Stock trading for complete beginners

Pincher

If you have £10k, and you make £1k a year, is it even worth the bother? I have no doubt if you check the market every day, you can dip in and out and make 10%, but you can make more just by pulling pints in a pub part time, for the same amount of time.

It's when you have say £100k, then it's worth the effort to do your own research.
For small amounts, it's more time efficient to just leave it with a fund.

fireblade28

Apodemus wrote: »

That's a bit of a sweeping statement! Plenty of small investors do perfectly fine without holding index trackers in their portfolios.

Of course they do. They don't however do much better than the set it and forget it method! Some will but you should never consider yourself an outlier. The data shows that the majority of day traders operate at a loss and the winning ones don't usually make more than around 12% constantly.

bulltraderpt

Pincher wrote: »

If you have £10k, and you make £1k a year, is it even worth the bother? I have no doubt if you check the market every day, you can dip in and out and make 10%, but you can make more just by pulling pints in a pub part time, for the same amount of time.

It's when you have say £100k, then it's worth the effort to do your own research.
For small amounts, it's more time efficient to just leave it with a fund.

You completely misunderstand me.

The example of £10k was regarding managing risk in a risky environment regarding size in relation to a portfolio.

The figure could easily have been £100k and a 50% loss on one position still equates to the rest of the portfolio only having to rise by 5.3% to get back to your original starting pot.

fireblade28

fairleads wrote: »

While your profits may well be running at 15% you've made nothing until you cash in, which is the difference between being a long only investor and a frequent trader. The former's profits are on paper whereas the frequent trader's profit is in the bank - and without the benefit of a complicated /comprehensive algorithm. Its about patience, discipline and watching the crowd.

Of course but thats part of the game. You will eventually cash it. You can trade more frequently but its extremely unlikely you will outperform a tracker over 20years. So there's basically no point to it. Unless you enjoy the waste of time.

bulltraderpt

fireblade28 wrote: »

Of course but thats part of the game. You will eventually cash it. You can trade more frequently but its extremely unlikely you will outperform a tracker over 20years. So there's basically no point to it. Unless you enjoy the waste of time.

One thing is for certain if you think in a certain way that's what you'll find. However if you open your mind up to other possibilities, it's possible that the outcome may be different.

For all you know you could be the best swing trader or day trader to walk God's green earth, but just sticking to the conventional wisdom doesn't make future returns a guaranteed certainty, plus, you'll never know if you had a talent for trading yourself.

Although I suppose as you are so certain in your own mind, I would suggest you are, personally 'correct' to stick with trackers.

Apodemus

fireblade28 wrote: »

Of course they do. They don't however do much better than the set it and forget it method! Some will but you should never consider yourself an outlier. The data shows that the majority of day traders operate at a loss and the winning ones don't usually make more than around 12% constantly.

I'm not arguing in favour of day-trading, just against your assertion that the only true way to make money on the stock market is with index trackers. There are other ways to set and forget.

fireblade28

Apodemus wrote: »

I'm not arguing in favour of day-trading, just against your assertion that the only true way to make money on the stock market is with index trackers. There are other ways to set and forget.

True! You could do it manually by picking if you wished.

fairleads

fireblade28 wrote: »

Of course but thats part of the game. You will eventually cash it. You can trade more frequently but its extremely unlikely you will outperform a tracker over 20years. So there's basically no point to it. Unless you enjoy the waste of time.

You must be psychic, because frequent trading gives me so much spare time I can afford to waste some of it here. :rotfl:

Malthusian

fairleads wrote: »

The vested interests i'm referring to are financial advisers and fund managers, they don't want the man in the street investing directly they want/need us to invest through them and into UT and IT funds. The more they manage the bigger their fees

In much the same way as vested interests like Jamie Oliver only tell us that Big Macs are unhealthy because they want us to buy their expensive cookbooks and blenders. And vested interests in Big Pharma lie to us that smoking is unhealthy to make us buy nicotine patches. Etc.

The only logical fallacy dumber than argumentum ad auctoritatem (an expert says A, so A must be true) is argumentum contra auctoritatem (an expert says A, so A must be false).

bulltraderpt wrote:

For all you know you could be the best swing trader or day trader to walk God's green earth, but just sticking to the conventional wisdom doesn't make future returns a guaranteed certainty, plus, you'll never know if you had a talent for trading yourself.

If you follow this logic we should all take up poker for a few weeks just to make sure we aren't another Tony Bloom. Or any other risky activity with a negative expected return but a high reward at the upper end of the distribution. The idea that an above average ability at statistics plus patience must surely translate into a winning edge at poker is extremely seductive. Thankfully I've seen enough very intelligent people walk that path before me so that I didn't have to.

bulltraderpt

Malthusian wrote: »

If you follow this logic we should all take up poker for a few weeks just to make sure we aren't another Tony Bloom. Or any other risky activity with a negative expected return but a high reward at the upper end of the distribution. The idea that an above average ability at statistics plus patience must surely translate into a winning edge at poker is extremely seductive. Thankfully I've seen enough very intelligent people walk that path before me so that I didn't have to.

The point I was making the bit you didn't quote, was as this gentleman's mindset and historic returns are backing up his thought process. I can't argue with that.

However I know that day traders are few and far between it does take a certain mindset to go with the flow as psychological pressures can be immense.

You do know though don't you that in playing blackjack, with the same pack, you can gain a statistical edge which puts the player (over the long run), a head of the house.

When you look back at the posts most people wouldn't entertain day trading, I am pleased to be brutally honest as it means less competition in the market place for those who do.