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I know nothing about stock trading. Where do I start?

Discussion in 'Investing/Trading/Cryptocurrency/Altcoins' started by ChrisS417, Dec 2, 2007.

  1. ChrisS417
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    ChrisS417 New Contributor

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    Ok well I don't know nothing about trading, just one thing.
    Buy, hope it goes up, sell. Rinse repeat.

    In my on going effort to raise my financial IQ, I've came upon the realization that I should probably diversify my study beyond real estate, and start the process of learning how the stock market works and how to make money at it.

    So my question is where do I start? What are some books you experts might recommend I read so I can get the vocabulary down?

    I want to learn how to successfully trade myself, even if it means losing some money to ingrain the lessons to be learned. I don't want to just give my money over to some broker and have him do it for me leaving me in the dark and learning nothing.

    I was thinking of just reading some books, taking $500-$1000, signing up with Scottrade or something similar, and seeing what happens.

    Any thoughts, feedback, opinions, and/or advice would be greatly appreciated.


    Thanks,
    Chris
     
  2. dino23
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    dino23 New Contributor

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    well since no one responded and it's been 4 days, i'd advise you to hold off and get some information first. find some one who's doing what you want to do (successfully) and make a trade with them. offer to clean their office part time or what ever service ya'll agree on while learning from them. get around some one whose doing what you want to do and willing to teach. heck, work for them if you can so you can learn the info. look for good books to read on the basics of investing. stay current in the business news, trends and fads. study business and what makes them successful.

    decide what you want to accomplish (goals, long and short term) and put in safety measures when trading. there are many ways people trade and what someone else do may not fit you. they may have a higher risk tollerance than you or vice versa.

    bottom line, i'd suggest, put your money in a short term interest bearing account until you are ready. and remember, don't be afraid to fail and gather the wisdom from your mistakes and others.
     
  3. CarrieW
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    CarrieW Gold Contributor Read Millionaire Fastlane Speedway Pass

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    theres a recommended reading thread in the forum. maybe go and look what others have posted there.

    I am not a stock trader as my intrest is in forex.(stocks are for later lol) but I read this awesome book called remininceses of a stock operator. awesome!

    theres more in the section on books.

    gl!
     
  4. CarrieW
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    CarrieW Gold Contributor Read Millionaire Fastlane Speedway Pass

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  5. Jonleehacker
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    Jonleehacker Gold Contributor Read Millionaire Fastlane Speedway Pass

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    I recommend:

    Trade Your Way to Financial Freedom, Van Tharp
    The Way of the Turtles, Curtis Faith

    both discuss extensively the need to develop a system and the need for proper position sizing of your trades - which most people are disappointed to hear is almost impossible with less than a $50,000 account.

    The books will demonstrate why most retail investors get slaughtered: in short it is because they believe in the myth of the perfect entry system (the ability to pick winners) and they take on way too much risk.

    Trading in the market is a lot like baseball, where getting a hit only 30% of the time can get you into the hall of fame. This means that you have to trade in a way that you can survive a series of losses and still have enough money left in your account to catch a winner that could make you a massive return.
     
  6. shaunew
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    shaunew New Contributor

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    great advice, I would say only trade one currency, say the euro to the greenback (us) Read as much info as you can on these to economy's and see how it affects their currency. Then start to look at charts provided by online trading companies and see how well you match you charting to what really is happening. After a bit start a demo and see how you do. Then if you feel comfortable with your trading skills go live with a small amount so if you lose it, it won't hurt. If you bomb go back to charting the currency's and see where you went wrong. If you succeed start looking at other major currency pairs and see how you do.
     
  7. JScott
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    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Also keep in mind that while a lot of people on this forum prefer Technical Analysis as the basis for their trading systems (and there's certainly nothing wrong with that), the other option is to trade based on Fundamental Analysis (or a combination of both).

    Warren Buffett is a great example of how successful you can be trading purely fundamentals, and he credits much of his success to Benjamin Graham. Graham's "The Intelligent Investor" is a must-read for any Fundamental Trader (and any business-person, in my opinion).
     
  8. 1320Trader
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    1320Trader New Contributor

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    I would start watching bloomberg and cnbc when you are at home.....you can quickly pick up the terminology if thats all you watch. Experience is the best teacher....you can read 1000 books and blogs but you cant get the feel of it without getting involved. Even if you dont make trades, just spend time watching the market. You also have to figure out what kind of trading suits your personality. People will tell you that this method is better than another method but there is no right method.....making money is right and there is endless ways to do it. Someone up above mentioned Tharps book (trade your way to financial freedom). Personally I didnt care for it because I'm more interested in trading discretionarily vs mechanically...but I do like the possible automation of mechanical trading. All in all you really have to find your own way in the trading business.

    its a forex article but gives you the run down of both discretionary and mechanical

    http://www.aboutcurrency.com/content/view/200/109/


    In short.....get involved.
     
  9. kimberland
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    kimberland Bronze Contributor

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    Frankly if I was making money in real estate,
    I'd continue playing in real estate.
    You don't see Buffett playing in real estate
    and you don't see Trump playing stocks, do you?

    However, if you really want to play in the stock market,
    look at how you're successfully investing in real estate
    and find a technique that parallels that type of thinking.
    Are you a real estate flipper?
    Then look into stock flipping techniques.
    Are you a cash flow person?
    Then look into cash flow opps.
     
  10. JScott
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    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Kimberland --

    Great advice! I think a lot of people think that by diversifying their investment activities, they will somehow increase their return. But the opposite is often true...by specializing in one area, you will be able to maximum your return in that area, and that maximized return will generally be much higher than a diversified return among many not-so-well-understood areas.
     
  11. kimberland
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    kimberland Bronze Contributor

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    Exactly JScott.
    Jack Of All Trades seldom get wealthy.

    I prefer to specialize
    and then if I need expertise in other areas,
    to hire for it.

    However, that is a very boring way to live
    (building wealth is quite boring, isn't it?)
    so most people prefer to jump around.

    I was having this discussion with a writer friend.
    Her first book was very humorous
    (won an award for it, actually).
    Her second book was the same.
    Now she's bored and wants to do a "serious" novel.
    Fine, I told her,
    but don't expect any of the readers
    from your first two novels
    to buy it.
    Expect to start from zero readers yet again.

    So she has a choice...
    Do the "fun" thing and make no money
    or
    do what she knows she does well and make money.

    She's going for the first option.
     
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  12. andviv
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    andviv Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

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    Kimberland, you just made three great points in your post:

    1. Specialize. Ride your One Trick Pony to success.

    2. Getting rich is VERY boring. You define your plan, you follow it, and if the plan was correctly designed you get tired and/or bored and decide to do new things just to make it more exciting. Kiyosaki mentioned this in one of his book and it really struck me as I tended to fall for that. There are just too many ways to make money these days.

    3. Your friend was already successful so now she has the freedom to pursue other endevours. That is one of the benefits of being successful, although it could also be a long term distraction and create problems.

    rep++
     
  13. zaiteku
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    zaiteku New Contributor Read Millionaire Fastlane

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    I think Kimber makes some good points, I think I tend to invest that way.

    With Real Estate I used to flip a lot (when the market was good for it) but now tend to just buy and hold my good ones and get rental income and appreciation, then roll it into something else when the opportunity arises.

    With trading I tended to trade many different stocks and would be in and out of things which worked well for me, but due to lack of time, I started trading collars more. Now I trade one or two stocks, and get money each month from cash flow or appreciation, or cash when the stock drops, then I typically buy more stock. So in a sense I guess Im treating the stock as a rental, but with downside protection as well, allowing me to place large positions in one stock. The 100 share blocks are like units in a condo to me.

    Until this post I never thought about it that way, but being less diversified has actually been better for me, income and time wise. But yes its boring as all get out. I find real estate the most boring once you get it going, as you dont even see it, only the money going in your account each month ( a little more exciting if you actualy get the physical check to deposit). And with Collars, its kind of non-directional, so youre just adjusting the trade here and there, but not watching a whole lot of things.

    I would like to break into some new things I guess, as even though its been great for me, its getting boring at times. But then again with this j.o.b. its hard to find all the time.... :smxB:
     
  14. Rufus Quail
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    Rufus Quail PARKED

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    I took a stock market class at my local community college. The textbook was How to Buy Stocks by Louis Engel. It is a simple book that explains everything for the beginner. I like Peter Lynch's One Up on Wall Street, another book for beginners. Lynch was a highly successful fund manger, so his advice has some weight.

    I advise starting with these types of basic books because they are simple. You can visit B&N and read a few pages of the various books.

    Investors Business Daily has free trial subscriptions (investors.com). IBD teaches a trading method that practically anyone can learn.

    I suggest not resigning yourself to losing money. This is not the positive approach you will need.:tiphat:
     
  15. WheelsRCool
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    WheelsRCool Contributor

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    Is getting wealthy really that boring? I mean I would imagine if you are say an entrepreneur building upa busienss you are very passionate about, that the process can be a great thing, the journey being great. Sort of like when a lot of entrepreneurs become wealthy and then they grow restless, wanting more projects to do.

    I guess it depends on the person though, maybe it depends on if one is passionate about the vehicle or not. Some people may view entrepreneurship or real-estate or investing, etc...as purely a vehicle for getting wealthy, whereas some other types are passionate about the vehicle itself.

    I have read Warren Buffet has said, "Put all your eggs in one basket, and watch that basket very closely" for building wealth.

    From my understanding, to build up the wealth initially, concentrate on one thing, but once the wealth is acquired, you can afford to diversify, for example Tim Blixseth is a real estate tycoon who is also a venture capitalist and entrepreneur, but he built up his wealth initially in real-estate.

    One thing I am wondering is I have been reading from Kiyosaki and he said that investing really well involves knowing the mechanics of businesses, such as accounting, finance, tax codes, business law, corporate law, and being able to read financial statements and so forth really well. This way you can analyze the businesses or real-estate, etc...you intend to invest in and garner a true understanding of whether the business is a solid investment or not. He said it takes a great deal of studying and devotion to garner these skills and knowledge, and of course some experience as well; he said most people have a much more limited knowledge of investing and tend just to go by the price of a stock, "hot tips," and the flow/momentum of the market and popularity of certain stocks....I'm just wondering is what he is saying pretty accurate?

    He also said that good investors don't get too concerned with whether the market is going up or down because they know how to make money in either situation...I know money can be made in either situation, but I am wondering about that because if you invest one way and the market goes the other, that could cause a problem.
     
  16. Jorge
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    Jorge Contributor

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  17. bpk1
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    bpk1 New Contributor

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    Make an account for a virtual profile on investopedia.com, it's a great way to learn, using rela marker conditions and prices.
     

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