Stock trading for complete beginners

EdGasket

What I think might be particularly relavant to day trading is the section of the book that deals with the reason why gamblers lose. The author asserts that this is not because the odds are against them as most people think but that the main reason for losing is that the casino has more money than the punter so even in a fair game, the punter will lose when they hit a losing streak that wipes them out.

E.g. in a coin tossing contest between two people, then if one of the contestants has 4 X the capital of the other to start with, they are most likely to win. So the lesson (I think) for the day trader is manage your cash and be sure a losing streak won't wipe you out completely.

bulltraderpt

EdGasket wrote: »

What I think might be particularly relavant to day trading is the section of the book that deals with the reason why gamblers lose. The author asserts that this is not because the odds are against them as most people think but that the main reason for losing is that the casino has more money than the punter so even in a fair game, the punter will lose when they hit a losing streak that wipes them out.

E.g. in a coin tossing contest between two people, then if one of the contestants has 4 X the capital of the other to start with, they are most likely to win. So the lesson (I think) for the day trader is manage your cash and be sure a losing streak won't wipe you out completely.

I am not so sure the 'odds' are against them. In fact I'd go as far to state that the longer you leave money on the table in a position, you are more likely to be hit with an unexpected update as well as a positive update.

The bit about the house having more money, well, if you mean funds then yes I could understand that thinking.

As for punters hitting losing streaks you can mitigate some of that by getting position sizing correct as well as taking small losses defined before you start. But I would debate the term 'losing streak'. Why? Because the market is a changing beast, entries change and chart patterns change, it is surly you that must adapt to an ever changing environment which is the key.

There is a rule I loosely use that if I have attempted to trade three different stock throughout the day and all three have been losers, I stop reassess, is it me or have I not taken into account something else.

As for your last sentence, I agree completely, that all comes down to position sizing and what percentage of your account are you 'willing' to lose before you stop. Most text books will say 1 - 2% for a retail trader but really if the funds are using risk percentages of 0.2%, surely we should to?

As an example yesterday I increased my pot by 1.01%, 8 out of 9 trades on the same stock were winners. Today because I have missed two entries, I have put nothing on, but that's better than chasing something when you aren't happy with the entry either on the longer time frame or where it is on the daily. It's all about patience, discipline and set ups.

fairleads

And while you guys have been chuntering on about gambling, the frequent traders have made a cool 10% on DBK :T

EdGasket

Dbk? ????????

bulltraderpt

EdGasket wrote: »

Dbk? ????????

DEUTSCHE BANK AG NA O.N. (DBK)

Good for him.

EdGasket

fairleads wrote: »

And while you guys have been chuntering on about gambling, the frequent traders have made a cool 10% on DBK :T

I made >10% on OSB, BRWM, and > 30% on SFR (all sold today) and still had time to chunter on about gambling

bulltraderpt

Anyway, getting back to talking about trading and not willy waving, here's a vid about "Is Stock Trading Gambling?"

https://claytrader.com/videos/stock-trading-quick-tip-stock-trading-gambling/

BTW I am not punting his service, because I am affiliated to him in anyway, just that he states it as I see it.

EdGasket

He could have said that in about a quarter the time.

I'm not actually convinced because he says only 10% of traders make a profit; and these might not even be the same 10% from one year to the next. If only 10% make a profit then the 'odds' are stacked heavily against you.

Secondly there are banks out there doing this stuff all the time backed by professionals and dedicated computers to spot where they can make a dime. The chances of an amateur competing and winining with these guys is wafer thin.

Thirdly I believe prices move essentially more randomly the shorter the timeframe you take. Therefore to me it is gambling; just obscured by charts and indicators to make it seem like it isn't. But the fact that everyone else is trying to do the same thing with the same tools means you can't all win; just like chips spread over the roulette table.

Furthermore if that guy in the video is doing so well, why does he need to come on Youtube to convince us too and sell books and courses? Why not keep it to himself, make some dough, then at least he'd be able to afford a suit to wear for his videos.

I think I am definitely in the swing-trade to buy and hold camp. Those three trades I mentioned; the first two made 10% in less than a month and the last one over 30% in 3 months. I think its easier that way.

bulltraderpt

EdGasket wrote: »

He could have said that in about a quarter the time.

I'm not actually convinced because he says only 10% of traders make a profit; and these might not even be the same 10% from one year to the next. If only 10% make a profit then the 'odds' are stacked heavily against you.

Secondly there are banks out there doing this stuff all the time backed by professionals and dedicated computers to spot where they can make a dime. The chances of an amateur competing and winining with these guys is wafer thin.

Thirdly I believe prices move essentially more randomly the shorter the timeframe you take. Therefore to me it is gambling; just obscured by charts and indicators to make it seem like it isn't. But the fact that everyone else is trying to do the same thing with the same tools means you can't all win; just like chips spread over the roulette table.

Furthermore if that guy in the video is doing so well, why does he need to come on Youtube to convince us too and sell books and courses? Why not keep it to himself, make some dough, then at least he'd be able to afford a suit to wear for his videos.

I think I am definitely in the swing-trade to buy and hold camp. Those three trades I mentioned; the first two made 10% in less than a month and the last one over 30% in 3 months. I think its easier that way.

Let's take each point in turn: We know from stats it's about 5 - 10% of traders make money, that's not just day traders that's all types of traders from what I see.

You say the odds are stacked against you, but it depends on what systems you use, what education you've got and more importantly position sizing and psychology.

Secondly: If I can do it understanding sentiment and very basic charting, then there enough meat out there for everyone.

Thirdly, price don't move randomly I could show you this because what you consider to be random is quite possibly pull backs to support or an algo flash crashing to fill orders, and those are great if you get it when they pull the market down.

The guy does post numerous vids on youtube. He considers you should get some kind of training before you enter the stock market and I agree, but you try and find a good trainer whose got a verifiable track record who doesn't cost thousands..

My only issue with training is that the trainer doesn't know what psychology you have, so if he teaches a certain system say swing trading but you are more suited to day trading it ain't gonna work! And vis versa.

We'll agree to disagree about which type of trading is better, as long as it suits you, who cares.

BTW the market is down 1.23% as I type and I'm up 0.31% from two trades today so far, so I'm pleased, taking my post to 40.2% for the year.

See, I can indulge in willy waving too! :T

EdGasket

Good luck bulltraderrpt. But your record so far doesn't prove you won't get a wipe out at some point (like that trader with 20 years under the belt who got wiped out). It's one person over 4 years or so; not enough to prove trading by amateurs works; still in the possibly just lucky territory. e.g. that Valiant trade was definitely lucky and as i said they actually announced a negative drill result on the same day as the takeover by Ithaca. Luck like that helps your stats a lot.

Good luck/trading anyway.