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Trading for a Living

Discussion in 'Shares' started by coopranos, 21st Mar, 2007.

  1. coopranos

    coopranos Well-Known Member

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    Does anyone here trade for a living at all?
    Whether it be intra trading or a system with a longer scope.
    It is something that has been increasingly of interest to me, and I would be very keen to hear any experiences, stories, or educational recommendations from anyone here who is doing it with some success.
    Thanks!
     
  2. Dr Lobster

    Dr Lobster Well-Known Member

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  3. coopranos

    coopranos Well-Known Member

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    Thanks for the link Dr Lobster

    Do you subscribe to their newsletter? If so, do you trade their recommendations, and how have you gone with it?
    Thanks!
     
  4. Jacque

    Jacque Team InvestEd

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    I know a few people who day trade for a living though I don't think any of them are honest enough to tell me upfront if they make or break on a consistent basis!! One trader has been doing well particularly this past year, however, and did tell me that she made $80K clear last year (Jan 06-Jan 07) -not my idea of a fulfilling career but I do like the profit sounding side of things :D
     
  5. Tropo

    Tropo Well-Known Member

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    Bed news first = Statistically 7 traders out of 10 consistently lose money.
    Some people/traders are never profitable (for different reasons), some are only profitable in the bull market and only minority is successful in all market conditions.

    I am not sure how much you know about trading, but if you are new to it then Dr. Alexander Elder's book "Trading For A Living" explains what trading is all about.
    Based on my experience, trading is a hard work which requires a lot of knowledge, patience and dedication (sometimes it is very frustrating as well ).

    Do not expect only winning. Losing is a part of trading and as long as you have good risk/money management system you may survive. To become a good trader and trade for a living takes years of experience.
    Do not think that success in this business is based only on the good trading system or somebody's recommendations. Trading is mainly about psychology....
    If you are keen to go that way, expect a lot of ups and downs.....Good education is a matter of to be or not to be....
    Also....trading is a very addictive endeavor and in the extreme case you can lose your friends.
    If you lose too much money your family will suffer.
    During the "dot.com" era I witnessed few divorces because new born traders without experience put all money on the line and lost most of it.

    Good news = Trading is a very lucrative business (for minority only !!!!) if approached correctly :D
    :cool:
     
  6. Dr Lobster

    Dr Lobster Well-Known Member

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    I do subscribe to the newsletter.

    I do trade it. I'm down 10% at the moment.

    I made my first trade 1/3/07 and was stopped out 2 trading days later. I bought on the eve of the recent dj correction hehehehehe, unbeliveable timing seeing how I sat on the side lines for 5 mths.

    However I have learnt from the experience. I broadly understand the principles that Nick explains ( its hard when you are comparing your level of knowledge to his), I don't envisage applying the principles on my own. I am happy to pay for the newsletter and gain what understanding I can.

    The way I look at it is this :

    I could spend the time developing my own system, I know I am intelligent enough to do it however I don't want to spend the time doing it. I'm not playing the entire investment game to see how much $$$$s I can make (if i was i would never have walked away from a job that paid in excess of $200k). I want to make enuff $$$$s to enjoy myself and balance it with time to enjoy my life. I'm not concerned about whether I could have made 2% more than the market or whatever benchmark you choose.

    Therefore, I am setting up a structure that will allow me to trade a small portion of my super while the majority sits in mgd funds. I look at super as my petrol money when I retire for good. I've set a limit, if I get to that limit I'm out, no more bets.

    As for trading for a living, no thanks, for cream no prob, but I don't want to be thinking about the market when I'm in the line up looking at 3 -4 ft waves peel in.
     
  7. Tropo

    Tropo Well-Known Member

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    "....I do trade it. I'm down 10% at the moment"

    Dr Lobster,

    I'm Sorry to hear that !!
    Below are few numbers which may help you to put stop loss in the right place, if you take on the next trade.

    If you down 10% you need to make 11% to break even
    If you down 25% you need to make 33% to break even
    If you down 40% you need to make 67% to break even
    If you down 50% you need to make 100% to break even

    Eg: if a stock declines 50% from say....$10 to $5 ($5/$10 = 50%), the same stock must rise by $5, or 100% ($5/$5 = 100%) to just break even !
    Happy trading
    :cool:
     
  8. Dr Lobster

    Dr Lobster Well-Known Member

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    Thanks Tropo, it may seem weird but I'm not really bummed about it.

    I have entered this arena with my eyes wide open. I accept that while a trade may make perfect sense there are factors that can change that in the blink of an eye, and pinpointing these factors and exactly when they may take effect is not possible.

    Before I traded a dollar in anger I read on forums about the psychology of trading and I pretty much thought "yeah yeah". However, I read some books on the psychological side of trading, because I like to have a lot of books, and it helps balance out the fact that I also have a big tv.

    Lo and behold, with that first trade and the subsequent correction in the market I found the value of those books. I had a stop loss point, I found myself looking at that stop loss and thinking "she'll be right, it'll be back, if it goes thru the stop I'll just hang on a bit longer" and then I realised what I was doing. So when that stop loss point hit, I was out and I never looked back.

    I'm not playing with sheep stations but I'm not frivolous with my trades. I know the point where I'll walk away, happy in the knowledge that I had a go, found out for myself if it would work or not, instead of wondering.

    As for the addiction part, it is most certainly there, if I'm not in a position I feel like I'm missing something, there is nothing to check that makes me say "yeah" or "doh". This part I need to keep in check. I'm enjoying the process, its new knowledge. I need to separate the result of the trades from the enjoyment of the process. That way I won't make a trade for the sake of being in the game.

    When I make a trade I think of myself as a surgeon, every cut must be precise and without emotion, proceed according to the manual. I'm thinking of getting some those green gloves, its safer than calling my missus "nurse". :)

    So why am I trading ? To make money, but also to out perform my mgd funds, to feel like I am out of the ordinary, to feel like I am directly responsible, to have day to day contact with my financial well being, to do something.

    Am I a risk taker ? Yep, probably, if the form I had to fill in to qualify for death and disability insurance is anything to go by. However I view the risks I take as calculated and I take the appropriate steps to mitigate un-necessary risk. I think I'm doing the same with trading.

    So if in 6 mths time if I've done my dough I will accept that, and I won't be upset by those who could have "told me so" because to live with the constant wondering of what mite have been would be worse.
     
  9. coopranos

    coopranos Well-Known Member

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    Lobster:
    Thanks very much for that, an interesting read.

    I have been reading some books by Van Tharp, and gather from my first read through them that his viewpoint is the most important points are your money management and your risk management (ie position size and risk per share). He even suggests that he has tested a random entry strategy using a specific position size and exit strategy and produced good results.
    Going on this my thoughts are to start of with a small amount of money and trade a system with a maximum 20% position size with a 10% trailing stop on each position (max risk of 2% of equity per position).
    This just leaves me to consider entry signal. I am considering either going for a newsletter with a reasonable track record (applying their buy recommendations with my position size & risk strategy), or coming up with a basic trend trading system.
    I will test the system for a little while before actually trading it to hopefully get a feel for what to expect.

    How does this sound as a start to those of you with some experience in the area?
    Thanks a lot for any input!
     
  10. Dr Lobster

    Dr Lobster Well-Known Member

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    Coops,

    FYI Nick trades using Elliot wave.

    When I first read about EW and fibb no.s I though that was some way out gear.

    then I read about LOA, hehehehehe, couldn't resist.
     
  11. Tropo

    Tropo Well-Known Member

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    "As for the addiction part, it is most certainly there, if I'm not in a position I feel like I'm missing something, there is nothing to check that makes me say "yeah" or "doh"

    Do not forget that : Standing aside is a position (Rule 43);)


    So why am I trading ? To make money, but also to out perform my mgd funds, to feel like I am out of the ordinary, to feel like I am directly responsible, to have day to day contact with my financial well being, to do something.

    Well ....When I started I thought like you, that I am trading to make money.....
    One very prominent trader explained to me once that I am trading to survive - not to make money.
    After while I understood what he was trying to tell me.
    If trader survives in the market long enough he'll make money.
    Anyway....Happy Trading.


    I will test the system for a little while before actually trading it to hopefully get a feel for what to expect

    coopranos,

    It sounds to me like a right thing to do.
    :cool:
     
  12. Dr Lobster

    Dr Lobster Well-Known Member

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    Interesting, its been a while since I have been on such a learning curve, its something I'm enjoying now, but was a bugger of a nut to crack at first.

    I appreciate your insights mate.
     
  13. unthreaded

    unthreaded Active Member

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    Good luck with the trading, my cautionary tale is meant as a guidepost not a stop sign.

    I traded heavily (day trading) 1999-2001. In note form follows the basic results:

    Daily profits averaged ~$300-$500
    Followed my trading plan rigorously*
    Believed in my ability to respond intelligently to adverse situations.
    As profits increased, increased my daily trading amounts.
    Suddenly made HUGE profits.
    The size of my gains relative to my investments distorted my perception of the operation of capital markets.
    The existence of large paper profits gave me a sense of unreality in the market.
    I was no longer trading real money - it was just paper games
    I was good at paper games, so I bought a lot of paper
    I got busy doing my day job, and spent evenings celebrating my smart investments.
    I bought a big house, with a big mortgage, because I deserved it for being such a clever trader.
    My life was F**king ace. I believed this was due to my incredibly clever strategies. I cashed out of my largest investmest (EISA) with a 300% profit not because I thought it wise, but because I wanted a big birthday party.
    The market cashed out everything else for me.

    C'est la vie
     
  14. willy1111

    willy1111 Well-Known Member

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    Wow - what a ride.

    Did you get back on the horse?

    You were obviously doing something right to be doing it for 2 yrs and making good money.

    Sounds like your ego got in the way a bit towards the end, but I would imagine a few minor adjustments/risk management tools would help great deal and make trading a very viable and profitable venture for you.

    Do you still have the big house?:eek:
     
  15. coopranos

    coopranos Well-Known Member

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    Mate cheers for your response, interesting story.
    Can I ask what you put your failure down to in the end?
    Did your system fall down, did you no longer follow it, did you not have appropriate risk management in place, was is psychological?
    Thanks again, appreciate your insights.
     
  16. Tropo

    Tropo Well-Known Member

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    "I traded heavily (day trading) 1999-2001.

    unthreaded,..."


    Did you use market depth at all ?
    :cool:
     
  17. bundy1964

    bundy1964 Well-Known Member

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    I do trade to build my equity up. I deal in the blue chips and the higher end of the mid caps. If it pays a dividend and has a decent margin percentage it's a target. So far I have had a success rate of 70% for the year which I am wrapped in, 55% is said to be good.

    The blip in the market did slow me down a couple of weeks and I missed some chances through being over commited to the market. I do use IncomeInvestor.com.au - Upcoming Dividends and asx charts and watchlists. Rebadged etrade is good for market depth and price movements.

    CFD's for a falling market can keep you trading both ways, have only used demo trades so far till my account gets set up.
     
  18. gad

    gad Well-Known Member

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    Bet that was one hell of a b'party you will never forget.
    I would imagine coming to terms with the crash is something you will never forget either, must have been hard, humbling. :eek:

    Hope your on your way back, far more wiser & far more succesful ;)

    Take care
     
  19. unthreaded

    unthreaded Active Member

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    Took me a long time to accept my responsibility rather than blame the market and bad luck.

    I dont think I will ever saddle up again on that horse - Just the wrong psychology for me.

    Hard to say publicly but Ego and stupidity were the biggest influences. Even though its a long time ago, I still wince every time I see lists of the "things to avoid", "ten biggest mistakes" etc. On any list of ten stupid things I usually get a seven. The thing is, at the time, they just werent obvious.

    They dont start as Headline mistakes, but small font footnotes.
     
  20. Tropo

    Tropo Well-Known Member

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    I would say that the most beginners make a lot of mistakes.
    I was one of them. At one stage I was close to blow myself to oblivion. Lucky for me that at that time I met THE man !!!.
    He totally changed my approach and view of the market.
    I survived many years in this business, so I may still be around few years more.
    You may consider going back one day....
    Can not wish you "good luck" - as you know luck has nothing to do with a successful trading.
    Never say never - because you never know...:p