Chucking it to become a Trader - pointers?

[CharlesM]

Hello All

I have toyed with the idea of becoming a trader (currencies, futures, comodities - I dont exactly know) for a while now, and as my job is boaring the sh one t out of me perhaps a few months of that might tell me if I should or not. The independance of it is also pretty appealing...

Can anyone direct me towards web sites or books or whatever that may tell me more about pursuing such a career?

If succesfull then a sattilite link on a boat may even be viable!!?? - if I am any good at it that is

Anyone that can tell me more I would appreciate it. I am sure there must be some traders out there that have paid for their shiny new boat doing this, or that are cruising the world while still having an income sourced from trades...

cheers
Charles

 

[Norman_E]

Go for it. There are thousands of real hard traders out there just waiting for your cash. Currencies are very hard to make money on unless you run a bank trading room. Commodities are a minefield. There are some amateurs who make money out of stock market day trading. To succeed you need to have a lump sum of cash to commit, good nerves and a willingness to close out any loss maker immediately, and not risk waiting for an upturn. There are computer programs which allow you to try it out without actually commiting any money, if interested you should spend a month just trying "virtual" deals, and see if you win or lose after factoring in dealing costs. Note that most brokers will not allow you to short sell, which means that you will struggle to be profitable in anything other than a rising market. Upside is that the first (I think) £8,000 of capital gains are tax free.

 

[[2068]]

Other upside is that you can offset your losses against other taxable gains...

One of those questions that's always fascinated me: if you fail to sell an option in time on, say, pork bellies, and we're talking maybe several thousand tons here, do they deliver to the Stock Exchange ?

 

[Phoenix of Hamble]

In used to help put in systems for professional trading floors..... and IMHO you're quite frankly, wasting your time.....

You are competing with heavily computerised systems that make trades instantaneously on the tiniest market movements at volumes that would make your eyes water....

As far as I am concerned, the only way the amateur can make money on the markets is by careful stock picking, with a decent amount of upfront capital, very very careful research, and then sitting on them for extended periods.....

Day trading is very difficult when you are competing with the might of the big broking floors.....

No doubt someone will tell us how they successfully support a lavish lifestyle on their daytrading activities, but none of the vast majority who make little or nothing, or lose substantial amounts will ever brag about it......

 

[jhr]

Doesn't directly deal with commodities, currency etc. but there's a lot of common sense on the Motley Fool website.

Worth a browse.

 

[Twister_Ken]

First see if you can persuade a broker to employ you.

If yes, you'll learn the ropes at someone else's expense.

If no, then they don't reckon you've got what it takes. Doesn't mean you haven't, but it is a reality check.

 

[[2068]]

As an example, I managed to turn about £2000.00 into £69.80 (QXL) from 1998 to 2001. otoh, a guy I work with managed to make a small gain on a similar amount over the same timescale by following the Berkshire Hathaway approach.

It can be done, but it takes huge amounts of time, effort, and a fair wodge of luck too. I know of NO-ONE who actually makes a living from day trading: it's just a game for those that also have a proper job.

dv.

 

[jwrhind]

As another example, I dabbled in trading on-line between 1999 and 2001 and made a return of 42% on £12k. I lost confidence after analysing some IPOs in detail and exited the market mostly in 2000 before the dot-com bubble burst and sold the "blue chips" in 2001.

Was an interesting experience, but I watched a lot of colleages make big losses. Great care was needed and of course I also I had my day-job income.

I agree with NAS and dvinell. Sorry.

 

[Tisme]

A good friend of mine makes a very good living from the stock market. He started dabbling whilst in paid employment, built up experience then, when he realised he could make a living from it he resigned from his job.
He has been doing it for years now, is very disciplined and he certainly works full time on it. He has a room set aside at home for it which is full of computers.......15 screens going all the time. He spends a small fortune on software and subscriptions to data providers. He is connected to the internet 12 hours a day, doing it on a boat would be expensive.

It can be done, but don't kid yourself that it's an easy life.

 

[Captain_Chaos]

Here's how an amateur can make a small fortune from trading
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
start with a large one!


I am in favour of people showing entrepreneurial spirit but please be careful. The grass always looks greener on the other side, particularly if you are going through a tough patch, but it is easier to make money in an area you know and understand, than by jumping into a sector that appears glamorous and lucrative to the outsider. As has been said in earlier posts, you are up against some big hitters with extremely sophisticated computer systems and you could lose a fortune.

Whatever you choose to do, i wish you well.

 

[Magic]

With NAS and Co here! Lot of effort for small gains, esp if you want to play from the boat!

You need to spend the time sat watching / researching, and unless you can play the downs as well as the ups then the pickings are small unless you are a superhero or a mind readers.

Day tradined was great during the dot com era, but and I say this still doing it today, it ain't what it was!

Personally I might cover the price of a holiday, or on the odd occasion a little more, but when I work it back and figure out the hours spent researching, watching, and praying I might as well have taken the bosses offer of working weekends!

But if you feel you can do it, good luck, and let us know how you get on! Oh and if you do really well, remember we all told you it was a good idea.

 

[Birdseye]

You will come across a few people who made serious money in the dot com boom, but in truth that was because they were riding an up escalator. If you had the capital, enough sense not to put it all on one punt, it was difficult not to make some money. But the market isnt rising like that now, and you will struggle to find any private individual who is making any worthwhile money from trading and lots who are losing it.

Day trading requires lots of data feeds and is impractical from a boat.

But investing / stockpicking is a different issue. My father made an average yearly return over more than 15 years of slightly over 20% by stockpicking and sitting on them. Probably would have done better still if he had been able to keep away from the penny shares in markets like Canada. It took a real interest in the subject to do the research and make an informed decision - something that I havent got at all. Nor am I willing to put in the hours.

You're coming at it from the wrong angle - you want to get out of something (your current job) and see trading as an easy way od making a living. It isnt. If you had the interest yopu would be doing it now. It isnt something you can read a book on - its a bit like being an entrepreneur, a type of mind / way of thinking you are born with.

Best answer is "dont". Hang on to what you have made.

 

[Norman_E]

We agree, I never said day trading was a sure way to make money. A month trying virtual trading will convince most people that it is a good way to lose money. Markets are like the sea, the sharks are there. Unlike the sea, every one of the market sharks is out to get you (or rather your cash). I have made quite a bit of cash on the stockmarket, but I started 18 years ago with a fairly sizeable investment put in for the long term and well spread, even so I had some losers which I had to close out. It remains difficult to calculate whether I have beaten the market averages or not, though it has been spectacularly better than holding cash on deposit, but worse than property investment would have been.

 

[summerwind]

Having worked for many years as a professional portfolio manager I can tell you that I don't necessarily agree with everthing that has been said so far.

HOWEVER, unless you have a fair bit of experience, an analytical mind, the resources to see you through the downs, the discipline to not blow your profits during the ups, the software and data feeds, strong self discipline to sell in a rising market when your system tells you to, knowledge of statistical analysis and investment theory and can manage high levels of stress <span style="color:red"> DON'T EVEN THINK ABOUT IT </span> .

If you think you can fly by the seat of your pants following tips and hunches I promise you your ass will soon be covered with nothing but rags. You won't be bored though - gored maybe. /forums/images/graemlins/frown.gif

To do the job from a boat would be hyper-expensive. Your data feeds, which need to be extremely reliable would have to come through a satellite link. Considering that you would be charged on the volume of data through the link, you would need to be a bloody good trader just to pay for your information.

If you have the resources to set up as a trader I would be inclined to set up a portfolio through a broker and go sailing. /forums/images/graemlins/cool.gif

 

[duncan]

you would be far better playing online poker; picking your times and games carefully you will meet successfull traders who have been celebrating success a little to much and are happy to share it with you!

 

[Roberto]

Charles,

I did that as a job for >15 years, and it is exactly that: a job, a full time one.
I agree with what Nas and others have said, in particular if you want to try that as a job, find an employment in EC2, someone who pays and supports you for that activity, and stick to that, that is being employed. It can be fun, although like many activities sooner or later it becomes boring.

But I suspect you rather see yourself sitting in your boat in a tropical lagoon buying and selling dollars, interest rates or whatever /forums/images/graemlins/wink.gif and making a living out of that.

Well, it can be done, but as a probability I would say in 100 people that try, one will succeed, and more by luck than by method.



Earning money this way is very difficult even when you have the support of an institution behind you (meaning instant research, information, sophisticated software developments, almost nil trading commissions, etc), as an individual you will competing with about 1/10000 of the resources available to the others, not a fair game imho

If you really want to try, only use the money you can afford to lose, lose completely: if that grows ok, if it goes bust your lifestyle will not be affected, which is the important thing. In this sense, it should not be seen much differently from pure betting..
Also, remember real trading is *very* different from opening an account and simulating your activity, or letting a "software" do it for you: when you have a position the psychological component is very strong, even stronger when you are investing your money and not the bank's money, and heart and business is a no-no.

This for the so called day trading.

A rather different story is if you are wealthy and like to manage your funds from the boat, in that case I would consider that an average return in the order of a few %points would already be a great achievement, knowing how much you need to live every year will give you an idea of the starting capital you need.

Otherwise, pick up a couple of stock of companies you like and forget them for a few years. No need to have a special economic background, on the contrary a technical one is much more useful: if you notice a company in the industry you work for which is doing something good, you will have an edge over many others, like being there first before all the others arrive, then if your idea is good the rewards can be really excellent, meaning several fold

I remember a friend of mine talked to me about internet at the very beginning, must have been early '90, I did not even know what internet was about: he had his idea, put his money in a few companies, a few went bust and he lost everything on that side, a few others have been very rewarding, when you buy shares at less than 1 dollar and they go to 200-300, and even after the bubble burst remain at 50-100 you made a good invetsment -.<) ... he left the bank, stopped working, big flat in manhattan, travels, language studies... and yes, a small Bloomberg terminal just to check from time to time what is going on

the problem is to find a bright idea, and especially find it before the others

hope this helps, whatever you decide /forums/images/graemlins/smile.gif

 

[Norman_E]

[ QUOTE ]

If you have the resources to set up as a trader I would be inclined to set up a portfolio through a broker and go sailing. /forums/images/graemlins/cool.gif

[/ QUOTE ]

I have never been tempted to try day trading. I did set up a portfolio, but not through a broker. I simply bought a wide spread of shares in companies I recognised, and managed it myself with very limited sales and even less purchases since the initial setup. I agree with the definition of a stockbroker as "a man who invests your money until it is all gone" and would never let a broker manage my investments. My partner has the proof of this from her own experience. For managed investments (and increased spread) I simply bought a part of my portfolio in the form of Investment Trust shares.

 

[CharlesM]

Thanks for the replies people.

Are any of you actually traders?

Perhaps I should simply renew my ticket and do dive instruction instead...

Pity though... the idea of trading appeals - especialy the independance from any boss etc.

Cheers
Charles

 

[Phoenix of Hamble]

Plenty of self employment opportunities that give independence from a boss, but can be done remotely...... journalism, web site work, proof reading, technical authoring, etc etc etc...

 

[rivalranger]

For the last two months I have been researching the viability of trading, here are a few random pointers from my trading experience so far.

In the UK spreadbetting is likely to be your trading platform as you are free from capital gains (if you make a profit) and due to the gearing you don’t have to tie all your capital up.

Most spreadbetting companies let you play with demo accounts, so you can test your trading system without losing real money.

A very good website for free info and very inexpensive beginners courses is http://www.learntrading.co.uk

Another good site about all things trading is http://www.trade2win.com

True day trading is pretty tricky, does require live data feeds, you would have to watch the market all day and due to broker spreads not very profitable on UK shares. Swing and position trading (where you hold the position for longer than a day) can be profitable with freely available data from the Internet and doesn’t take up much time.

If you currently have a fulltime job and Internet access you can easily trade at work to see if it’s for you. Even if you can not trade at work the US market is open from 2:30pm to 9pm and the forex market is 24 hours a day.

Getting a fulltime job as a trader backed with the companies money is apparently quite difficult, as the firms have the choice of the brightest individuals from the very best universities in the world. However, if you are prepared to fund your own trading account and training , there are plenty of companies who would take you on (apparently most traders are self employed and pay for seats on dealing floors).

Regards