looking at stock advice thread I had this question. I know it is not exactly real estate but then again we've so much expertise here why dont we put it to use.

What's your view of stock trading as full time job? Is it possible?
What characteristics are required?
What training would be useful?
What is the minimum capital required to earn a sustainable income?
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  • Originally Posted by wiseman
    Stoxxx,

    I have been in stocks since the mid'80s and found that only investments work in stocks, not trading (but that could be my weakness and so don't rule it out completely).


    After maybe 4 years of finding my feet, I now am able to make in the range of 12-18% consistently on my total capital each month. Thus, if you could make even 8-10% consistently, your 5L capital will make you around 40k - 50k per month.

    Of course, if you are eating out of the money set aside, compounding will ensure that even a 12% monthly CAGR will get you a handsome 14 lakhs profit at the end of an year for the 5 lakhs you put in!

    It is potentially a richly rewarding skill. But hard earned.




    Also another query...at the beginning you say that trading does not work in stocks.


    But below the post you seem to indicate that it could work though not for everyone. Is that correct?
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  • 1. If you are bearish, do not be afraid to pay down.

    Sell on signs of weakness. It takes guts to sell when price has already fallen considerably. The opposite applies for bullishness. Buy on signs of strength.

    2. Double tops and bottoms can be very profitable opportunities


    Sell at double tops and buy at double bottoms AS they form. These are potentially very profitable opportunities and you can trade them with tight stops.

    3. Act on intuition

    Intuition comes from studying the market and watching it over a long period of time. If you get a strong feeling about a market - even if you are not sure completely why - act on it. But know that feelings can be wrong and be quick to act if the market does not confirm your intuition.

    4. There is no such thing as a price that is too high or a price that is too low.

    The market is never too high or too low.

    5. Have guts when a position goes onside


    There is little point in calling a top or a bottom only to take a few points. You have to be able to hold a position.

    6. Fading moves can be very profitable but there is no room for stubborness

    When a price is at extremes and you want to attempt to fade it, take small positions and be prepared to act quickly to cut your losses if price does not turn. Look for areas where the market last found it hard to get above/below. Look carefully at the price action. Is it stalling? Remember that there is no room for stubborness in the market.

    7. Look for clues

    The market almost always tips its hand to which way it is going. If you can't see this, you haven't watched it long enough.

    8. Remember why you got in.

    If you are position trading a market and you are, for example, buying a considerable distance above support, then that last support is the reason for entry. Until that is invalidated, your trade reason still stands. The "market" knows or cares nothing of where your break even point or fixed trailing stop is. These two latter terms, if based on monetary concerns (not wanting to lose, wanting to protect profits) rather than based on technicals (keeping a valid s/r level between you and the price) are useless.

    9. Support/Resistance is the key to the market

    This is one of the only technicals that the professionals keep coming back too. Where are the support and resistance points? To determine their validity, watch the strength of the price at them.

    10. See the bigger picture

    You have to have the ability to see the bigger picture. Where are we on the higher timeframes? How much room do we have to move?

    11. Get involved

    Invariably, those that make big money, get involved. You need to live and breathe your market to make money consistently. Watch it as much as you can. Time spent watching is time spent learning.

    12. Fundamentals

    Fundamentals are useful but remember that how a market should react and how it does react are two very, very different things. Don't get married to a fundamental opinion if the price does not confirm it.


    Found this somewhere on the net.....thought to share it...
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  • TMF: John Urbanek – An example to us all / Investment Strategies


    The person who lost £33K after one year and in the process lost his wife and daughter.....a family destroyed forever......

    lessons for novice traders....stop loss.....stop loss.....stop loss
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  • Some new techniques ...

    Originally Posted by stoxxx
    Thanks a ton. Reason I took some time to respond is this post is full of some great advice for beginners and experienced alike and took me some time to really understand and appreciate all that you have said.

    Someone should make this post as a sticky for a newbie and this should be followed religiously. I am yet undecided but if and when I decide to take a plunge I'll do my best to follow the advice in this post.

    Particularly the one about money management and stop loss (I guess risk management) is great.

    I am now clearer on money management aspect I think.

    In terms of stop loss though where should one put them? as you have rightly said too tight stops will make one lose winning trades due to short terms sideways / temporary movement in other direction.

    Equally no stop losses will wipe out the whole account including all profits made and the capital with one break out against. So we need stop losses to avoid MOAL (mother of all losses).

    So in your view what's the thumb rule to place stop losses.



    Stoxxx,

    Knowing that there is no way out of the Stop Loss Paradox (except to severely limit your profit potential while keeping losses limited - where's the fun then?:D), I worked on an entirely new premise and model.

    I'm now implementing this model to take on Rohit's 5% challenge from Monday, 25th morning. This is on the Stock Advice thread.

    You might want to watch the outcome of that model. It does away completely with stop losses!!!:) In my limited experience with this model, I find that it is automatic, allows me to set targeted trades at the beginning of the day and go about my other business, while also making it a fear-free and enjoyable trading experience!

    Hopefully, sometime soon, I will be able to make it a reasonably priced, subscription model on the Web!!!

    cheers
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  • its not easy to make money as wholetime trader. Exceptions always exist.

    but my view is if one understand fundamental and technical analysis well , he shall try it parallelly for some time
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  • Originally Posted by wiseman
    Stoxxx,

    Knowing that there is no way out of the Stop Loss Paradox (except to severely limit your profit potential while keeping losses limited - where's the fun then?:D), I worked on an entirely new premise and model.

    I'm now implementing this model to take on Rohit's 5% challenge from Monday, 25th morning. This is on the Stock Advice thread.

    You might want to watch the outcome of that model. It does away completely with stop losses!!!:) In my limited experience with this model, I find that it is automatic, allows me to set targeted trades at the beginning of the day and go about my other business, while also making it a fear-free and enjoyable trading experience!

    Hopefully, sometime soon, I will be able to make it a reasonably priced, subscription model on the Web!!!

    cheers


    thanks Wiseman....looking forward to it.....

    I'll be one of first subscribers for your model....when you can publish it....

    is it 5% per month challenge?
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  • Originally Posted by hporwal
    its not easy to make money as wholetime trader. Exceptions always exist.

    but my view is if one understand fundamental and technical analysis well , he shall try it parallelly for some time


    true but if you can make it then it is worth it...
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  • Nope, 5% per week!

    Originally Posted by stoxxx
    thanks Wiseman....looking forward to it.....

    I'll be one of first subscribers for your model....when you can publish it....

    is it 5% per month challenge?



    Nope, Stoxxx. Challenge was 5% per week.

    Today, I traded as per Rohit's guidelines (single trade, buy, sell and 5% in a week - which is a total gamble if you ask me!:D).

    Luck was on my side. Without even using my system, simply doing a strangle, I returned 6.9% in 1 day itself!!!:D

    But don't take that too seriously. It was a gamblers trade and only needed some tactics (like taking a too-good profit and letting the loss maker on the reverse side recover a little).

    My system's engines are still idling and will get into action tomorrow and the days after that. Lets see how much they can extract this week.

    Incidentally this week should be quite volatile with RBI's moves and the US Debt Ceiling drama, not to mention the ongoing EU crisis.

    cheers
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  • Originally Posted by rohit_warren

    Compulsive trading kills



    nice one ...
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  • Originally Posted by wiseman
    Nope, Stoxxx. Challenge was 5% per week.

    Today, I traded as per Rohit's guidelines (single trade, buy, sell and 5% in a week - which is a total gamble if you ask me!:D).

    Luck was on my side. Without even using my system, simply doing a strangle, I returned 6.9% in 1 day itself!!!:D

    But don't take that too seriously. It was a gamblers trade and only needed some tactics (like taking a too-good profit and letting the loss maker on the reverse side recover a little).

    My system's engines are still idling and will get into action tomorrow and the days after that. Lets see how much they can extract this week.

    Incidentally this week should be quite volatile with RBI's moves and the US Debt Ceiling drama, not to mention the ongoing EU crisis.

    cheers


    so more than double your wealth in a year or much more if you compound it...

    nice one...

    I am learning that patience is key above all....as I think Buffet said stock markets are mechanisms to move money from impatient to patient....


    letting your trades run in either direction and for that size of the trade is important i.e. whats at stake....too big a leverage can run emotions high and make you take calls impatiently....

    lessons for a novice....
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  • the reason I say above is I ran a huge (from my perspective) gamble of £100 per point for FTSE trying to swing trade....

    the markets turned in other direction the moment I dealt the ticket and kept that way for a 2 hours.....previous me would have closed when I was almost £1500 down...but I was quite clear about my reason to short FTSE and ignored the screen.....at the end nice profit of £1000 could have been more but I had placed a limit order to close the trade when target achieved....I had a stop loss but was pretty distant and again earlier me would have lost this trade with a tight stop....

    but again pure ....this actually worries me that I do a few trades with discipline and then there is one that lures me to the self destruction...but so far it has turned my way but not good to continue....

    as someone said a loss will teach far more than these profits...
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  • Control is the essence of good trading. You can’t control the markets, but you can control your actions. You either have the control or you hand it over. This is a multi-layered statement, which I will explain later. As a trader, ‘handing over’ control is putting it lightly. Realistically, you get beaten into a bloody pulp and have no other options but to submit.
    Are you on borrowed time?
    If you are doing any of the following actions, then you are trading on borrowed time:
    1) You go ‘ALL IN’ on any single stock aka a Hail Mary.
    2) You go all in on a stock position into an earnings report or an FDA meeting
    3) You are constantly ‘praying’ for a position to go your way even though all your original premises and signals have broken down
    4) You start justifying your trade position with a ‘longer term’ out look and decide to ‘invest’ or ‘swing’ the trade.
    5) You keep trading to ‘make up’ the commissions

    6) You keep trading to make up losses on the day, even through the setups are blurry
    7) You go double, triple or more of your normal comfort level size on trades after each stop loss--- especially when it’s during consolidation periods
    8) Your intraday losses are greater than 10% of your account
    9) You can’t leave the screens for fear of missing an opportunity, not even to go to the bathroom
    10) You regularly pray for just one more miracle trade! (several times a day)
    There’s a fine line between having control and plunging head first into the
    Miracle Whip-ped
    After a miracle trade, a trader will come to one of two conclusions. This is where the fate of the trader is sealed.
    The trader will realize how lucky he was, take a step back and reevaluate his methods objectively. He will take the necessary steps to get back in control and maintain control. Never for once will the trader mistake the miracle trade for some great feat of trading ability. He got lucky. He won’t be so lucky the next time.
    Or…
    In the absence of reason, the trader will chalk it up to skill and natural born talent. Lol. The miracle trade has now embedded a dangerous precedent in the mind of the trader. In the guise of a profitable trade, the market has placed a ticking time bomb into the mindset of the poor trader. The trader will go on as if nothing has happened. He will inevitably find himself in the minefield again. He may survive again, which makes it even worse. With each successive miracle trade, the trader gains more false confidence. Instead of avoiding the minefield, this foolish trader now actively seeks them out. It’s like a scene from some B rated horror flick where the victim is completely unaware of the psycho killer behind him. It doesn’t take a genius to figure out the inevitable conclusion to this story. Let’s just say, dead man walking. The best way to not get blown up in a minefield is to not place yourself in a minefield
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  • Maybe I will paper-trade the UK Indices?

    Originally Posted by stoxxx
    Control is the essence of good trading. You can’t control the markets, but you can control your actions. You either have the control or you hand it over. This is a multi-layered statement, which I will explain later. As a trader, ‘handing over’ control is putting it lightly. Realistically, you get beaten into a bloody pulp and have no other options but to submit.
    Are you on borrowed time?
    If you are doing any of the following actions, then you are trading on borrowed time:
    1) You go ‘ALL IN’ on any single stock aka a Hail Mary.
    2) You go all in on a stock position into an earnings report or an FDA meeting
    3) You are constantly ‘praying’ for a position to go your way even though all your original premises and signals have broken down
    4) You start justifying your trade position with a ‘longer term’ out look and decide to ‘invest’ or ‘swing’ the trade.
    5) You keep trading to ‘make up’ the commissions

    6) You keep trading to make up losses on the day, even through the setups are blurry
    7) You go double, triple or more of your normal comfort level size on trades after each stop loss--- especially when it’s during consolidation periods
    8) Your intraday losses are greater than 10% of your account
    9) You can’t leave the screens for fear of missing an opportunity, not even to go to the bathroom
    10) You regularly pray for just one more miracle trade! (several times a day)
    There’s a fine line between having control and plunging head first into the



    Stoxxx,

    Interestingly I noticed you are trading in GBP with FTSE.

    I handle some money of some US friends in India, but since I do options this money is not repatriable - just building an alternative for them.

    But this new system can basically trade anything that moves. So, I have a medium-term idea of trading US market handling their US accounts from Bangalore.

    Why not also UK markets the same way?! :D

    Just a thought!!! I will turn my attention to these markets after ensuring the system works fool-proof for a couple of months under various condition and also add some safety features like roll-over model, etc.

    Unfortunately Indian Brokers do not provide a s/w API to tie my system with theirs. Otherwise, given that the model is doing all the decisions on price/volume, it will become an ideal automated trader of sorts.

    Unlike High Frequency Trading, I like to call this Smart-Frequency Trading!:D

    cheers
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  • apologies Wiseman. I noticed your post only today. Yes that would be a good idea to explore.
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  • a good website for those interested in forex trading.
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