How to Start Trading (Compliments of Bondarb)

Revsly:

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/calendars/index.html

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 to be investing with my Dad so I will be bookmarking this.

Revsly:

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.

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 pure shorting of stocks.

learn to use stop loss and trailing stop. your life will be miserable if you stay in front of computer all the time.

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 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.

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 Futures trading or just trading in general (not equities)?

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 enough (attractive spreads etc), etrade i think is more towards equities,

most important is ur method/skills; doesnt really matter how good the system is if you suck big time

I love to do credit spreads.....very lucrative but dangerous too.

Wikinvest's platform is very impressive, and works with any brokerage account from the major brokers. It easily syncs your information over and displays it in a very helpful and organized way. Wikinvest calculates Beta, P/E, P/B, etc for your entire portfolio, and pushes data live directly to you-- all you have to do is leave the web page open and news articles and real-time quotes come streaming in.

I highly recommend it. For those that are worried about security and privacy: they have been certified by Verisign, TRUSTe and Mcafee.

https://www.wikinvest.com/?_acn=portfolio&_acm=competition&_acs=hud

May I ask how much capital is needed for trading Forex? Which platforms are good? I live in Canada.

Thanks in advance.

After almost a year of carefully following the advice in Bondarb's post (made a print out last year, and I still have it on my desk), coupled with further research that consistently revalidated his advice, I have undoubtedly become a much better trader, especially in the FX market. Proper money management and discipline is critical to the performance of any new trader, and that post extensively articulates on those factors. Thanks, Bondarb!

I started with about 10k, saved up from an allowance I didn't touch for 18 years and some of seed money from parents. I learned by trading specific stocks in patterns I noticed. It evolved into more stocks and more patterns. I made a killing for a part-time job...

I second the 'download the platform onto your computer' comment. You can't afford to be using a web-browser platform if at all possible; risky for many reasons.

I'd say even 5k is too small. The more capital you have, the more leeway until failure you have.

I'd say risk mgmt is better than half the fight. If you don't have PROPER stops put in the second you initiate the trade, you're gonna get killed in the long run. Know and accept that the stop will be hit on that trade (even if it isn't); if you can handle that loss on that trade, then go ahead and execute the trade. CUT YOUR LOSSES SHORT AND LET YOUR WINNERS RUN. Implant this in your head from the outset.

PROPER stops: The market doesn't care where you put your stops; your trades aren't block trades (unless you're trading something illiquid, which is not a good strategy). Use resistance and support areas; anything else is completely arbitrary and your stops will likely get run.

The more frequently you trade/the shorter the time frame, the less edge you have versus the big boys/the machines. Not to mention commission costs start to pile up. The best edge you have is on longer term charts.

I have to agree that the only edge left in the markets is long term charts due to the proliferation of high frequency traders that dominate shorter time frames. Top fund managers use annual OHLC candle stick charts for a reason- would you rather see 20min worth of data or take birds eye view of 300 years of market activity, dating as far back as the south sea bubble? I don't wish to brag, but I was fortunate to have been able to capitalize on the 07/ 08 financial crisis by shorting Dow futures, and this was only made possible as a consequence of the double top I identified in 1876 (left top) and 2007 (right top). With technology improving and more data becoming available, it is more than likely that speculators will gravitate towards using decade OHLC charts in the near future. Remember, the market is extremely random in the short term but predictable in the long term. Who do you want to bet with, the day traders or elite portfolio managers? Data is expensive but if you can afford 400-600 years of annual OHLC candle stick charts, you've got a decent edge. In fact, I wouldn't start trading until you have acquired that data.

I was on a 'roll'- markets have been choppy lately and I have been barely breaking even. I'm waiting for the S&P to bottom in 2038 due to a key Fibonacci support level that roughly corresponds with that time frame. Need to wait things out till then as it is absolutely critical to pick your battles as a speculator. This caliber of inferential financial time-series would not be possible without a few centuries of data. My models also indicate that there shall be a significant drop in the markets this summer, but it shall be followed by a rip-roaring V recovery until the market surges towards the same resistance level that it reached in 1894.

And with all due respect, please don't ever attempt to belittle me by calling me a "kid". I'm obviously far more experienced than you.

If I could trade "trading knowledge", I'd go long Macro Arbitrage and short 'rynofrowan'.

Macro Arb: you may be right regarding your 2038 thesis, but by moving down a few time frames, surely you could make pretty good money AND be able to enjoy it over the next 26 years...

Come on guys, don't troll THIS thread...

I've used every equities platform, TD Ameritrade is the best For Forex, FXCM is the best.

Cool thread. Great to see people talking about what makes you successful and not just getting a job.

Macro Arb reminds me of the 1980s documentary of PTJ...

Macro Arb,

Serious question, do you have Bruce Willis sneakers or do you use something else?

Knowing your platform, exchange rules, understanding risk/money management and discipline, these are all your supporting departments and just prerequisites. They won't help you at all making money, but you will lose money by not having them.

Now, what is way more important and the only way to stand out from the zero sum crowd is your edge. You need to identify and execute upon your alphas.

For this you will need to develop models of your market. Once you have good models, you will need to manipulate the data (technical, fundamental or whatever kind of information) to extract your edge.

This is your starting point. Now you will need to combine your supporting departments with your edge, which is usually already difficult enough.

Then you will need to train and continuously go through the process to improve the components.

Basically hard work and you will need to combine different talents.

^ You're obviously not trade4size...

i hate my compliance department just thought id mention that here

Am I the only one here who thinks day trading is a bad idea? What percentage of people make money in the long run? 5% max (and that's a liberal estimate)?

The bottom could also materialize in late Q4 2037, only time will tell as I admittedly don't have a crystal ball. Although, like bondarb, I think early Q1 2038 would be far more probable as it corresponds with a critical lunar cycle phase that has historically tended to create strong positive statistically significant returns in the S&P500. As you can see, like most other macro traders I use a fairly holistic approach when making concentrated bets and I truly have a lot of conviction in the S&P 2038 bottom trade as there is almost perfect confluence of agreement among all the proprietary methods that I developed throughout my career. This truly is a no-brainer trade, the only question is if you'd prefer to retire in a ghetto 1 b/r apartment in Brooklyn or your own private island off the coast of Scotland.

Has anyone here traded options on commodity futures before? What is the least capital intensive way to trade commodities?

And the crash of summer '12 has just begun. If you didn't initiate those shorts, look out for that 1894 resistance level...

anyone have good links to hong kong economic newspapers?

Always good to have different points of view and different advice when trying to expand your knowledge of something

11. Buy High, Sell Low