Stumbling on Happiness, and you like Steve's site, you'll enjoy Mind-Manual. |
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11-26-2006, 05:11 PM
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This was an enormously helpful post. At first glance, I would think that day trading isn't for me. I don't want to feel that I have to sit in front the computer all day. On the other hand, I sit in front of the computer all day ANYWAY, so maybe that's not a good argument. In fact, maybe it's just "resistance." I guess I'm afraid that the market will move so fast that I won't be able to go to the bathroom...and what if my internet connection goes down? I suppose I would be working with stops anyway, but there is this fear. So, based on that, I think I would be more comfortable with dealing with longer time frames. Swing trading sounds like something I might be tempermentally suited to...as well as position trading. Traderwill, could you tell me please why conventional technical analysis doesn't work anymore? I find that disturbing, because technical analysis just has a certain beauty to it that appeals to me on so many levels...aesthetically, musically...the idea of reading group behavior through a set of indicators...of reading the footprints that group behavior leaves...well, that's something I could get into. Or maybe I misunderstood...are you saying that I need to pick the technical indicators that I personally want to track rather than using someone else's system? I could do that...I never did understand what a japanese candlestick was in the first place, but moving averages are nothing short of poetic. I suppose you can tell that I think of the markets as being a kind of music. There's a rhythm, and I think (hope) I'll be able to learn the basics, get a firm foundation of knowledge, then be able to allow myself to feel it...let it become a part of me... Does anyone else feel that way, or am I thinking a bit too much outside the box? Thanks! - v |
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11-26-2006, 07:56 PM
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 For very cheap, you can get a second internet service. It doesn't have to be very fast (even go for dialup if you want)... it just needs to work when your main connection fails. I definitely suggest this for professional traders. Or, at the very least, be sure you know how to call your broker to get your positions closed out.Quote:
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An important thing to understand is that technical indicators don't actually add any information to a chart... they are actually filtering the data. They highlight some aspects of the price and volume action, while hiding others. So, you can see everything that the indicators tell you on a bare chart, if you know how to look. That's not to say they're useless, but it should make it clear that they aren't holy grails. And now for the shameless plug portion of the post: there are articles on all these topics on my blog.
__________________ Move the Markets (www.movethemarkets.com) -- my stocks/futures trading website. Unaspected (www.unaspected.com) -- My tarot/astrology journey, and readings offered to the public. |
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11-26-2006, 09:53 PM
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| When I say conventional technical analysis doesn't work anymore, I mean just that: conventional technical analysis. Technical analysis in the sense of analyzing price and volume action and finding repeating patterns has always worked and will always work; "mainstream TA" doesn't. I have spent hundreds of hours of my life coding up and backtesting every conceavable combination of indicators, moving average crosses, etc. and the only ideas I have that work are original (though some concepts are "stolen" from other traders; what works that I know isn't superbly advanced, and it makes logical sense, but it's not a system from any books. Indicators can work with a system to make it better or act as a filter - say you have a mean-reversion system, it might be useful to only take signals when the market is 2 SDs away from normal according to bollinger bands - but it also may not. In the 70s and 80s, TA was dominated by math geeks. The first automated trading systems were just based on simple moving average crosses. In the 90s, TA worked well because the markets kept going up, and indicators like stochastics that would give oversold signals worked quite well. Since then, conventional TA has gotten harder and harder to use. When you're developing your system ideas, there are two contradictory principles you must keep in mind. Simplicity is important, largely, and your system must make sense, and many simple systems DO work. At the same time, if your system is so simple that a computer can automate its entries ("buy when the moving averages cross while MACD level is above X"), it almost definitely does not work and you can confirm this by acquiring some backtesting software. |
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11-28-2006, 11:52 PM
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 Anyway, the author, Phil Town, is pretty much against mutual funds and other types of longer term "investing". However, you could end up holding good stocks for quite some time. It's definitely not about active day trading or anything like that. As many others have suggested here, stay away from trading "systems" or anybody that claims they can teach you how to beat the markets. I've tested and paper traded many so-called systems and haven't found one yet that works all the time. If anyone really knew how to beat the market, then a monkey wouldn't be beating Jim Cramer at picking stocks!  Incidentally, I've NEVER met anyone who makes a full time income from actively trading stocks (day trading). They might do fine for a while, but "Mr Market" always catches up eventually and gives them a good spanking. Try as I may to find someone with long term trading success, they usually all tell me to steer clear and stick to my tech career. Good luck - I hope you find your stock trading niche! Max |