I would buy and read the Random Walk Guides, there is a slim one for a primer and a fat one for specifics. Well-written from a layperson's (ie me) perspective.
I'm not heavy in the game at all. But I like to know this shit.
I'm hugely risk averse and ADD, I like to just sit on my shit because otherwise I'm a bundle of nerves and I'm concentrating on stocks not my primary business. Most folks, if you're like me, keep your eye on the cue ball because without that you can't continue to build your portfolio.
I would buy and read the Random Walk Guides, there is a slim one for a primer and a fat one for specifics. Well-written from a layperson's (ie me) perspective.
i've actually never read a random walk down wall street - i don't think it would help me all that much so i never looked into it. i would strongly advise anyone to learn how to manage cash and positions first, and paper trade until you have a decent set of rules. follow them strictly. to be a successful trader you have to be mechanical with your execution. if you know how to manage your money you'll be able to make your mistakes early and still stay in the game.
a good place to start in terms of reading would be reminiscinces of a stock operator by edwin lefevre. it's sort of an autobiography - really quick and interesting read - but he lays down a lot of the basics in that book. get those down cold before you start exploring specific theories about trading.
Yeah it would not be useful to you. Random Walk Guide To Investing (the skinny one) is more useful to debunk BS ideas that people get from reading a column in the business section or watching a lot of Jim Kramer (I'm looking at you MarkLatency), and getting folks, as you said, to a position of strength on fundamental asset management, risk assessment, etc. issues so that once those fundamentals are down they can get into more serious strategies.
a good place to start in terms of reading would be reminiscinces of a stock operator by edwin lefevre. it's sort of an autobiography - really quick and interesting read - but he lays down a lot of the basics in that book. get those down cold before you start exploring specific theories about trading.
Investing should depend on your goals - short, intermediate, and long. Is the money for a second house in 10 years, your kids college education in 4 years, or retirement in 30 years. All of these situations call for a different strategy. Are you accumulating for the future or are you distributing a bunch of cash for income? What is your tolerance for risk? The more risk you can take the greater your chance for higher returns. However, you also have a greater chance of significant loss.
Build a financial plan with a professional advisor that you trust. Together you can assess your goals, tolerance for risk, and multiple strategies to achieve those goals. Then meet at least once per year to discuss changes to your plan. Also don't forget to cover your ass with all the right insurance. Health, Life, Disability, Homeowners, etc. No reason making all these grand plans when one death, accident, etc can wipe out the entire thing.
I respect those here that trade stocks for a living. I am also in the business, but only place people in individual stocks if they have over $200k to invest. I also outsource the daily buying and selling to my associate who lives and breathes this shit on the daily.
For all you amatuers out there, keep it simple. Dollar cost avergage into the market, don't try to time it, slow and steady will win the race over the long haul. Get an advisor to help you because it's a madhouse out there of products, strategies, etc.. Like I tell my clients, I could probably do a lot of research and spend the time to learn to fix my car, but I'd rather have it done right and pay a professional.
a good place to start in terms of reading would be reminiscinces of a stock operator by edwin lefevre. it's sort of an autobiography - really quick and interesting read - but he lays down a lot of the basics in that book. get those down cold before you start exploring specific theories about trading.
This book is authored by Edwin Leferve, but is really written by Jesse Livermore. I'm not sure if he told the story to Leferve or if Leferve is a pen name for Livermore. Livermore is considered to be one of the all time great traders on Wall Street (and is also in my "heroes" list on my myspace page) and operated around the great depression times.
The book is not easy to read because it uses a lot of 1920's era terminology. If you have a good handle on how the market operates you can understand what he is talking about. Dude went flat broke two or three times, but also was so wealthy at times that once he came close to collapsing the stock market with a short bet and was personally contacted by them asking him to not trade that day for the good of the country. That's juice.
Another good thing to read is "Extraordinary Popular Delusions and the Madness of Crowds". It's THICK and written in the 1800's, but is the best thing I can think of to learn about...well, to learn about extraordinary popular delusions and the madness of crowds. It's crowd psychology basically. Goes into the tulip bulb craze, and other times in history where people got so caught up in crowd hype that they behaved irrationally with their finances, and of you bet against them you would eventually become rewarded. Case in point...the bursting of the internet bubble a few years ago; people bidding up anything.com to totally ridiculous levels. If you were patient and smart and took a position against the hype you are a rich motherfucker these days. Another recent example is the stock Taser. Got bid ridiculous last year and eventually crashed when the smarter money prevailed. Check the chart..TASR.
I worked with a guy who got rich through this thinking (also called contrarianism). I remember when the Nasdaq crossed 4000, I asked him how soon he thought it would be before it crossed 5000, he said "Matty I don't know, but if it's within 6 months I'm gonna short that baby and ride it all the way down". He probably made a couple million, then retired and moved upstate somewhere.
There's another book I have which is written by Michael Parness, called "Rule The Freaking Markets". It's one of the easiest books to read for a beginner, and is a solid introduction into how to trade trends. I made a ton of money off of a couple of things I got from that book. Dude runs a website called trendfund.com, but I've never looked at it.
Here's the thing with financial books. They all have a lot to say, but it's hard to digest and absorb every little thing in the book. I got to where I am today by reading anything I could get my hands on and taking at least one or two things from the book. If you only read one book and only learn one method, what are you going to do when that method isn't working for you anymore? Better to have a whole arsenal at your fingertips.
Another good thing to read is "Extraordinary Popular Delusions and the Madness of Crowds". It's THICK and written in the 1800's, but is the best thing I can think of to learn about...well, to learn about extraordinary popular delusions and the madness of crowds. It's crowd psychology basically.
i just started reading this a few weeks ago actually. i'm kind of having a hard time getting into it ... it's that 1850's style writing i guess. i have it at my desk though and i'm planning on picking it up again soon.
recently i've been reading a bit about cycle theory, especially for setting price and time targets. i've set a few intraday price targets recently that were so accurate that it was a little uncanny.
this here is supposed to be one of the best out there. my copy is in the mail right now so i can't say whether it's worth the money or not (it's a little pricey). the profit magic of stock transaction timing by j.m. hurst is also apparently very good.
man this thread has some , but reading these replies from the heavyweights in the game makes me nervous about investing in the market. I've never invested in stocks but been itching for a while, if only I had some spare cash. Well, I just got my bonus, and was thinking of starting with a bit of it stocks.
my question: is it worth going in with $1000 or so? I know that's probably a laughable amount in the real world, but that's all I'm willing to risk at the moment.
this here is supposed to be one of the best out there.
Written in 1951?? It amazes me that some of the best books to read were written 50, 100, 150 years ago. Look up in this thread, there are three mentioned that fit this category. Throw in "Think and Grow Rich" while we're at it.
I just got back from an uplifting holiday dinner, I feel charitable and am about to put together a nice fat post for this thread if I can stay awake.
This here is full of interviews with traders and investors who are in charge of gobs of money and are good enough at what they do to wind up interviewed in a book like this. I read most but not all of this book, it's good. There is a second version too, updated. I think this one was written in the late 80's. There were a couple of "oh shit!!" moments while reading this, lots of good information tucked into the interviews. THICK.
This is that "Rule The Freakin Markets" joint that I mentioned in an earlier post. This is the hardcover, it's in a paperback version now I think. I recommend this for a beginner, real easy to read and good information that you can put to use right away. I made money off this, and referred back to it a couple times including this week.
This one is about finding stocks that move in price ranges and buying at the bottom or shorting at the tops of the range while it rolls along. I was disappointed in the purchase to be honest, don't buy it.
"Trading for a Living" is advanced and a bit expensive. It's basically a textbook, actually I think there is a workbook that goes along with it which I didn't buy. It's well worth the price, but not the first thing you want to read if you are just getting started. You have to be REALLY into this shit to read this and have a working knowledge of how things work to be able to get through it.
These two are BIBLES for some people. Same author for both, I read the blue covered one when I was young and it's the one you want to read before the other one. These books should be read with a copy of the Investors Business Daily newspaper at hand, as they are written by the publisher of that paper and they kind of go hand in hand. You'll see what I mean if you go this route. This is not for buy-and-hold and forget about it investors, it is for people who want to move money around and be disciplined about it. I highly recommend these books. Blue cover first though. Read it with a highliter too, there is so much good info in here you'll want to mark it as you go so you can refer back to it. For real, these are bibles for a lot of people out there. You need these.
Options are risky as shit and you need elephant balls to trade them. These are advanced books. If you want to go balls out and have some money you can stand risking (I lost 100% on one investment in options last year, but also made over 100% 7 times this year as well), options or futures are the way to go. I think there are books that are more suitable for beginners though, but I'm not up on them.
This was a good one, I never finished it though I kind of skipped around in it to chapters that I felt I needed to read first. It's a primer on how the markets have changed and how the old "buy-and-hold" strategy does not really fit anymore. Also discusses how the internet has changed things, basically lays out how investing has changed for the mid-2000's. Pretty good. I heard the author interviewed on the radio and he was interesting, that's what made me buy it. I should look at it some more.
The book on the left is about buying the companies that have their own corporate insiders (CEOs, directors, people like that) buying shares. You can find that information easily, but honestly I just summed up the book in one sentence. It's a waste of time. They say the same shit in every chapter but word it differently. If a CEO has faith in his own company and is buying up shares, that company is worth a look. Fuck that book, you don't need it. The one on the right is good, sums up the philosophies of a few top traders including Jesse Livermore and William O'Neil. Good, and cheap and thin too. Fast read and worth the price because it might lead you in a direction you didn't know about.
These are discussed in the thread already. On the left is a printing of Reminiscences of a Stock Operator (there are many versions, it's a classic) and on the right is Extraordinary Popular blahblahblah. Both are mentioned above, in posts by myself and FadedGlory. At some point in your education you have to read these books or you are soft.
I just started reading this and it's good so far. Broke out the highliter for it, only 50 pages in though. I like it. Breaks down how to catch price swings.
These are good too, but I just started reading them also and am only about 100 pages into them. Just One Thing is a bunch of wealthy dudes dropping one nugget on you that they feel is crucial knowledge to have. It's a good book, but not for freshmen. More for seniors. The other one, Ordinary People Extraordinary Profits; I broke out the highliter on that too. It's technical though, and not the first book you want to read. But keep an eye on it for the future.
I got some more books on my work truck and a few loaned out to some folks, but I think there are enough here for you to look into.
I got another post planned for tomorrow which will help some of you dudes also.
my question: is it worth going in with $1000 or so? I know that's probably a laughable amount in the real world, but that's all I'm willing to risk at the moment.
do you want to invest for the longer term or actively trade it?
i think an easy but undoubtedly long term approach to buying stocks, is to buy when interest rates are at the bottom, and then sell when they are at the top. you may not be able to time the exact highs and lows, but it seems to be a dependable 6 - 10 year cycle.
well, i don't know how much that relationship is holding up right now, but you bring up an interesting point. my advice to anyone starting out in trading would be to select a single market that you can trade without any dispositional bias (in your case, you'd be buying and selling neutrally behind long-term economic data). far too often investors or traders become too involved with their positions and get themselves into trouble - "everybody wants an xbox 360, so microsoft stock must go higher;" "everyone i see on the train has an ipod, so apple stock has got to be a good purchase," etc. there are strong arguments for fundamental trading like this, but for the small speculator it can be a difficult game to play. i don't know how many times i've seen a stock get upgraded or beat earnings and get whipped on the street for reasons unknown to the layman. it could be an institution liquidating a position into the good news or the fact that while the report on the company was excellent, it wasn't quite as excellent as the peanut-head analysts on the street wanted it to be. that's why i think it would be smart for someone looking to profit from price movements to avoid selecting indivual stocks for a while until they're comfortable enough with trading to do so without running the risk of being wiped out or caught in a meltdown trade. there are tons of liquid markets out there that can be a bit more "pure" if you know what i mean - they're more driven by simple economics than by the factors that drive the stock market, which are totally unique to the stock market. that's not to say that you can't make a grip of money in stocks (i'm sure sween and others on this board would have something to say about that), but for the novice looking to learn how to trade effectively they can be confusing at first.
my question: is it worth going in with $1000 or so? I know that's probably a laughable amount in the real world, but that's all I'm willing to risk at the moment.
do you want to invest for the longer term or actively trade it?
does actively trading mean looking at the numbers every day? I'm not into just having my money sit somewhere -I'd rather be actively involved. Does it make sense to actively trade such a small amount of money? I mean, there's a small fee everytime you trade, right?
I need an "stock market for dummies" that's how much I know about this... I'm just wondering if it's worth my time to learn about it if I only have a grand to invest - or should I just put it in my 401k?
if you can't be patient then you should just take the $1000 and go to Vegas, you'll likely reacch the same result. It'll be fun, but you'll end up with $0.
i don't think that's true at all. too much "patience" can leave you with nothing much faster than knowing how to cut your losses will. that is if you trade on margin, of course.
i just hate babysitting trades so i do my best not to rot with a loser for too long. even if i know i'm right in the long run.
i just hate babysitting trades so i do my best not to rot with a loser for too long. even if i know i'm right in the long run.
I'm with you on that. One of the best things to learn is how to cut your losses and move on. Waiting for a loser to turn around causes you to miss opportunities elsewhere with that money.
That is the reason you have to set a "stop loss order" on every trade you make, as FGlory mentioned earlier. For some of the newer folks, a stop loss is a number you set that you want the stock sold at if it declines. For example, you buy shares of XYZ at 100. You then decide a percentage that you are willing to risk, say 8-10, maybe more if it swings a lot. I usually keep it at 10% regardless. So, you would set a stop loss order at 90.
If you are right and you start to gain points, you want to protect your gains and move your stop loss up. That's called a "trailing stop loss". You make 5 points on XYZ so now it's trading at 105, move your stop loss up to 101. You've now locked in profit of 1 per share. (a quote from a professor..."I'm more concerned with the return OF my money that the return ON my money) Keep moving the stop loss up if it climbs more. But by all means, USE STOP LOSS ORDERS.
No one is right on every trade, even the best professionals are wrong sometimes. I'm wrong a lot. BUT, I learned a long time ago to cut my losses quick and move on, and that's what seperates good traders from bad. Look at it this way...you can be wrong three times and only lose 8% each time, then correct once and hit for over 25% and that makes up for three mistakes. Be right 33% of the time and you'll do ok.
You might see the stock hit your stop loss, then turn right back around and go back up. That's called getting "whipsawed" and it sucks, but it happens. Suck it up and either buy back in or move along to something else.
And that's the other problem...knowing when to take profits is just as hard as when to cut losses. You're absolutely right.
The book on the right in this picture has a whole chapter dedicated to how to sell and take profits. And yeah, speaking from experience it is pretty hard to do. But if you use a trailing stop loss like I mentioned above it makes it easier.
O'Neil teaches in his book that you should take profits in the 20-30% range, unless the stock you pick makes 20% within I think a month. In that case you should hold it longer since it stands a good chance of running for more percentage.
If you were to trade options like I do you'd get good at taking profits very fast. You have no choice, options can fluctuate 50, 100 percent a day sometimes. For example, I bought something on a Friday a couple weeks ago and on Monday it went 130% for me. Instead of selling and locking in that beautiful, hard-to-reach percentage I felt that it had more to go so I held. Next day that 130% gain got reduced to a 50% and I sold. Still made 50% profit in two days, but kicked myself for not taking the big boy on Monday. (Mark, plaese to spare me the "pigs get slaughtered" Cramer nonsense). Best part is that the whole trade was based on a weather forecast.
Here's an example, let's all play along with Sween on this one. I'm holding some shares of Google at around 345 that I bought in late October when the stock broke out. It's at 430 now. Never mind how many shares, that's not important.
Here's what you don't know. Google just got added on Friday to the Nasdaq-100 index. It means that any mutual fund or exchange traded fund or tracking stock that bases itself on that index HAS TO BUY THE SHARES. So basically, by getting added to the index Google just gained more institutional buyers. And, these funds have to buy more shares of the companies with the largest market capitalizations than of the smaller ones. So Google is in a good position.
I'm sitting on 19.5% in a little under two months. I have a stop loss set, loose though because Google moves around a lot. What should I do? What would you do?
man this thread has some , but reading these replies from the heavyweights in the game makes me nervous about investing in the market. I've never invested in stocks but been itching for a while, if only I had some spare cash. Well, I just got my bonus, and was thinking of starting with a bit of it stocks.
my question: is it worth going in with $1000 or so? I know that's probably a laughable amount in the real world, but that's all I'm willing to risk at the moment.
i just enrolled in a 'fundamentals of financial investing' at my local community college...hopefully itll help.
Comments
I'm not heavy in the game at all. But I like to know this shit.
I'm hugely risk averse and ADD, I like to just sit on my shit because otherwise I'm a bundle of nerves and I'm concentrating on stocks not my primary business. Most folks, if you're like me, keep your eye on the cue ball because without that you can't continue to build your portfolio.
i've actually never read a random walk down wall street - i don't think it would help me all that much so i never looked into it. i would strongly advise anyone to learn how to manage cash and positions first, and paper trade until you have a decent set of rules. follow them strictly. to be a successful trader you have to be mechanical with your execution. if you know how to manage your money you'll be able to make your mistakes early and still stay in the game.
a good place to start in terms of reading would be reminiscinces of a stock operator by edwin lefevre. it's sort of an autobiography - really quick and interesting read - but he lays down a lot of the basics in that book. get those down cold before you start exploring specific theories about trading.
I'll check out reminisces... sounds interesting.
This is one that I've referred to -
http://www.amazon.com/gp/product/0471445509/ref=pd_lpo_k2a_1_txt/002-5762167-7015215?%5Fencoding=UTF8
Build a financial plan with a professional advisor that you trust. Together you can assess your goals, tolerance for risk, and multiple strategies to achieve those goals. Then meet at least once per year to discuss changes to your plan. Also don't forget to cover your ass with all the right insurance. Health, Life, Disability, Homeowners, etc. No reason making all these grand plans when one death, accident, etc can wipe out the entire thing.
I respect those here that trade stocks for a living. I am also in the business, but only place people in individual stocks if they have over $200k to invest. I also outsource the daily buying and selling to my associate who lives and breathes this shit on the daily.
For all you amatuers out there, keep it simple. Dollar cost avergage into the market, don't try to time it, slow and steady will win the race over the long haul. Get an advisor to help you because it's a madhouse out there of products, strategies, etc.. Like I tell my clients, I could probably do a lot of research and spend the time to learn to fix my car, but I'd rather have it done right and pay a professional.
Peace,
Cortez
Not as safe as bonds but at least real estate moves much more slowly than stocks. You won't lose your ass overnight.
This book is authored by Edwin Leferve, but is really written by Jesse Livermore. I'm not sure if he told the story to Leferve or if Leferve is a pen name for Livermore. Livermore is considered to be one of the all time great traders on Wall Street (and is also in my "heroes" list on my myspace page) and operated around the great depression times.
The book is not easy to read because it uses a lot of 1920's era terminology. If you have a good handle on how the market operates you can understand what he is talking about. Dude went flat broke two or three times, but also was so wealthy at times that once he came close to collapsing the stock market with a short bet and was personally contacted by them asking him to not trade that day for the good of the country. That's juice.
Another good thing to read is "Extraordinary Popular Delusions and the Madness of Crowds". It's THICK and written in the 1800's, but is the best thing I can think of to learn about...well, to learn about extraordinary popular delusions and the madness of crowds. It's crowd psychology basically. Goes into the tulip bulb craze, and other times in history where people got so caught up in crowd hype that they behaved irrationally with their finances, and of you bet against them you would eventually become rewarded. Case in point...the bursting of the internet bubble a few years ago; people bidding up anything.com to totally ridiculous levels. If you were patient and smart and took a position against the hype you are a rich motherfucker these days. Another recent example is the stock Taser. Got bid ridiculous last year and eventually crashed when the smarter money prevailed. Check the chart..TASR.
I worked with a guy who got rich through this thinking (also called contrarianism). I remember when the Nasdaq crossed 4000, I asked him how soon he thought it would be before it crossed 5000, he said "Matty I don't know, but if it's within 6 months I'm gonna short that baby and ride it all the way down". He probably made a couple million, then retired and moved upstate somewhere.
There's another book I have which is written by Michael Parness, called "Rule The Freaking Markets". It's one of the easiest books to read for a beginner, and is a solid introduction into how to trade trends. I made a ton of money off of a couple of things I got from that book. Dude runs a website called trendfund.com, but I've never looked at it.
Here's the thing with financial books. They all have a lot to say, but it's hard to digest and absorb every little thing in the book. I got to where I am today by reading anything I could get my hands on and taking at least one or two things from the book. If you only read one book and only learn one method, what are you going to do when that method isn't working for you anymore? Better to have a whole arsenal at your fingertips.
-Sween.
i just started reading this a few weeks ago actually. i'm kind of having a hard time getting into it ... it's that 1850's style writing i guess. i have it at my desk though and i'm planning on picking it up again soon.
recently i've been reading a bit about cycle theory, especially for setting price and time targets. i've set a few intraday price targets recently that were so accurate that it was a little uncanny.
this here is supposed to be one of the best out there. my copy is in the mail right now so i can't say whether it's worth the money or not (it's a little pricey). the profit magic of stock transaction timing by j.m. hurst is also apparently very good.
my question: is it worth going in with $1000 or so? I know that's probably a laughable amount in the real world, but that's all I'm willing to risk at the moment.
Written in 1951?? It amazes me that some of the best books to read were written 50, 100, 150 years ago. Look up in this thread, there are three mentioned that fit this category. Throw in "Think and Grow Rich" while we're at it.
I just got back from an uplifting holiday dinner, I feel charitable and am about to put together a nice fat post for this thread if I can stay awake.
This is that "Rule The Freakin Markets" joint that I mentioned in an earlier post. This is the hardcover, it's in a paperback version now I think. I recommend this for a beginner, real easy to read and good information that you can put to use right away. I made money off this, and referred back to it a couple times including this week.
This one is about finding stocks that move in price ranges and buying at the bottom or shorting at the tops of the range while it rolls along. I was disappointed in the purchase to be honest, don't buy it.
"Trading for a Living" is advanced and a bit expensive. It's basically a textbook, actually I think there is a workbook that goes along with it which I didn't buy. It's well worth the price, but not the first thing you want to read if you are just getting started. You have to be REALLY into this shit to read this and have a working knowledge of how things work to be able to get through it.
These two are BIBLES for some people. Same author for both, I read the blue covered one when I was young and it's the one you want to read before the other one. These books should be read with a copy of the Investors Business Daily newspaper at hand, as they are written by the publisher of that paper and they kind of go hand in hand. You'll see what I mean if you go this route. This is not for buy-and-hold and forget about it investors, it is for people who want to move money around and be disciplined about it. I highly recommend these books. Blue cover first though. Read it with a highliter too, there is so much good info in here you'll want to mark it as you go so you can refer back to it. For real, these are bibles for a lot of people out there. You need these.
Options are risky as shit and you need elephant balls to trade them. These are advanced books. If you want to go balls out and have some money you can stand risking (I lost 100% on one investment in options last year, but also made over 100% 7 times this year as well), options or futures are the way to go. I think there are books that are more suitable for beginners though, but I'm not up on them.
This was a good one, I never finished it though I kind of skipped around in it to chapters that I felt I needed to read first. It's a primer on how the markets have changed and how the old "buy-and-hold" strategy does not really fit anymore. Also discusses how the internet has changed things, basically lays out how investing has changed for the mid-2000's. Pretty good. I heard the author interviewed on the radio and he was interesting, that's what made me buy it. I should look at it some more.
The book on the left is about buying the companies that have their own corporate insiders (CEOs, directors, people like that) buying shares. You can find that information easily, but honestly I just summed up the book in one sentence. It's a waste of time. They say the same shit in every chapter but word it differently. If a CEO has faith in his own company and is buying up shares, that company is worth a look. Fuck that book, you don't need it. The one on the right is good, sums up the philosophies of a few top traders including Jesse Livermore and William O'Neil. Good, and cheap and thin too. Fast read and worth the price because it might lead you in a direction you didn't know about.
These are discussed in the thread already. On the left is a printing of Reminiscences of a Stock Operator (there are many versions, it's a classic) and on the right is Extraordinary Popular blahblahblah. Both are mentioned above, in posts by myself and FadedGlory. At some point in your education you have to read these books or you are soft.
I just started reading this and it's good so far. Broke out the highliter for it, only 50 pages in though. I like it. Breaks down how to catch price swings.
These are good too, but I just started reading them also and am only about 100 pages into them. Just One Thing is a bunch of wealthy dudes dropping one nugget on you that they feel is crucial knowledge to have. It's a good book, but not for freshmen. More for seniors. The other one, Ordinary People Extraordinary Profits; I broke out the highliter on that too. It's technical though, and not the first book you want to read. But keep an eye on it for the future.
I got some more books on my work truck and a few loaned out to some folks, but I think there are enough here for you to look into.
I got another post planned for tomorrow which will help some of you dudes also.
I have a couple of those but cot damn, time to bust out the half.com
cheers,
M
Which ones do you have? Did I point you in the direction of the O'Neils last year?
that crowds book look hot
I just go to the library... ?
do you want to invest for the longer term or actively trade it?
does actively trading mean looking at the numbers every day? I'm not into just having my money sit somewhere -I'd rather be actively involved. Does it make sense to actively trade such a small amount of money? I mean, there's a small fee everytime you trade, right?
I need an "stock market for dummies" that's how much I know about this... I'm just wondering if it's worth my time to learn about it if I only have a grand to invest - or should I just put it in my 401k?
i just hate babysitting trades so i do my best not to rot with a loser for too long. even if i know i'm right in the long run.
I'm with you on that. One of the best things to learn is how to cut your losses and move on. Waiting for a loser to turn around causes you to miss opportunities elsewhere with that money.
That is the reason you have to set a "stop loss order" on every trade you make, as FGlory mentioned earlier. For some of the newer folks, a stop loss is a number you set that you want the stock sold at if it declines. For example, you buy shares of XYZ at 100. You then decide a percentage that you are willing to risk, say 8-10, maybe more if it swings a lot. I usually keep it at 10% regardless. So, you would set a stop loss order at 90.
If you are right and you start to gain points, you want to protect your gains and move your stop loss up. That's called a "trailing stop loss". You make 5 points on XYZ so now it's trading at 105, move your stop loss up to 101. You've now locked in profit of 1 per share. (a quote from a professor..."I'm more concerned with the return OF my money that the return ON my money) Keep moving the stop loss up if it climbs more. But by all means, USE STOP LOSS ORDERS.
No one is right on every trade, even the best professionals are wrong sometimes. I'm wrong a lot. BUT, I learned a long time ago to cut my losses quick and move on, and that's what seperates good traders from bad. Look at it this way...you can be wrong three times and only lose 8% each time, then correct once and hit for over 25% and that makes up for three mistakes. Be right 33% of the time and you'll do ok.
You might see the stock hit your stop loss, then turn right back around and go back up. That's called getting "whipsawed" and it sucks, but it happens. Suck it up and either buy back in or move along to something else.
And that's the other problem...knowing when to take profits is just as hard as when to cut losses. You're absolutely right.
The book on the right in this picture has a whole chapter dedicated to how to sell and take profits. And yeah, speaking from experience it is pretty hard to do. But if you use a trailing stop loss like I mentioned above it makes it easier.
O'Neil teaches in his book that you should take profits in the 20-30% range, unless the stock you pick makes 20% within I think a month. In that case you should hold it longer since it stands a good chance of running for more percentage.
If you were to trade options like I do you'd get good at taking profits very fast. You have no choice, options can fluctuate 50, 100 percent a day sometimes. For example, I bought something on a Friday a couple weeks ago and on Monday it went 130% for me. Instead of selling and locking in that beautiful, hard-to-reach percentage I felt that it had more to go so I held. Next day that 130% gain got reduced to a 50% and I sold. Still made 50% profit in two days, but kicked myself for not taking the big boy on Monday. (Mark, plaese to spare me the "pigs get slaughtered" Cramer nonsense). Best part is that the whole trade was based on a weather forecast.
Here's an example, let's all play along with Sween on this one. I'm holding some shares of Google at around 345 that I bought in late October when the stock broke out. It's at 430 now. Never mind how many shares, that's not important.
Here's what you don't know. Google just got added on Friday to the Nasdaq-100 index. It means that any mutual fund or exchange traded fund or tracking stock that bases itself on that index HAS TO BUY THE SHARES. So basically, by getting added to the index Google just gained more institutional buyers. And, these funds have to buy more shares of the companies with the largest market capitalizations than of the smaller ones. So Google is in a good position.
I'm sitting on 19.5% in a little under two months. I have a stop loss set, loose though because Google moves around a lot. What should I do? What would you do?
OH SHIT!
=
the new
???
i just enrolled in a 'fundamentals of financial investing' at my local community college...hopefully itll help.
but seriously, a wealth of
-rich