你好！我十月搬台灣住。

[Wodin]

Hello Markshot. Longtime no see. So how come Taiwan?

Best of luck and have a great new life.

[MarkShot]

Closer to family.  A lower cost of living.  Unlike the USA a good National Health Insurance system ranked one of the best in the World.  (not having to go bankrupt because of the cost of insurance or because you don't have it)

[Wodin]

Could have come to the UK and got your health for free. Well except prescriptions. However I'd advise against it as the UK is a dump and the society has gone to hell.

[MarkShot]

Well, actually I don't know that my trading results were so poor.  The problem was that I had set a very aggressive timeline of milestones by which success or failure was measured.  Perhaps way too aggressive, but life decisions needed to be made on whether I proved myself or not.  So, I passed a couple of milestones while falling a little behind schedule.  After months of multidisciplinary study, in a month of paper trading, I generated almost a 10% portfolio return while during the same period the SPX posted a 0.5% return.  This was very encouraging, but I failed my next milestone.  As a serious systems project manager, I pulled the plug rather than move on to faith-based trading.

My advice to anyone who is seriously considering trading would be both to allocate a lot time to self-education, but also a lot of time to practicing via paper trading or with a small toy portfolio.  Ideally, you want to be at the trading for an entire year.  Go through seasonal impacts on markets, a few global crisis, earnings seasons, etc...  This will not give you a feel for every type of market, but it will be a start.  Within the market there are many cycles.  There are bull markets that usually run for about three years; there are bear markets that usually run for about a year; there are mini-bulls and mini-bears (outsiders mistakenly think that the direction of the market is much more clear cut than it is - just like warfare, battles only exhibit perfect clarity in history books); there is the US four year presidential election cycle; you have long multi-year cycles in various heavy industries such as aircraft where is takes a decade for fleets to be replaced ... although history never repeats 100%, there are certainly prior precedents.  Furthermore, learning to trade is about understanding the tremendous interconnectedness between many things and trends; recognizing patterns.  It is not enough to know how to read a stock chart just doing technicals, since your chances of doing well going long are poor if the indexes don't climb too.  And even that is not good enough, since picking the best performer in an industry group won't generate good returns if the group itself isn't experiencing an influx of investors.  Finally, as the home gamer, you really need to pay attention to where the big boys/girls (mutual funds, hedge funds, institutions) are parking their money.  Since you could pick the most promising company in the World because you are visionary, but if the tide is going out, your positions are going to get hammered.

[MarkShot]

One more comment about trading with a small toy portfolio, your results are going to be somewhat skewed, since the cost of trades will be disproportionately large.  Whether you buy a 100 or 1000 shares, the trade costs the same (however, this is not true with option contracts).  So, in terms of evaluating your results and extrapolating, you may want to factor out the transaction fees.

I would avoid leverage when starting out.  This means purchasing on margin (borrowed money) and using options.  Remember 99% of all options expire out of the money.

Going back to the prior STOP-LOSS debate (meaning getting stopped out or holding), remember that even with a -7% STOP-LOSS, you can lose 20%.  How?  Normally, stocks tend to open at the prior sessions close price.  However, news is often announced after the close.  So, a stock can gap up or down at the open ... some really bad news can have a stock open well below your STOP-LOSS.  You'll take a loss (be stopped out) larger than you had planned.  Of course, you can see it coming as many stocks trade electronically prior to the open, but there is not much you can do about it.  You could trade pre-market, but that has its risk, since volume is low.  When volume is low, prices can sometimes get very skewed.  Effectively, one large trader with an itch can move the price disproportionately.

[MarkShot]

Or maybe its rational enough the the computers are beating everyone.

Glad to see your posts markshot!

With just a regular brokerage account, you can get pretty fancy with your orders.

You can put orders in to only trigger in a certain time frame when a certain price threshold has been crossed, but not to pay more than a certain price.  All to happen programmatically.  You can put in an order to buy one of four stocks when a certain price is reached and cancel the purchase of the other three.  A common "bracket" order generates two other orders when a stock gets purchased.  So, you immediately (programmatically) create a STOP-LOSS as soon as you own it to limit your downside, but at the same time you create another SELL-STOP if it should appreciate more than a certain amount.  Often you'll may want to adjust your STOP-LOSS orders daily after the close to lock in some gains while limiting the downside.

The above was orders.  However, when it came to ALERTs (emails/texting), you could get infinitely more sophisticated if you knew how to program.  You could set up alerts which would fire only if a stock was breaking through a certain price on heavy volume (more than the 30 moving average) and the SPX was up 1%.  At which point, you could check out the market and decide if this was the sign you were waiting for to get in.

Beyond that TDAmeritrade has a totally retail investor programmable trading platform.  You could define the rules and it would merrily place trades on your behalf at the speed of electrons until your account went bust.  So, you could be just like the big boys and flash crash with the rest of them.  I never really looked into it, since I preferred to lose my money the old fashioned way by hand.

One of the toughest buy decisions was setting the price for something at the open.  Studying the chart and trying to think of a fair price so that you wouldn't over pay, but you wouldn't miss your chance.  Then, second guessing yourself for an hour from 8:30-9:30am as you watched the S&P futures dance before the open.  :)

[MarkShot]

One of the posters I NEVER miss.  Been thinking about getting into the market once I clear the debt off my books.  Nothing big, but something to play with.  Looking mostly for stocks that pay dividends and have consistent value.  I also wanted to try and stay focussed on a small area of stocks before diving into the big pool.

You want to limit the number of positions you take at any one time.  In part, this will vary to some extent on the size of your portfolio and your free time.  Probably somewhere between 3-10 stocks.

To really do it justice, you don't want to load up on a lot of stock, because then you won't be able to focus.  Once you start going beyond that, then you might want to consider mutual funds and ETFs.  Because if your portfolio has a large enough basket of stocks, then you can simplify the headache by simply buying a basket to begin with.  ETFs have no management fees, can be traded intra-day, and are not subject to good or poor management ... so, if you want to own coal miners or a broad spectrum of Brazil's market, ETFs are the way to go.  You'll reduce some risk, but also limit some upside.  (However, remember with foreign market ETFs, you have both the market movement and the FOREX movement relative to the USD.)

For technical traders, you are going to have your eye on some key sectors and stocks.  You'll be watching the market to send you a signal before you get in.  For example, charts form resistance lines.  A price at which the market will not pay more than.  You'll see the stock rise to that price and pull back many times.  Now, if one day, you see the stock surge through the resistance on heavy volume (means there is institutional buying), this could be your entry to buy.  You'll also be looking for a stock which has lost value over 8 weeks or longer and kind of stagnated in terms of price.  This indicates that ownership has been swapped.  Those who were tired of the losses or lack of appreciation close their position (shaken out).  New owners mean fresh momentum.  You'll be looking for a stock that hasn't seen a substantial price drop in the last 6-12 months (no overhead supply).  Those who purchased at a much higher price will be holding and looking get out even as soon as it begins to climb.  This overhead supply will dampen any rally in the stock and weaken any upward momentum.

So, a stock is a commodity.  A company may be solid or shaky, but your decision is also based on past chart behavior.  Good companies can make bad stock picks.  Especially, some very good companies, because by the time everyone in the World recognizes them, the biggest gains have been gotten.  You're joining the party too late.  As you and many other small fish are loading up, the institutions are slowly unloading.  They can spend months gradually unwinding a position.  (They dump little by little so that there is no big hit to the price.)

So, you are a hunter.  You are going to identify some good candidates and stake them out for exactly the right time.  Knowing when to enter is tough and knowing when to exit is even harder (the signs are less clear).

All this talk of stocks ... making feel a tinge of guilt for having gotten out.  Oh, well ...

[MetalDog]

One of the posters I NEVER miss.  Been thinking about getting into the market once I clear the debt off my books.  Nothing big, but something to play with.  Looking mostly for stocks that pay dividends and have consistent value.  I also wanted to try and stay focussed on a small area of stocks before diving into the big pool.

You want to limit the number of positions you take at any one time.  In part, this will vary to some extent on the size of your portfolio and your free time.  Probably somewhere between 3-10 stocks.

To really do it justice, you don't want to load up on a lot of stock, because then you won't be able to focus.  Once you start going beyond that, then you might want to consider mutual funds and ETFs.  Because if your portfolio has a large enough basket of stocks, then you can simplify the headache by simply buying a basket to begin with.  ETFs have no management fees, can be traded intra-day, and are not subject to good or poor management ... so, if you want to own coal miners or a broad spectrum of Brazil's market, ETFs are the way to go.  You'll reduce some risk, but also limit some upside.  (However, remember with foreign market ETFs, you have both the market movement and the FOREX movement relative to the USD.)

For technical traders, you are going to have your eye on some key sectors and stocks.  You'll be watching the market to send you a signal before you get in.  For example, charts form resistance lines.  A price at which the market will not pay more than.  You'll see the stock rise to that price and pull back many times.  Now, if one day, you see the stock surge through the resistance on heavy volume (means there is institutional buying), this could be your entry to buy.  You'll also be looking for a stock which has lost value over 8 weeks or longer and kind of stagnated in terms of price.  This indicates that ownership has been swapped.  Those who were tired of the losses or lack of appreciation close their position (shaken out).  New owners mean fresh momentum.  You'll be looking for a stock that hasn't seen a substantial price drop in the last 6-12 months (no overhead supply).  Those who purchased at a much higher price will be holding and looking get out even as soon as it begins to climb.  This overhead supply will dampen any rally in the stock and weaken any upward momentum.

So, a stock is a commodity.  A company may be solid or shaky, but your decision is also based on past chart behavior.  Good companies can make bad stock picks.  Especially, some very good companies, because by the time everyone in the World recognizes them, the biggest gains have been gotten.  You're joining the party too late.  As you and many other small fish are loading up, the institutions are slowly unloading.  They can spend months gradually unwinding a position.  (They dump little by little so that there is no big hit to the price.)

So, you are a hunter.  You are going to identify some good candidates and stake them out for exactly the right time.  Knowing when to enter is tough and knowing when to exit is even harder (the signs are less clear).

All this talk of stocks ... making feel a tinge of guilt for having gotten out.  Oh, well ...

Thanks for taking the time to explain that to me.  It's as I suspected, difficult, fraught with choice, wrapped around an ulcer waiting to happen with a jackpot if you know when to get in and get out :-)  By the by, what's an ETF?  Is it what you intimate, a Mutual Fund you can create yourself?

[MarkShot]

A Mutual Fund has a professional management and there are usually fees involved.  They have a state objective like "Invest in Tech Companies in the People's Republic of China".  The management will decide what stocks to accumulate and what to distribute.  Like anything else, their expertise will vary.  Also, they are constrained by objectives and bylaws of the fund.  So, it might be that Chinese energy stocks are hot, but they cannot buy them, because it is a tech fund.  However, it gives you a chance to play Chinese tech without having to what to buy and what to sell.

An ETF (Exchange Traded Funds) is simply a basket of stocks formed by I believe brokerage house.  Suppose there is a technology index on the Shanghai exchange.  This basket then owns stock which mirror that index.  There is no management ... it's like buying the index.  You own shares of the basket which trade just like stocks.  It's a way for you take a broad position without putting down a lot of money.

When it comes to technical analysis (price & volume), stocks, commodities, futures, options, funds, ETFs all exhibit common behaviors.  The behaviors are simply manifestations of supply and demand and investor psychology.  That Japanese Candlestick charting began hundreds of years ago with the rice spot and futures market.

I am off to go play some CMAK and enjoy some totally non-P&L related diversion.  :)

[MarkShot]

Here is a good site for ETFs.

http://etfdb.com/

Although I didn't buy any ETFs ... well, I did one GLD (which tracks the spot price of gold more or less), I used the ETF symbols in my trading platforms to track the general performance/charts of foreign markets (indexes).

For a while I owned ARCO (Arcos Dorados), a relatively new IPO, which is effectively the McDonald's franchise in Argentina.  I made around 8% with that one.  You cannot directly own foreign stocks in the USA, but they trade as ADRs (American Depository Receipts).

[MetalDog]

Thanks again, Markshot.  Quite helpful and I'll look into it.

[MarkShot]

Books I would recommend are:

http://www.amazon.com/Stan-Weinsteins-Secrets-Profiting-Markets/dp/1556236832/ref=sr_1_1?s=books&ie=UTF8&qid=1336950518&sr=1-1

http://www.amazon.com/Money-Stocks-Complete-Investing-System/dp/0071752110/ref=sr_1_2?s=books&ie=UTF8&qid=1336950680&sr=1-2

http://www.amazon.com/Japanese-Candlestick-Charting-Techniques-Edition/dp/0735201811/ref=sr_1_1?s=books&ie=UTF8&qid=1336950573&sr=1-1

Read in that order.

Weinstein's book is a classic, and one of the most lucid.

O'Neil's is another classic in its 5th. Edition. It covers his personal hybrid of value added fundamental analysis plus technical analysis. It is a complete system which goes hand in hand with Investors Business Daily. Known as CANSLIM.

Nison's book is another classic. He popularized Japanese Candlestick Charts in the USA. The two previous books use OHLC bar charts.

[Bison]

Mark dives fully into a project when he decides to pursue it.  I remember when he started to play chess.  He could fill you in on all the different chess programs along with strengths and weakness and that was just in the first week of picking up the game.

[MarkShot]

Funny you should say "dive".

I was waking up every morning with my current positions feeling that I was drowning.  But I would tell myself, "No problem.  I am going to swim my way out.".  Finally, I woke up one morning and realized that I didn't know how to swim.  Thus, I got out.  :)

---

BTW, the other big thing in my life is that I have lost 25Lbs in three months.  (became a vegetarian ... nothing socio/political/religious just for health reasons)  Still got about 17Lbs to go before I will be fit.

[Bison]

BTW, the other big thing in my life is that I have lost 25Lbs in three months.  (became a vegetarian ... nothing socio/political/religious just for health reasons)  Still got about 17Lbs to go before I will be fit.

This is outstanding Mark.  Congrats!  Are you working out too?