Am I going into trading too soon?

redbuzzard

33,000 shares @ 450p is £148,500.

Are you sure you aren't teasing us?

noggin1980

_Super wrote: »

I'm not expecting to invest £15k and wake up the next morning with £50k... £2850 a year is a stupidly small amount of money and I honestly think I could make more than that by trading.

No it's not, 20% increase per year after 10 years turns your 15,000 into 93k it's a very very good return and one that we'd all dearly love to guarantee.

If your plan made sense why aren't active funds making way more than 20% a year these are guys doing what you are thinking about doing but with much more information and experience than you, with better tools and lower charges. What makes you think you are massively better than the average active fund manager?

_Super

Herbalus wrote: »

:rotfl::rotfl::rotfl:

You're talking absolutes. 20p is a small amount of money but if you started with £1 what more can you expect?

If you think that £2850 is a "stupidly small amount of money" then you need to realise that you didn't have a lot of money to start with.

I know I don't have much money to start with which is why I said I'll probably wait till I have a bit more capital but of course the more money you have the more money you can make and lose.

The general consensus on this forum seems to be "avoid trading all together" but is this based on personal failure or something else?

It would almost seem that people are telling people not to trade when they themselves have not done much if any trading? The way I see it is I have two choices.

Take the slow steady approach that will probably win in the end (25 years time)

Take the risky approach and try to get at least 50% return on your starting capital per year.

I guess a lot of it based on personal circumstances too, not to be rude but it does seem like a fair few of you are quite a bit older than me, like I said I'm only 22 and have pretty much nothing to lose and losing £15k would be a bit depressing it really wouldn't be the end of the world. I just wouldn't make the mistake of trading again :rotfl:

coyrls

_Super wrote: »

the price will probably go back up

Why will it probably go back up?

_Super

redbuzzard wrote: »

33,000 shares @ 450p is £148,500.

Are you sure you aren't teasing us?

Yes.. epic typo from me lol. 450p = 4.50 I was typing 0.45 -_-

_Super

coyrls wrote: »

Why will it probably go back up?

Because I've looked at a vast number of stocks from various different indexes and the majority of them do eventually go back up.. even if it takes several months.

bowlhead99

_Super wrote: »

I'm not expecting to invest £15k and wake up the next more with £50k... £2850 a year is a stupidly small amount of money and I honestly think I could make more than that by trading.

Yes it is a small amount of money. But then your entire bankroll is a stupidly small amount of money to someone with greater ambitions. It's not even a couple of months wages for someone earning a 6 figure salary, for example.

Even if you sell your shares for a tiny profit, it adds up.

Buy: 33,000 shares @ 450p = £14,850
Sell: 33,000 shares @ 460p = £15,180This is an increase of about 2% and I've seen some shares change by up to 9% in 1 day.

Sure, I've seen shares change by hundreds of percent upwards in a day or drop by 95%+. If you take a 95% loss you need a 1900% return to recover. Neither event happens very often. But the fact that you can make a year's worth of investment returns in a day by trading doesn't mean you will.

For example, I could go to a casino and put £3000 of my £15000 bankroll on a bet which doubles that £3000 in four seconds. Annualised that is a great compound return. But not easy to keep up that pace with anything other than blind luck. Same with your making 9% a day on some blue chip stock trade.

If you accept annual investment returns at 19% a year in your premise of what happens if you invest slowly into funds, then after a decade you have £15000 x 1.19 x1.19 x1.19 etc = £85,000. For just sitting and waiting without even adding in any more £15,000s. So the £2850 in year 1 wasn't much but it was pretty good compounded after you let it run its course.

If you think that pace of returns is awful and you want to make £85000 in a year instead of in a decade you need to do better of course and maybe trading will help you do that. You only need to make 19% ten times in a row so if you do it monthly instead of annually, with ever increasing deal sizes, you'll be there in a year.

Now obviously I know this could go down in price so then I would have to decide whether to hold on to the shares and see if the price picks back up or just sell them.

So, you either take a win or a loss. Just like at the casino really, except it takes longer.

Of course holding into them the price will probably go back up but for the duration you'd not be making any profit at all while your funds are tied up.

. That's right what goes down will probably go back up. Unless it goes down further instead. Someone sitting on a 70% loss is doing that because he held onto a 50% loss and then it went down another two fifths instead of going back up.

Maybe I'll try in a few years when I have a bit more capital, who knows.

Come back and let us know if you do. It does work for some people. Most you don't hear from again

_Super

noggin1980 wrote: »

No it's not, 20% increase per year after 10 years turns your 15,000 into 93k it's a very very good return and one that we'd all dearly love to guarantee.

If your plan made sense why aren't active funds making way more than 20% a year these are guys doing what you are thinking about doing but with much more information and experience than you, with better tools and lower charges. What makes you think you are massively better than the average active fund manager?

I'm not sure to be honest. I suspect that a fund manager doesn't care a great deal about what they invest in as long as they turn a reasonable profit. When it's your own money you're going to be a lot more careful and go for the best possible.

Also fund managers don't trade do they? They just dump the money in various stocks in an index and let it sit?

coyrls

_Super wrote: »

Because I've looked at a vast number of stocks from various different indexes and the majority of them do eventually go back up.. even if it takes several months.

OK, here's one example. How about if you bought this share in January 2001:

https://www.google.co.uk/finance?cid=663310

(Click "All" under "Zoom").

As it happens I bought it on IPO but didn't sell before 2001!

jimjames

_Super wrote: »

Because I've looked at a vast number of stocks from various different indexes and the majority of them do eventually go back up.. even if it takes several months.

Several months? Have you looked at very many? How about several years.

How would that hit your planned return if you have to wait several years just to get back to your starting point?