Trading for n00bs

Discussion in 'Share Investing Strategies, Theories & Education' started by Dr Lobster, 18th Jul, 2006.

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  1. Dr Lobster

    Dr Lobster Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    81
    Location:
    sydney nsw
    For those that provided me with valuable input I feel I owe an update.

    I have been through a number of books of late and am now starting to dig into the psych aspect.

    Part way thru a course, which is helping to bring a few things together.

    Got a trial version of amibroker and currently learning how to wield that sucker.

    I think I'm understanding it, not all of it, but those gaps I will continue to fill.

    I lurve public transport, otherwise I would never get this stuff done !!!
     
  2. Tropo

    Tropo Well-Known Member

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    1st Jul, 2015
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    Location:
    NSW
    Below text by L.Bedford may help you in your trading venture !!.
    Happy Trading!.

    Louise's Thoughts - Ask a Silly Question...

    Just imagine that you have the opportunity to have lunch with the most successful trader in the world at a lavish restaurant. As you prepare to meet this living legend of the sharemarket, there are many thoughts running through your mind. You know all about the history of this incredibly skilled individual and you're in awe of his outstanding list of accomplishments. Such a unique opportunity! You will no doubt be the envy of your trading friends. What is the first question you would ask?

    Take a minute to think about it… don’t rush in… this could perhaps be the most defining moment of your trading career to date.

    Generally when presented this scenario, there are three broad types of questions that traders tend to ask. The type of question that they ask tends to define their experience and expertise in the market. Novices to the sharemarket usually ask questions revolving around indicators and entry signals. They seem totally focussed on determining the ideal set-up which will give them confidence to pull the trigger and engage the market. Their questions may include:

    What moving average do you use?
    What is the effect of dividend yield on future share price action?
    What is the calculation of the Stochastic indicator?
    These types of queries tend to dominate 90% of the question time of any seminar that I've run. Some never progress beyond this level, even though they may have been trading for years.

    Once a trader has moved beyond their fixation with entry, indicators and set-ups, it will dawn on them that money and risk management are a very important concepts. How to handle risk, position sizing and setting stop losses then become a focus. Questions may include:

    How do you set your stop losses?
    Do you handle highly volatile shares differently from the Top 20?
    What percentage of your capital do you allocate to each market that you are trading?
    Traders asking these types of questions are well on the way to developing a level of professionalism that very few traders achieve. At last these traders have come to the realisation that entry is a minor determinant of a trader’s profitability. The novice refuses to acknowledge this fact and insists on pursuing an area that is almost irrelevant to experienced traders. Evidence such as this suggests that entry decisions and indicator selection have little to do with your ultimate success in the sharemarket.

    There is a small but sophisticated group of traders who have moved beyond these two broad categories of questions. These veterans have usually had many years of experience in the market, and come from the school of hard knocks. They have come to realise that an individual’s mind-set and their psychological make-up will be the ultimate determinant of a trader’s success. Questions asked by this group include:

    How do you maintain a sense of detachment from the market?
    How do you handle a windfall profit?
    After you have made a loss, what do you do?
    Most professional traders would be able to teach you to trade their system in about 2 hours. Why then do so few go on to achieve profitable results, even after being taught by some of the best minds of the trading world? It's because the majority of people are not instinctively set up to trade. There are very few naturals in the trading world. Successful traders have had to learn how to trade and how to handle the inevitable losses that will ensue.

    Ed Seykota’s achievements rank him as one of the best traders of all time. In times of trading pressure, I find it useful to remember some of Seykota’s wise thoughts;

    “There old traders and there are bold traders, but there are very few old, bold traders”.

    When asked for some of the main contributors towards his success, he states:

    “I handle losing streaks by trimming down my activity. Trying to trade during a losing streak is emotionally devastating. Trying to play “catch up” is lethal. Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money”.

    There are two main traits that Seykota looks for to identify the winning trader personality:

    He/she loves to trade; and
    He/she loves to win
    Those who want to win and lack skill can find someone with skill to help them, but they must have the desire in the first place.

    95% of traders never seek to improve their overall mindset, and as a result inadvertently deprive themselves of extraordinary profits. These profits are achievable only to the 5% of traders who are prepared to get out of their comfort zone and work on their own innate deficiencies and acknowledge their personal strengths. Your level of financial success will rarely exceed your level of self-development. The good news is that it is your choice to be in the 5%.

    - Louise Bedford
     
  3. Dr Lobster

    Dr Lobster Well-Known Member

    Joined:
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    Location:
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    Interesting, I just picked up a copy of this book a couple of days ago.

    I have a bad habit of reading 3-4 books at a time. While this is not a problem for fiction (which I no longer bother with) I must restrain myself when it comes to education as I want to really focus.

    I have a stack of trading books beside my bed that I am steadily chomping thru.

    There are a couple more to get at this stage, apparently there is a new Van Tharp book due in Nov, so I'll wait for that. Plus I need to get schwagers book.

    Good thing I don't mind a bit of reading, though my kids just didn't appreciate
    Reminisces of a Stock Operator as bed time reading. While I can accept that from the 6mth old, its just not acceptable for a 2 and 4 yr old.:p
     
  4. Tropo

    Tropo Well-Known Member

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    Location:
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    Well.....reading 3-4 books at a time about trading it's a bad habit ;)
    Reminiscences of the Stock Operator may well be a bed time reading, but this book is not for children (IMHO).
    Do not get in the habit of only reading a lot of books about trading, because
    you may forget what your ultimate goal is.....:p :D
     

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