Am I being logical?

[stink]

HI All,

New to the forums and the market so at the moment i am just trying to come to grips with realistic scenarious with my 10000 capitol. Now if my plan was to aim for a 10% profit on each trade and compound any profits so conitinually going for 10% of my compounding amount. Say if i did 10 trades per year and got 6 out of 10 correct and my losses were minimal due to stops etc, Am i right in thinking that with dicipline you could potential make quite a big gain on my original 10k investment over 1 year?

I am aware there is alot that can happen that i dont know about, but is this a reasonable expectation or not?

If not can you tell me why, if anyone could share what they have done as there own starting strategy in the market i would love to hear about it.

Cheers Stink

[tech/a]

Potentially yes.

Likely--if a novice trader highly unlikely.

Particularly when you may believe 6 out of 10 trades being correct may guarentee a profit.

But you have to start somewhere and at least you understand SOME of the equation,much more than most people bother with.

[stink]

hehe thanks Tech,

yeah i realise theres more to consider, would you say a beginner trader with a well thought out plan thats sticks to it, could make it happen? I have read alot on these forums about poeple commenting about if you have thought your plan out fully and considered all your options in good and bad times you should do ok. And most of all dont trade emotionally and dont be greedy.

I mean is %10 each trade even reasonable or would it be safer to say around 5%?. MY problem is i am trying to get a plan together to protect my capitl as much as i can but still get in the +, then once my capitol grows i can then afford to rethink my strategy etc?

Cheers Stink

[professor_frink]

hi stink,
IMO it's not the best thing to be aiming for any particular return on a trade. Look to make the best possible exit in any trade, regardless of what the return is, be it 5%,10% or 150%.
a small cap stock will move up 10% quite easily, but it will also be capable of going down 10% even faster!

[Smurf1976]

Money management and a proven trading system are needed before investing a single $ IMO. Otherwise it's just gambling... :2twocents

[bullmarket]

hi stink

I think it's dangerous to have a hard-wired rule in your plan saying you want at least 10% profit before you would consider selling. Obviously in some cases a stock might only rise say 5% and then for whatever reason sentiment might change and so the share price retreats.

Maybe a variation of your 10% rule could be to have a look at the company fundamentals and price chart to see if there is a reasonably high probability that the share price could rise by at least 10% before buying......ie.....have a look at where the nearest historical strong price resistance is on the chart and so your 10% rule could be modified to say that the nearest historical reistance must be at least 10% above your purchase price......but that obviously doesn't mean the share price will definitely rise by 10%...it may or may not but at least historically it had been 10% higher and if the company's fundamentals and outlook are still sound then everything else being equal there could be a reasonable probability that over time it could rise by 10% again.

just some food for thought and good luck..

cheers

bullmarket :)

[stink]

hi stink,
IMO it's not the best thing to be aiming for any particular return on a trade. Look to make the best possible exit in any trade, regardless of what the return is, be it 5%,10% or 150%.
a small cap stock will move up 10% quite easily, but it will also be capable of going down 10% even faster!

I must be missing something here, dont you exit when the stock hits your exit point or reached you desired profit level?

appreciate your input

[professor_frink]

if your buying support levels and selling at resistance levels then having a target(the resistance level) can be a valid way to trade.But it's not always the best way. Take the current mining boom for example. If you bought bhp in march 2003 and sold it for a 10% profit, you'd be doing pretty poorly. If you wait for your chosen method of trading to give an exit signal, then you have the potential to make alot more. This won't always happen, but you will come out further ahead in the long run if you have a good exit strategy.

[stink]

if your buying support levels and selling at resistance levels then having a target(the resistance level) can be a valid way to trade.But it's not always the best way. Take the current mining boom for example. If you bought bhp in march 2003 and sold it for a 10% profit, you'd be doing pretty poorly. If you wait for your chosen method of trading to give an exit signal, then you have the potential to make alot more. This won't always happen, but you will come out further ahead in the long run if you have a good exit strategy.

OK Thanks Professor i understand what your saying now. You have to excuse my noobness.

Yeah no sense in selling out if the stock is moving strongly in the up, but you still keep your stop set at a % so whatever it does if it doesnt perform your out with minimal loss.

Thankyou all for your input its great to be able to run ideas by people who are trading and have been here before.

Thanks Again
Stink

[professor_frink]

no worries stink happy to help.
don't worry about being a newbie, everyone has to start somewhere! And by asking about exit techniques, you are already a long way ahead of most newbies, who seem to be obsessed with making the best entry. For me the exit is what seperates the good from the bad. Traders can time the entry perfectly, and still walk away with a loss because they don't know when to exit.

Enjoy the rest of your weekend :)

[chemist]

HI All,

New to the forums and the market so at the moment i am just trying to come to grips with realistic scenarious with my 10000 capitol. Now if my plan was to aim for a 10% profit on each trade and compound any profits so conitinually going for 10% of my compounding amount. Say if i did 10 trades per year and got 6 out of 10 correct and my losses were minimal due to stops etc, Am i right in thinking that with dicipline you could potential make quite a big gain on my original 10k investment over 1 year?

I am aware there is alot that can happen that i dont know about, but is this a reasonable expectation or not?
...

No, that's fantasy. Try doing some research.

BTW it's "capital", not "capitol".

cheers,
Chemist

[nizar]

HI All,

New to the forums and the market so at the moment i am just trying to come to grips with realistic scenarious with my 10000 capitol. Now if my plan was to aim for a 10% profit on each trade and compound any profits so conitinually going for 10% of my compounding amount. Say if i did 10 trades per year and got 6 out of 10 correct and my losses were minimal due to stops etc, Am i right in thinking that with dicipline you could potential make quite a big gain on my original 10k investment over 1 year?

I am aware there is alot that can happen that i dont know about, but is this a reasonable expectation or not?

If not can you tell me why, if anyone could share what they have done as there own starting strategy in the market i would love to hear about it.

Cheers Stink

Why would u wanna cap ur wins to 10% only ?
U must develop entry and exit criteria for all stocks u trade..

Ull never make any big wins if u cap ur gains to a maximum of 10%... :2twocents

[stink]

No, that's fantasy. Try doing some research.

BTW it's "capital", not "capitol".

cheers,
Chemist

Thanks for that great advice chemist, so helpful!!

so do you spend all your time trying to give decent advice or looking for spelling mistakes to point out to make yourself feel ?

anyway if you have nothing constructive to add then shut your head !

[tech/a]

Targets can be very effective in short term trading.Where R/R can be set and you trade to that.

However longer time frames where corrections fade into part of a longer term trend,allowing wider exit criteria will ensure maximising return.

Smaller time frames generally have greater % winners but less R/R and longer term Vice Versa.

[chemist]

Thanks for that great advice chemist, so helpful!!

so do you spend all your time trying to give decent advice or looking for spelling mistakes to point out to make yourself feel ?

anyway if you have nothing constructive to add then shut your head !

stink by name, stink by nature.

I'm trying to discourage the notion that posting questions in this forum (or any other) will provide the means to be a successful futures trader. Someone who asks extremely basic questions that reveal a lack of understanding of the working of markets needs to spend at least a year in serious study before they are ready to trade (if ever).

cheers,
Chemist

[stink]

stink by name, stink by nature.

I'm trying to discourage the notion that posting questions in this forum (or any other) will provide the means to be a successful futures trader. Someone who asks extremely basic questions that reveal a lack of understanding of the working of markets needs to spend at least a year in serious study before they are ready to trade (if ever).

cheers,
Chemist

Look thats fine Chemist, i understand what your saying. As per the definition mate i think i am doing exactly what you instructed me to do.

Research is an active, diligent and systematic process of inquiry in order to discover, interpret or revise facts, events, behaviours, or theories, or to make practical applications with the help of such facts, laws or theories. The term "research" is also used to describe the collection of information about a particular subject

Is a forum not a "research" tool?

Cheers
Stink by Nature lol i like it!

[happytrader]

Hi Stink

I guess you've got to start somewhere. However, have you actually backtested your plan? If so how do you think you would have gone over the last 6 trading days? Fear and doubt are strong indications we haven't done our homework thoroughly enough.You might like to ask yourself these questions before you commit capital. Best tip, Never fall in love with the deal.

Cheers
Happytrader

[wayneL]

This is not aimed at anyone in particular but:

There is one thing I have observed about traders.

Those who have had their @rse handed to them on a platter, tend to become anti-trading zealots, random-walkers, buffetologists or some such "enlightened being".

The fact that others can trade successfully using patterns/indicators, stop losses, trend trading/target trading etc becomes disturbing to their psyche. They simply must point out to all and sundry the folly and impossibility of trading short term successfully. Any evidence to the contrary is cleverly evaded or arrogantly ignored.

Trying to convince these people otherwise is an exersize in futility. It is like trying to teach a pig to sing; it will frustrate you, and it annoys the pig.

What these people must learn though, is to leave tech taders alone to do there thing. By and large we leave fundie traders/investors alone to do theirs, do we not? (with a few exceptions, but these are usually enthusiastic newbies, they get over it). It is fine to point out why one prefers one form of trading over another... but c'mon, there are just too many successful traders on both sides of the fence to go on bagging each other, and maintain any sort of credibility. It's peurile!

Stink,

Ask away, research as much as you like, do it thoroughly, don't delude yourself, then go and make a bundle :D

Cheers

[stink]

HI Happytrader, thanks for the reply.

In answer to your question, No i havent back tested anything as yet and i understand that this needs to be done extensively before using my hard earned cash.

HI Waynel,

Thanks for your post, yeah i will be doing alot of research and definately not jumping straight in without doing so. I would like to think i can post my ideas up here when the time comes and whether there good or bad get some constructive feedback from the majority of you who seem to be very helpful and knowledgable traders.

Thanks Again
Stink

[It's Snake Pliskin]

Wayne,
I've got one question for you: Do you backtest?

[It's Snake Pliskin]

This is not aimed at anyone in particular but:

There is one thing I have observed about traders.

Those who have had their @rse handed to them on a platter, tend to become anti-trading zealots, random-walkers, buffetologists or some such "enlightened being".

The fact that others can trade successfully using patterns/indicators, stop losses, trend trading/target trading etc becomes disturbing to their psyche. They simply must point out to all and sundry the folly and impossibility of trading short term successfully. Any evidence to the contrary is cleverly evaded or arrogantly ignored.

Trying to convince these people otherwise is an exersize in futility. It is like trying to teach a pig to sing; it will frustrate you, and it annoys the pig.

What these people must learn though, is to leave tech taders alone to do there thing. By and large we leave fundie traders/investors alone to do theirs, do we not? (with a few exceptions, but these are usually enthusiastic newbies, they get over it). It is fine to point out why one prefers one form of trading over another... but c'mon, there are just too many successful traders on both sides of the fence to go on bagging each other, and maintain any sort of credibility. It's peurile!

Stink,

Ask away, research as much as you like, do it thoroughly, don't delude yourself, then go and make a bundle :D

Cheers

The way I see it is there will always be communists and democratic people, just like tecchies and fundies.

[wayneL]

Wayne,
I've got one question for you: Do you backtest?

Yes,

But, I trade patterns which are are hard to test mechanically. I can't put TOO much stock into the results.

But I have 5 years of real trading results, which I think is more valuable.

Cheers

[It's Snake Pliskin]

Yes,

But, I trade patterns which are are hard to test mechanically. I can't put TOO much stock into the results.

But I have 5 years of real trading results, which I think is more valuable.

Cheers

Agree there Wayne, thanks.

[Bobby]

Agree there Wayne, thanks.

Hey Snake nice to see you back posting .

Snake, You a pattern trader . :confused:

I thought you were a Evolution type trader using timing & crowd movement to outwit the mob ?

Bob.

[It's Snake Pliskin]

Hey Snake nice to see you back posting .

Snake, You a pattern trader . :confused:

I thought you were a Evolution type trader using timing & crowd movement to outwit the mob ?

Bob.

Hey Bobby,

Patterns, swings anything to profit off.

Evolution type? Outwitting the mob is difficult because you have to be prepared to be wrong. But if your timing is good......Crowds make most a lot of money, lets push it up until...........

Opportunity is presented in front of you everyday :alien2:

[MattThomson]

The only advice I can offer so far is too read as much about the company as you can. Understand the possibilities for the future, the expected returns for each possibility and the probability of each possibility. Understand the key external factors that affect each company such as a commidity price, the interest rate, the exchange rate, etc. You can even take it as far as looking at the companies directors and learning about their past and, if they were the director of another company, looking at how that company did. Another good thing to do is too look at another company in the same sector with similar operations, but at a more advanced stage, and looking at their history. Look at charts and see what affects information releases had on the price. Learn to identify when a price is too high and get out before the correction, and then get back in when the price goes too low. I have seen many charts where after an announcement the price oscillates around the new price, with the oscillations decreasing with time. Identify the companies on a trend, and even by looking at a 20day moving average you can identify the peak/trough of the trend.

These are just some of the things that I have learned over the past few weeks that I have been trading. Currently I have made no profits, and a $200 loss (although this will hopefully be eliminated in the next few days as I still have the stock). If anyone has any tips like these, or disagrees with any that I have given, please tell me :) I'm still learning.