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Time and money for your first year or two.
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Time and money for your first year or two.

  #1 (permalink)
Trading Apprentice
Detroit
 
Futures Experience: Beginner
Platform: not sure
Favorite Futures: not sure
 
Posts: 4 since Jan 2015
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Time and money for your first year or two.

Hey everyone. I love your forum here. Tons of great info and insights. I'm new to this so I'm going to say things that don't make sense. That's what new guys are for; It's our job and we're damn good at it. And pardon the long windedness. Currently I'm reading a bunch of books, talking on forums and I want to develop great skill at swing trading and day trading. An aspiring trader needs time and money. Time to study, to learn, and money to cover expenses. Like equipment, rookie loosing streaks, research costs, normal living costs, etc. So, how do you maximize both at the same time? I'm sure other traders have figured out this problem better than I have, but here are the solutions I see so far.

1) I doubt this one will work. Hypothetically, it would be great to work for some company that is involved in trading, or maybe in the ball park. Meet knowledgeable people, learn a lot, broaden horizons etc. However, I have no back ground in finance or investing. My resume doesnít looks appealing; my only strength is learning fast and being extremely motivated to understand the job well; learn everything possible about this topic. If i am wrong about this, if there are in deed such options, such jobs, please tell me. Until someone suggests otherwise, I'm considering this option a no go.

2) I expect this next option won't work, either. Work 3rd shift at a job you can study. Like a security guard. Eventually, start trading during day time. But, how long before you save up a trading account of 20k? Probably a long damn time. Some say accounts of 5k and below are pointless. Perhaps that is not fully true, perhaps there is some "angle" to trading which can squeak you by, generate a modest profit out of a 5k account, continue to work a full time job. Continue educating yourself about trading, save up, eventually accumulate a large enough savings to trade full time. Again, I doubt this 5k account "angle" exists, and if it does I don't know what it is. Do you?

3) This may sound odd but it's doable. Semi trucks. 35k to 50k your first year. There is a lot of down time where you are not driving. While driving, truckers wait for traffic to clear up, then listen to audio recordings. Truckers get degrees for online colleges this way or learn foreign languages. Save save save, learn learn learn. Make trades during down time. Eventually, stop being a driver; trade full time.

4) Maybe some combination. Such as first #2, then #3. Figure out what the whole strategy should be while working nights, (although I'm sure the plan will change) after that, if I'm 10K or 15K short of start up capital, go drive a truck until I save the rest.

Again, I'm new, and am sure other traders have confronted this issue, have thought up better ways to handle the first two years than I have. Any suggestions? Anything important I don't know about, that would change everything I've said here?
Thanks a million.

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  #2 (permalink)
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  #3 (permalink)
Trading for Fun
Kalispell montana
 
Futures Experience: Beginner
Platform: ninjatrader
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Some good questions. Things to consider. Been thinking about some of the same things. Been looking at trading some e-micro to get my feet wet.

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  #4 (permalink)
Elite Member
Luxembourg, Luxembourg
 
Futures Experience: Advanced
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Starting out with limited capital is really tough. The only 100% certain way to increase it initially is with adding in external capital, i.e. savings / salary related. If I were you, I would focus on that initially thus your option number 3.

Regarding day-trading, others may feel different, but I would not touch futures with a $5k account, and the commissions will kill you if you try to day-trade equities.

Since you are already reading quite a few books, I would add Nicholas Darvas's How I Made $2,000,000 in the Stock Market. If I recall correctly, he traded in the 50s and 60s, but the key point is that he was travelling most of the time and only had periodic access to market prices. Not monitoring the markets all the time was a key element to his success.

If you wish to replicate his story, the book is a great starting point. William O'Neil expands on Darvas's ideas in How to Make Money in Stocks and he offers services that help in implementing his strategies, namely Stock Investment Research & Education - Business & Financial News - IBD - Investors.com, eIBD (also at the website) and MarketSmith | Stock Research & Investment Tools for Stock Market Analysis (more expensive option, but my main tool). Mark Minervini has the book Trade Like a Stock Market Wizard which reinforces a lot of O'Neil's work, but he has his own spin on the patterns and trades more frequently than the other two (although not as frequently as you may think).

All of the above authors are people that started out with "smaller" accounts and turned them into millions, thus their experience could be of use to you.

Your major winners will most likely be held for months (maybe even years), your minor winners could be held weeks and your losers will be exited when stop-losses are hit (days). This method is dependent on having a bull market driving your stocks up, and depending on your exposure, returns can be volatile, but it is the only method I have seen that gives an above-average chance of success. If you can keep your trading volume low, and bag one or two ten-baggers over 2 years, then you can make quite impressive returns.

Edit: Of course this means working for another couple of years until the account grows sufficiently. There are no real shortcuts in this business.


Last edited by grausch; February 18th, 2015 at 05:42 AM. Reason: Added a bit to the original post
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  #5 (permalink)
Trading Apprentice
Detroit
 
Futures Experience: Beginner
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Posts: 4 since Jan 2015
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Quoting 

2) I expect this next option won't work, either. Work 3rd shift at a job you can study. Like a security guard. Eventually, start trading during day time. But, how long before you save up a trading account of 20k? Probably a long damn time. Some say accounts of 5k and below are pointless. Perhaps that is not fully true, perhaps there is some "angle" to trading which can squeak you by, generate a modest profit out of a 5k account, continue to work a full time job. Continue educating yourself about trading, save up, eventually accumulate a large enough savings to trade full time. Again, I doubt this 5k account "angle" exists, and if it does I don't know what it is. Do you?

As is obvious to most, above, 'option' means a potential strategy. Below, 'option' means calls and puts. Which I don't know much about.
In terms of swing or position trading, Iím wondering if options can lower the barrier to entry. Suppose a trader is well educated, great judgment, has a nice track record. They donít let their greed or fear cause them to do something stupid. But they have an account of 5k or less.

The fact that options grant you access to more shares than you have the money to buy, but, if it fails, you only loose the cost of the option, means smaller accounts could earn higher profits.

Am I understanding this correctly?

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  #6 (permalink)
Elite Member
Chicago IL USA
 
Futures Experience: Advanced
Platform: Ninja Trader
Favorite Futures: ES
 
Posts: 5 since Sep 2014
Thanks: 2 given, 1 received

Some of my biggest recommendations are to focus on some serious time and risk management. Sometimes it's not how much money you can make... it's how much you can keep yourself from losing. The leverage with futures can really blow out your account with not enough margin. Trying out a sim account but practicing with exactly the amount you would trade was helpful when i was starting out. Granted the real world isn't always the same as a sim, but can help you define your risks and draw downs. I hear ya about getting a job at a firm.. the market is competitive especially if you do not have much experience in computer science. Save and learn to love to learn.

As for the current job, it seems to depend on what type of learner you are. If you can visualize what you hear on the audio tapes then that might be for you. If you can read books over night to visually see what topics are at hand, then maybe that route might be better for you. Just make sure to give yourself time to try these ideas out on a sim before throwing down real money. You can get a sim account with TD, which has a decent platform. TT is great for futures, but the sim only lasts around a month. If you are not looking to hold positions overnight.. AMP Clearing as some low margins.. but its up to you with what will work best for you. Just remember that works awesome on a Sim... might not work as well in the real world.

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  #7 (permalink)
Elite Member
Luxembourg, Luxembourg
 
Futures Experience: Advanced
Platform: TWS
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Favorite Futures: Stocks
 
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Jake G View Post
The fact that options grant you access to more shares than you have the money to buy, but, if it fails, you only loose the cost of the option, means smaller accounts could earn higher profits.

Am I understanding this correctly?

Don't take this the wrong way, but what makes you believe you will actually pocket these higher profits? Is this greed talking? Your reasoning above is corrected - you can only lose your premium and you can earn multiples of your premium paid if the underlying does a big move. Yet at the same time, I believe ron99 (on this forum) is one of the very few options traders who makes money. He sells options whereas you are talking about buying them.

Trading options is doable, and based on your reasoning, with limited risk and high profits there should be lots more very profitable options traders around. Yet I see very few of those. I will leave it up to you to decide why that is.

I provided a method above that is not very sexy, but it provides an above-average chance of making money. You could investigate that, or you could try to go for the lower chance options. Currently you have not even started trading yet, and you are already showing greed. It is subtle, and sooner or later it will get you...

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  #8 (permalink)
Trading for Fun
Kalispell montana
 
Futures Experience: Beginner
Platform: ninjatrader
Favorite Futures: es
 
Posts: 158 since Jan 2015
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Curious, would building (buying) an automated system be an option? This way the system could be setup and would still allow a person to work another job why the system is doing your trading. Would this be a ok way to start out?

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  #9 (permalink)
Elite Member
Hanover, Germany
 
Futures Experience: Beginner
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Favorite Futures: Crude Oil
 
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sledmt View Post
Curious, would building (buying) an automated system be an option? This way the system could be setup and would still allow a person to work another job why the system is doing your trading. Would this be a ok way to start out?

If it would be that easy, everyone'd do that.
Most automated systems simply don't work, none of the paid services, that's for sure.

Of course I can't stop you from going down that road.
But I can at least try

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  #10 (permalink)
Trading Apprentice
Boston Massachusetts
 
Futures Experience: Intermediate
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I am in the same boat. very little money to trade with.

I try to save a few dollars every month and sock it away for safe keeping

I have spent about 5 years now studying how to trade with no trades. no account.

It has been the best thing for me. In the beginning I wanted to trade so bad. now I
realize I would have lost all the money doing stupid things.

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