How to Start Trading (Compliments of Bondarb)
ST
(King Kong, 1,738
Points)
on 4/20/12 at 7:45pm
There have been a few requests to find the classic post by Bondarb, so it made sense to sticky it. This is what he wrote:
Here is how you learn about trading:
- Have at least 5k. If you dont have that then get it somehow, use your imagination.
- Set up an account on Interactive Brokers that allows your to trade futures.
- Pick one product that has a small sized contract...when i did this I could only trade at night so I picked Hang Seng Index Futures.
- Read up on the leverage inherent in futures and create a risk management plan...ie how you are going to size trades, use stops, add to positions, etc. notice you do this before you know anything about the market because it is by far the most important part of being a good trader. Discipline is what is going to make you a good trader not brilliant ideas. On 5k you will probably be trading 1 lots...ie 1 contract. That is fine.
- Learn how to account for your performance. Every day you should know how much you made or lost and have a good log of it. Not what the broker sends you...you should do it yourself and use them as a check. You are your own back-office and middle-office.
- Learn the interactive brokers execution platform inside and out. The IB platform is not much different then one I use at a large hedge fund so when your done with this you should be able to execute in a professional manner.
- Learn everything about the market you trade. For the case of hong Kong if thats what you picked you should know how the central bank works in that country, the politics, the composition of the stock index, valuations, etc. This will take awhile. Start by finding a local newspaper to read every day. Then go to the central bank website. Find yourself an economic calendar that shows what data is coming out in your market (they are not hard to find for free). Start very basic. Notice that you do this only after you are ready to handle all the real business of trading. Also, you should do this even if you intend on trading using mostly technical analysis...it will help.
- Start trading. Be careful. Your goal #1, #2, and #3 is preservation of capital. This is a learning experience you arent going to get rich trading 1 lots. Trade defensively at first. If you turn out to be a good trader what you think is defensive now you will probably realize later was insane so heir on the side of caution.
- If you actually do all these steps you will be a better trader and know more about markets then most kids do AFTER they complete an analyst or associate stint on a sales and trading desk...i gaurantee it.
- Remember what you are doing is learning a trade...you arent learning how to sell bonds to dumb central banks or how to kiss some bankers ass you are learning a skill that few have and makes you very valuable if you become good at it. Treat your work with due seriousness and you will be paid back many-fold.
Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock






Revsly wrote: 6) Learn
6) Learn everything about the market you trade. For the case of hong Kong if thats what you picked you should know how the central bank works in that country, the politics, the composition of the stock index, valuations, etc. This will take awhile. Start by finding a local newspaper to read every day. Then go to the central bank website. Find yourself an economic calendar that shows what data is coming out in your market (they are not hard to find for free). Start very basic. Notice that you do this only after you are ready to handle all the real business of trading. Also, you should do this even if you intend on trading using mostly technical analysis...it will help.
Here is the global economic calendar I use. I trade FX so this helps with the majors:
http://www.cmegroup.com/tools-information/calendar...
I started trading FX a year ago after reading this post. I should have bookmarked it because I can think of >10 times I needed to reference it before making a trade. After being margin called a few months ago I have finally learned the lessons of discipline, staying with it mentally, getting out and taking a loss, etc. I always had the research part down, but after a year I can finally think of myself as a trader and not a gambler.
Also, for what it's worth, I started with $200. I had to get in and I knew if I didn't start with that $200 I would never get going. The account is inconveniently small, but I have definitely learned about risk management and the lessons I have learned and traders I have talked to as a result of getting in with my own money on the line have been more than worth it.
Much appreciated. I'm going
Much appreciated. I'm going to be investing with my Dad so I will be bookmarking this.
Revsly wrote: If you actually
If you actually do all these steps you will be a better trader and know more about markets then most kids do AFTER they complete an analyst or associate stint on a sales and trading desk...i gaurantee it.
This question might be a little random, but do most kids know anything about trading when they start? Or are firms generally looking for people they think have talent (as opposed to people who seem to know much about trading)? Do most of these kids start off as traders? Or do you start off assisting traders and then slowly get taught and eased into it? I ask, because trading is a mystery to me. I have no real idea how people get their first job, where they tend to work, etc.
For my aspiring Entrepreneurial Nomads, check out my blog.
im a rising junior @ u. of
im a rising junior @ u. of Michigan and have an etrade acct...
i can tell you the vast majority (90%ish?) of my friends don't trade, and out of the few that do, probably half have no idea what they're doing and throw money at the board and hope to get lucky.... which is how I started.
but the key thing to do is just read and learn, IMO. Yahoo message boards is pretty interesting (even if mainly bullshit, a few gold nuggets here and there), bloomberg news, read equity reports, try to understand what is going on technically (i.e. exit points and entry points), set a goal for yourself (maybe say 8% appreciation is your goal), and check out the company's website (they'll usually have an investor powerpoint up describing exactly what they do)
2 warnings, from personal experience
1) don't chase a stock. the market has a way of evening itself up. be patient
2) NEVER FALL IN LOVE WITH A STOCK. easiest way to lose money.
When I started trading it was
When I started trading it was pure shorting of stocks.
learn to use stop loss and
learn to use stop loss and trailing stop. your life will be miserable if you stay in front of computer all the time.
eliteculture wrote: learn to
learn to use stop loss and trailing stop. your life will be miserable if you stay in front of computer all the time.
HORRIBLE advice. Have fun doing whatever you are doing while I'm still sitting in front of the computer picking you off for free money. See "Flash Crash" for further reference...
Great information. Why pick
Great information. Why pick IB? I know their commissions are really low, is their platform also very good? Also, how strict are their requirements for opening an account? Do they closely follow the 100 trade minimum? I have an account with TradeKing but the commissions with IB are so much cheaper and they offer a lot more services if I want to branch out from stocks.
this is true. started getting
this is true. started getting sim accounts from brokerages when i was in high school and traded everyday til i turned 19. Then i kept going at it until i was half way done with my freshman year in college where i open a live futures trading account, since then i have been trading e-minis.
Personal hands on experience in the markets is better than any internship in my opinion.
balbasur wrote: When I
When I started trading it was pure shorting of stocks.
shameless plug, but check out my sig if you havnt already. you might like it.
also, this could be the post to get me moving. ive been learning my technicals but havnt started backtesting yet.
_________
John Tabacco's raw, unique market commentary based on real information from real short sellers:
http://www.TheDailyShortReport.com
Is Interactive Brokers the
Is Interactive Brokers the best trading platform available? Is it best to use online trading software vs downloadable platforms? Are there any other platforms i.e. ThinkOrSwim, GHOST, TT, E*Trade, Scottrade, etc that are better?
What are some good books for
What are some good books for Futures trading or just trading in general (not equities)?
GoldenEagle2009 wrote: Is
Is Interactive Brokers the best trading platform available? Is it best to use online trading software vs downloadable platforms? Are there any other platforms i.e. ThinkOrSwim, GHOST, TT, E*Trade, Scottrade, etc that are better?
i use etrade and love it.
i hear amazing things about thinkorswim though. scottrade, from what i understand, sounds like a slightly worse version of etrade.
econ wrote: Revsly wrote: If
If you actually do all these steps you will be a better trader and know more about markets then most kids do AFTER they complete an analyst or associate stint on a sales and trading desk...i gaurantee it.
This question might be a little random, but do most kids know anything about trading when they start? Or are firms generally looking for people they think have talent (as opposed to people who seem to know much about trading)? Do most of these kids start off as traders? Or do you start off assisting traders and then slowly get taught and eased into it? I ask, because trading is a mystery to me. I have no real idea how people get their first job, where they tend to work, etc.
You would never start as an Analyst and start trading immediately (at least not your own book)... you will basically do the bitch-work for the desk for at least a year (or two, maybe more) usually. The amount of time it takes to get a book also depends on the firm, as well as your progress.
BondArb's statement on capital preservations is SPOT ON. Don't ever think "I could make X on this trade"... always focus on how much you could lose. If your risk management (such as the risk-reward ratio you use) is sound, and your ideas are solid, you should at least break even or have a positive pnl.
Many thanks for this post.
Many thanks for this post. For Bondarb or anyone else who has an idea about how this sort of trading should work:
1) For this type of trading where you are doing it in your own free time and on your own capital, would trading purely on fundamentals be ok, or does one need to incorporate technical analysis and charting? If it is necessary, that makes this Everest even steeper given how unique the two approaches are and (I believe) the need to really thoroughly understand each approach before actually implementing it.
2) How frequently did you change positions on average? Is 100% of your invested capital being turned over on a daily basis? Weekly? Or is this a function of trading style (from question 1) and someone who is doing something more fundamental might experience a turnover more in line with an equity investor?
3) How intensive is this? If someone's already in banking or research (but not trading) and let's say that person (let's be honest here, I'm talking about myself :) ) actually has a few hours each night. Is this something that can actually be pulled off?
4) Anyone on this board actually doing this? Would be curious to hear how things have gone thus far.
Thanks Bondarb, Revsly, and others who have contributed here.
sweet how true.. IB is good
darkxfriend wrote: Many
I love to do credit
Wikinvest's platform is very
May I ask how much capital is
Be careful when moving away
After almost a year of
I win here, I win there...
levelworm wrote: May I ask
I win here, I win there...
I started with about 10k,
"All I've ever wanted was an honest week's pay for an honest day's work."
Linfone wrote: I started with
I win here, I win there...
I second the 'download the
gossard13: The best edge you
Moving tonnes of product. Making fat stacks.
I have to agree that the only
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
Macro Arbitrage: I have to
Moving tonnes of product. Making fat stacks.
I was on a 'roll'- markets
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
And with all due respect,
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
If I could trade "trading
Come on guys, don't troll
Bi-Winning: After almost a
I've used every equities
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
Cool thread. Great to see
relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.
Macro Arbitrage: I was on a
Macro Arbitrage: My models
See my WSO blogs here.
Bondarb: Macro Arbitrage: I
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
Relinquis: Macro Arb, Serious
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
Knowing your platform,
^ You're obviously not
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
i hate my compliance
Macro Arbitrage: ^ You're
Am I the only one here who
Macro Arbitrage: I was on a
The bottom could also
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
Has anyone here traded
And the crash of summer '12
"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."
anyone have good links to