Newbie with a bunch of Questions

[DionM]

Hi all,

Hoping some of you might be able to help me.

Background: 29yo married with family, engineer. In other words, conservative as all get out :D Have dabbled in the stockmarket and have a small portfolio, all funded out of our own pocket (no loans). Have the tried and true like Coles, CBA, Telstra1/2/3 etc. Lately took a punt on a couple of interesting stocks (eg AMP China Growth Fund) and dabbled with some of the bigger Uranium stocks (eg PDN, though I bought only yesterday). Also totally mistimed buying BHP Billiton some time ago and bought at 29.90 :banghead: Who said you can't go wrong with bluechips no matter when you buy :rolleyes:

Anyway, I'm looking to start playing the game a bit more and move away from blue chips, and also looking at a margin loan eventually to get some leverage. More Uranium and Gold stocks maybe, plus Biotech and Energy.

I have two aims - for some I am investing for the long term - eg CBA - maybe 20yrs. Will only sell when it comes to big life events - helping my children buy a house, etc. However I'd also like to realise some short term profit as well - not necessarily day trading, but buying and selling within the 1 year.

So I'm after a few recommendations.

Books - what should I read to learn about how to 'read' share charts? I mean I know the basics, but how to read trends etc I guess. And I guess what sort of size share parcels to buy, at present I buy based on price and $1500 total seems to be my sweet spot / confidence level. (Except BHP where I bought 200 shares at $29.90ea :banghead:)

Brokers - who is a good one? Initially I would continue with our own funds, spending between $1k and $2k on various companies. I currently trade with Sanford.

Stock info - Lack of information frustrates me, I hammered the heck out of the asx site with delayed prices and charts the other day. I'm thinking of paying $9.95 / mo for Sanfords premium package to get live charts, etc, but I wonder if I can get the same level of info for free elsewhere? Charts with price and volume (I know I need at least those), watch screens, market reports, news etc are the kind of thing I'm looking for, I guess.

Software - Is there anything good for analysis, or are the tools provided on some brokers' sites pretty good? I get daily emails from Sanford with closing prices (in insight trader format, which I don't have but I've learnt the format of the file and browse it with notepad).

[julles]

Ok firstly books for Charting and this ones good for trends, moving averages etc.

Secrets for Profiting in Bull and Bear Markets
by Stan Weinstein

Charting packages
http://www.incrediblecharts.com.au/ Free for one month, delayed Data 12 hours I think.
$18.00 per month hourly updates, very good value with stock screening ability.

www.bigcharts.com (you still have to refresh the chart) Just place au:bhp to get the chart and quote.

Sanford Pro $79.95 a month for dynamic data if you trade intra day Free if you make a number of trades per month. I can't recall how many sorry I don't pay for it. Up to the minute charts

The $9.95 would probably suit you as you'll be eod trading?

Anyway I use IC charts for the overall big picture and Sanford 1 min and 5 min charts (the sanford pro package) intra day.

Good luck with it.

[Realist]

I'm looking to start playing the game a bit more and move away from blue chips, and also looking at a margin loan eventually to get some leverage

To me this sounds like a suicide mission.

A newbie, borrowing alot of money to speculate.

Leverage works both ways, and because you are paying interest and you may get a margin call it can kill you if it works against you.

Don't do it!

[DionM]

julles - thanks for the book recommendation. Will look into it. Will also look at those chart packages.

realist - I guess the margin thing is if/when I get confidence, and was more to give an indication of the direction I will head in if I get comfortable. That could be anything from 6 to 24 months away, certainly I'm not going to dive in tomorrow. I am a very conservative person so of course I will only take that course when I am confident I can avoid a margin call; until then it will be funded out of our own pocket.

[canaussieuck]

To me this sounds like a suicide mission.

A newbie, borrowing alot of money to speculate.

Leverage works both ways, and because you are paying interest and you may get a margin call it can kill you if it works against you.

Don't do it!

Given the fact we are in a three wave corrective move at the moment, i think it would be a good time for you to paper trade for a few months. Take this time to formulate a plan on how you intend to trade/buy and hold. Watch your capitol and what happens to it, as your learn and study, and analyse. Try very hard to be as thorough as you would be if it was real money. You'll need to spend allot of time, about 5 hours per day or more, especially when your learning, if your really serious.

If you worry about missing an opportunity, don't worry there will be plenty once you learn to preserve your capital.

Keep in mind that most who are profiting from short term moves are probably swing trading long and short right now. If you can't short the market then your not going to make much money. If your a buy and hold guy, then even Realist would tell you that there would be bargains to be found later if your patient and stand aside while the market corrects.

I jumped in last May, had no idea what i was doing, but i had money i was willing to lose. Thankfully the bull market resumed its trend, and even a fool could have made money. Thankfully i found this site too.

Good luck, and remember there are no stupid questions questions for newbie's.

Cheers,

[Tekmann]

Hi Dion & Welcome to ASF.

Whilst you are seeking out the tools that will aid you on your journey, the most important aspect, that I now beleive should come first is the trading or investing psychology.

The tools, charts & fundermentals will be much easier to absorb than the psychology & mindset. IMO

Cheers
Tekmann

[nizar]

DionM - Nice, i wish my parents would help me buy a house! LOL
Also, dont even think about leverage.
It will destroy you.

Be prepared to lose money.
Trading stocks is probably not the hardest way to make monet but its certainly the easiest way to lose it.

I would recommend 3 books to read:
1) Stan Weinstein - Secrets for profiting in bull and bearmarkets
2) Van Tharp - Trade your way to financial freedom
3) Alexander Elder - Trading for a living

After you have learnt about risk management and money management (books 2 and 3 cover this briefly), you can paper trade, or if you are confident, and have a trading plan, you can go straight in.

And Can - as for this being a corrective move, wave 3 or watever, thats just your view - and like any other view you could be wrong (just making an objective point, though i must add that i do share this view).

[DionM]

Thanks for the extra feedback!

I'm browsing the bookstore at present and will place an order today I think. I certainly want to understand both the tech and the psych, for sure. I guess I am keen to learn about charts after my very badly managed BHP purchase right on their peak; I should have done my research rather than just hope the price would continue up (it didn't, and has remained below for some time). I sort of assumed that blue chip meant fail-safe - lesson learnt and thankfully it's only $500 or so that I am currently running behind, and no doubt it will regain that over the next few years anyway.

I am definately holding off on the margin loan, don't worry :D . While it is my own money to loose I am (a) more cautious and (b) less gung ho. Lately we've been buying around $2k parcels of shares once every 3-4 mths (the latest being PDN, like I said), our philosophy has been that our 'spare cash' (after paying home loans etc) gets divided equally between additional loan repayments and investments.

The recent purchase of PDN has missed the big increases, but I will be happy with a steady increase over the next few years.

[coyotte]

Given the fact we are in a three wave corrective move at the moment,

Cheers,

That's only one school of analysis --- other schools may differ.



Cheers

[canaussieuck]

That's only one school of analysis --- other schools may differ.



Cheers

yeah yeah ok, fair enough. Perhaps i should have said "Given these uncertain times" :)

Cheers,

[AnalysisParalysis]

If you want a free charting package, go to spacejock.com, and get FCharts SE.

Free software, free eod data.

[Gar]

Hey Dion,

Im pretty new to this myself so im sure most of the guys here can provide some better suggestions than me but I'll share some of the things that have helped me as a newbie



Books - what should I read to learn about how to 'read' share charts? I mean I know the basics, but how to read trends etc I guess. And I guess what sort of size share parcels to buy, at present I buy based on price and $1500 total seems to be my sweet spot / confidence level. (Except BHP where I bought 200 shares at $29.90ea :banghead:)

Two books that I found essential are:

Charting Secrets - Louise Bedford
This book runs through all the basics of technical analysis like indicators, chart patterns, trends and support and resistance, candlesticks etc. all in an interactive way. Its much easier to learn something if you have to practice it as you go and this book provides that.

Trading for a Living - Alex Elder
Im sure everyone agrees that this book is an essential, it covers the psychology of traders and the market as a group, I have the audio version and find its great for a reality check every now and then.


Brokers - who is a good one? Initially I would continue with our own funds, spending between $1k and $2k on various companies. I currently trade with Sanford.

I use eTrade but its frequently down these days


Software - Is there anything good for analysis, or are the tools provided on some brokers' sites pretty good? I get daily emails from Sanford with closing prices (in insight trader format, which I don't have but I've learnt the format of the file and browse it with notepad).

Best value for money charting software is Incredible Charts in my oppinion, it has millions of indicators and a nice clean interface to work from. The demo version alows you to use it for 30 days with a 16hr delay, after the 30 days it puts ads over the interface but its only $18 a month for the full version which has a 1hr delay.

Another program I used for learning was the demo version of Pro Trader, it has a mode called tuition mode or something that hides all the data after a specified date and allows you to tick through day by day, its great for testing yourself at recognising patterns and reversals.

The most important thing you should learn before all this though is designing a trading plan and sticking to it, work out how much your willing to risk and set your stops accordingly

Best of luck mate, Gar

[Tekmann]

Best value for money charting software is Incredible Charts in my oppinion, it has millions of indicators and a nice clean interface to work from.

Incredible Charts is a good program, but seems to be falling behind the times with client needs (Fib retracement, Gann retracemtns & Indicators, Multiple Windows within program, Live and/or 20min data delays), for some years now....Recently released V5 provided little improvements...UNFORTUNATELY

However they do support the existing product reasonably well.. I admit.

I also recently strarted using Amibroker, and was blown away by the bells n whistles, and much the same price....but seem to provide no tel support.

[Boyou]

Hi
Wasn't sure where to post this question, but this is definitely a newbie query...so here goes. Have just bought a small parcel of TAM. Looking at the current price on ASX I note a volume of 2,596,396, but no movement in the share price of 13.5c.
Is this unusual? From what I have seen regarding other stocks this type of volume has been moving the price at least a small amount. Any comments?

So much to learn!

Cheers, Peter

[tech/a]

There are buyers on oneside of the auction and sellers the other.

Where transactions take place with little price movement sellers are absorbing buyers. Sellers are not chasing lower prices and buyers are not chasing higher prices.
Market is 13.5c so both buyers and sellers are transacting business "At Market".

[Boyou]

Thanks Tech...all so obvious when you explain it that way:)

[Antics]

If you want to learn to invest rather than trade then you can't go past the following resources:

1) "The Intelligent Investor" by Benjamin Graham.

This book is reasonably dense, but it is written by the godfather of securities analysis, and it is more than worth its weight in gold.

2) "One up on Wall Street" by Peter Lynch

Lynch gives some insight into how he achieved over 25% a year in annual returns while managing huge amounts of money.

3) www.berkshirehathaway.com - this contains every one of Warren Buffett's letters to shareholders from the 70's till today. They are a very enjoyable read and outline his investment process in great detail. Every one of them is worth reading.

There are definitely other books out there, but I would start with these three and progress from there.

[Boyou]

Antics, your recommendations for reading are noted... Thanks. At the mo I am definitely only an Investor...the trading thing scares the pants off me, to be truthful.

I had been toying with the idea of doing something more with my Lazy money in term deposit, then a friend of a friend spruked loudly about HYO and I took a peep at the market. Long story short..in for a dip with $1000.00. Small potatoes, but I figure if you have money riding on something you are bound to take more interest in it.

Since then I have bought into MON and TAM and Gold shares. My "Portfolio" sits at 10,200.00. So far I am down about $200.00 including Brokerage fees (with E Trade).

I plan to sit on them for long time ..after all, as I have realised you haven't gained or lost anything till you cash in.


Cheers ,Y'all:D

[nizar]

I plan to sit on them for long time ..after all, as I have realised you haven't gained or lost anything till you cash in.


You have alot to learn, my friend.
That attitude will cause you to hold dogs for longer than you should.
Learn to cut your losses short, and let your winners run.
All the best with your trading/investing.

[Boyou]

Nizar, so right ..I do have a lot to learn.BUT ..maybe I will have some fun along the way.I think it's already started! The posts in here are great fodder for the mind.

Thanks for your thoughts,

Cheers Y'all;)

[Boyou]

Anyone have info on where to obtain Market CAP statistics on ASX listed companies .Been looking on ASX website but can't find anything.

Cheers Y'all:rolleyes:

[Julia]

That attitude will cause you to hold dogs for longer than you should.
Learn to cut your losses short, and let your winners run.
All the best with your trading/investing.

I agree with this. It was the lesson I took some time to learn and lost money in the process. Don't hold onto the doggies.

[tech/a]

maybe I will have some fun along the way.

If you want fun then dont trade.
Its a business.
Nizar/Julia are spot on.

"The I havent lost anything until I sell" attitude is like having a Credit card debt and saying you arent losing anything by holding it--its only when you pay it off that youve copped the cost.

Have fun --- it will be short lived.

[x2rider]

Hi folks
Going back to dion's origanal post . I wouldn't be to harsh on yourself for buying BHP at 29.90 . It is above that at the moment and I can't even start to list the shares that have lost me more than an excepatble amount of loss.

Even when it was down at $25.00 it was still only aabout a 17 % loss . Just a word of warning . They get worse than this :(

Cheers martin

[Boyou]

Allright Already!! I get the message loud and clear..Thanks for the concern and stern warnings. ....BUT

while you are pouring the good oil,could one of you answer my previous enquiry re Market Cap info?

Cheers Ya'll:( :confused:

[bvbfan]

http://www.ascii-data.com/

Or if you want to do it my each stock then tradingroom is fine
www.tradingroom.com.au

[Boyou]

Thanks muchly bvbfan.....I have checked the sites.Exactly what I need.

Cheers Y'all:)

[rowes]

Books - what should I read to learn about how to 'read' share charts? I mean I know the basics, but how to read trends etc I guess.

what exactly do you mean when you say you know the basics?

When it comes to reading charts i really like the candlestick approach, a couple of authors i recomend are Stephen W Biglaow and Steve Nison. Bigalow has a couple of books out which i have read and Nison has a couple of extra, both great reads in my opinion. you are looking at 100$ + a book compared to some of the aussie authors of around 39.99$ but worth every dollar i reckon. There is plenty of free information provided by these authors on the net so you can look into to see if its your thing before parting with your hard earned cash.

[hangseng]

A book I have gained a great deal from "The 36 Strategies of the Chinese for Financial Traders" by Daryl Guppy. I paper traded for some time using a few of the strategies in the book and it worked a treat, tried for real and same result. I don't always win but each time I don't I have learnt another valuable lesson. I particularly like "sacrificing the plum to save the peach", I have saved captial and converted to profits a number of times using this strategy. Speaks a lot of trading discipline and the must do of taking profits and protecting capital.

The book also works a lot on market psychology as well as trending and trading strategies. Not a book for everyone but it works a treat for me.
http://www.guppytraders.com/gup317.shtml

I agree with others, Incredible Charts are fantastic. I have been using the free version for almost 12 months but I am about to pay for the full version. Excellent learning and analysis site and tool. I can't speak highly enough of this.
http://www.incrediblecharts.com.au/

[disarray]

hi. i'll slide my noob question into this thread.

how can i tell the which amount of the days volume is buy or sell? i use ASX and yahoo finance to track my shares but when they show volume, they only show the full volume of days trade. how can i find out which are proportion of the volume are buys and which are sells?

i'm keen to know if people are buying in or bailing out of a particular stock

danke

[nomore4s]

hi. i'll slide my noob question into this thread.

how can i tell the which amount of the days volume is buy or sell? i use ASX and yahoo finance to track my shares but when they show volume, they only show the full volume of days trade. how can i find out which are proportion of the volume are buys and which are sells?

i'm keen to know if people are buying in or bailing out of a particular stock

danke

Disarray, I used to wonder this as well when I first started out, but then I thought about it for a bit. For there to be volume there must be both a buy & a sell, for someone to buy it someone else has to sell it.

[tech/a]

Its all in the Price bar.

There is a whole trading methodology and many books written on price action and volume. Known as Volume Spread Analysis.
Quickly on selling and buying.

Take any bar.

If a bar closes higher than the open then buyers have won the day.
If the spread of the bar is wide and the close toward the high then they have had to chase higher prices to get filled.
If the bar closes lower than the open then Sellers have won the day and if the spread is wide and the close near the low then the sellers have had to chase buyers at a lower price to be filled.
If price closes at or near the open then neither buyers or sellers have been in control.


A long and involved yet very powerful trading analysis tool.

[disarray]

thanks for the responses gentlemen. i understand shares have a buyer / seller component to make volume, but is there a way to determine the ratios?

for example big holder A decides to take profit and dumps a load of stock, is this taken up by lots of little investors grabbing bits of it at a time or another whale coming along and grabbing most of it? can you tell who those buyers are (aside from ASX company announcements that is)?

also are all public shares actually owned by someone, or are there leftovers available which the company holds and wants to sell? for example during an IPO, 10 million shares are offered but only 7 million get bought. what happens to the other 3?

i have ordered some books and been forum lurking to get more information and these are a few outstanding things i don't understand yet.

cheers

[rub92me]

Depends on what datasource and or broker you have. "Rich" intraday data which shows broker codes and individual trades is quite expensive though. Good brokers (i.e. not an internet broker) don't come free either. Good to have either/both though, especially if you are serious about short-term period trading.

[constable]

Is it possible for a broker to sell his own shares back to himself and generate "false trades" to manipulate the price?
I know through westpac the trade would be cancelled and if im buying at a lower price than a sell order that i have on the same stock then the trade takes 3-4 minutes to submit while it gets reveiwed. So long as the there is no overlapping on price i can be on both sides. im just wondering if any broker can cross this boundary as suggested on the rds thread.

[tech/a]

Personally I think your all getting tied in knots over something which has little to no bearing on your long term/short term profits.

Worry about what YOUR doing not everyone else.

Volume and Spread simple who sells what to who is of no consequence.
Take care of the big issues like risk management.

[constable]

Personally I think your all getting tied in knots over something which has little to no bearing on your long term/short term profits.

Worry about what YOUR doing not everyone else.

Volume and Spread simple who sells what to who is of no consequence.
Take care of the big issues like risk management.

i was more after the fact though as these theories are bandied around much like cappers etc.

[professor_frink]

thanks for the responses gentlemen. i understand shares have a buyer / seller component to make volume, but is there a way to determine the ratios?

for example big holder A decides to take profit and dumps a load of stock, is this taken up by lots of little investors grabbing bits of it at a time or another whale coming along and grabbing most of it? can you tell who those buyers are (aside from ASX company announcements that is)?

I've heard of futures daytraders using tick/volume delta(measures volume going through at the bid or ask), and seen charts of it, so it can be done. Simply reading the tape would give you a good idea too. But unless your trade lengths are measured in minutes instead of days, it would be pretty pointless information to have.

Tech was on the money in post#32. You'll get all the information you need for position/swing trading out of the daily bar and volume.

[pacer]

I try not to over-complicate things.....money is made on simple facts and figures....delve deeper if you must, but you may only confuse things.

This worked before,atm and will in the future.....getting rid of the 'NOISE' is alway a problem for a good trader.....and usualy just ends up in gut instinct taking over anway....which in my experience .....wins 90% of the time.

Work out what is important (T/A Fundies/News) and go from there.

Works well for me....too easy.......:)

[tech/a]

Const.

Firstly your case.

Placing a buy at a lower price than their sell order.
Cant see a problem with this Ive done it often.

But at both ends of the scale at the low of a move and at the higher end of a move professionals do test the market.
Here is BLG and the comments on recient price action which as you can see were very good as future price action proved.

First is the high of a move (Note the commentary is on the bar marked and future price action wasnt known---this commentary appears AT THAT BAR)

The second is a low of a move--not known at the time---as you can see by the chart of the "Suspected high" These are alerts and warnings---other analysis confirms but wont go into it here.

The software is Tradeguider VSA EOD.
This is what I mean with regard to the importance of VOLUME and SPREAD.
When you get into this stuff youll find that your understanding of volume will be turned on its head!!

[Spineli]

A question to all,

If you had a $1m trading paper portfolio and your strategy was to make the most monetary gains you could over 3 months (regardless of the risk), and could only invest upto a quater of that in an individual stock in the ASX300,
what would be your Top 4 preferential shares?

Cheers

[tech/a]

Here are the 4 stocks with the highest volitility or "Bang for Buck" as of tonight on the ASX 300.

Information ONLY not advice to buy or sell .

[wayneL]

Here are the 4 stocks with the highest volitility or "Bang for Buck" as of tonight on the ASX 300.

Information ONLY not advice to buy or sell .
Tech

What is you BFB formula? Out of interest, I'll run it across US optionable stocks and see what it shows.

[tech/a]

((10000/C)* (Mov(ATR(1),200,S))/100)

[wayneL]

((10000/C)* (Mov(ATR(1),200,S))/100)

:eek: FWIW\/

[wayneL]

:eek: FWIW\/
Although most of those tickers are, or recently have been severely whacked.

A further filter required to get rid of the absolute rubbish.

[constable]

tech ta for that ...still reading thru mstock and bar formations and their interpretations, some are obvious others not so!!
still like to know from anyone whether a broker can legally sell to himself on market?

[tech/a]

tech ta for that ...still reading thru mstock and bar formations and their interpretations, some are obvious others not so!!
still like to know from anyone whether a broker can legally sell to himself on market?


Ask Radge on Reecap. He'll know.

[rub92me]

Okay, so while we are on volume spread. Wouldn't it be useful to know how the volume was distributed in the daily range, and if not why not?
A simple example:
Open 1.00 Low 0.95 High 1.15 Close 1.14 Total Volume 10 million. Say only 100 thousand shares were traded in the 0.95 to 1.00 range and more than 9 million in the 1.10 to 1.15 range. Would you want to /need to interpret this different if the distribution was over 9 million traded in the 0.95 to 1 range and 100 thousand shares traded in the 1.10 to 1.15 range.

[tech/a]

Okay, so while we are on volume spread. Wouldn't it be useful to know how the volume was distributed in the daily range, and if not why not?
A simple example:
Open 1.00 Low 0.95 High 1.15 Close 1.14 Total Volume 10 million. Say only 100 thousand shares were traded in the 0.95 to 1.00 range and more than 9 million in the 1.10 to 1.15 range. Would you want to /need to interpret this different if the distribution was over 9 million traded in the 0.95 to 1 range and 100 thousand shares traded in the 1.10 to 1.15 range.

Yes you can do this with shorter timeframe analysis.
Steidlmayer or better known as Market Profile is one sort of specific analysis which will look at distribution.

Trading shorter timeframe charts will do similar things in that much can be analysed from a single day bar from say 72------5 minute bars.

This would be helpful when looking for an entry or exit to a position (timing it) and if you were trading smaller timeframes particularly futures.

[nizar]

Here are the 4 stocks with the highest volitility or "Bang for Buck" as of tonight on the ASX 300.

Information ONLY not advice to buy or sell .

Since when was HDR $4.78!!!
Used to be a 7c stock.......

Is HDR even still listed. I thought it was taken over...
My IRESS and ASX site shows as invalid security...

[rub92me]

4.78 is not the price for HDR, it's the BFB value... And yes, it is no longer listed, it was taken over for just over $2 a share (a good premium over the sliding sp at that time; I remember it well :D )

[constable]

Ask Radge on Reecap. He'll know.

yep its not only possible but common practise and highlighted by a crossed trade. Provided they have a valid buyer and seller at the same price they can transact the whole amount if there are no others at that price, otherwise the transaction must be done 50% at a time.
Also according to Nick the broker can be acting as principal and take the otherside of the trade to the client.
So if its highlighted by a crossed trade then its neither concealed or can be viewed as a clandestine activity as some forumites may believe.