Newbie's goals and strategies...

[Sergio]

Good day everyone,

i am a newbie and i ready to learn a lot from all experts here =]

i have a goal and strategies as a newbie that i learn from my dad, but i need some revisions and some advises or maybe lectures about my goals and strategies..

in short, my dad is not a good trader,he start with 10k and after a year bid here bid there, now his balance is around 9.5 - 10.5 k which is no gain=[. however i still put respect on him as he is my dad, so please don't say bad things about him.. =]

goal: make $50 profit (after 40 comsec fee) from 2000 that i invested in first week..

strategies:
1= i have a look of a cheap bluechip company
1= when the declining price is going up in a day, then i will buy it at the next business day
1= when the raising price is going down in a day then i sell it at the next business day

2= i will look at the cheap bluechip company because it will give me more profit compare to the expensive one.
2= i am looking at CMG..if it up by 0.020 a week, means i may gain around 70 with 2000 invested..

3= so far i am looking for a cheap(below 2.1) blue chip (according to smart investor magazine dec2011) such as HVN (harvey norman), IMD (imdex), SDM (sedgman), LCM (logicamms), OKN (Oakton), TOX (tox free solutions), WTP (Watpac)..

questions;

1. is my goal realistic?
2. is my first strategy is dumb?
3. is my 2nd and 3rd strategy to invest more in cheap one is a better?
4. is it ok to invest on some stock which has a small sales in a day? some of it like CMG is having only 2 sales by this friday..

suggestion is more than welcome =]

and please use a simple language as heaps of advance investing term that i am not aware of =]

thankssss

regards,
Sergio

 

[Garpal Gumnut]

A plan to conserve your capital should be foremost in your thoughts.

The markets can be cruel.

gg

 

[Sergio]

gg,

i just do some search about conserve capital..
is it about ensure i not use all of my cash to invest in one basket? perhaps another opportunity come? or another better stock come? or maybe i should use a stop loss mode?

 

[suhm]

pretty hard to make a return from 2k, unless u use IB or other super low cost broker entry and exit is likely to cost you about 40 which is 2% to break even. You also wont be able to get any diversification. Personally 20% of my trades make 100% of my profit. The other 80% cancel each other out, I try to limit the blow outs but have a couple of shockers the previous year.

It is nigh on impossible to use any risk management strategy with your capital base, your position size would be to small to be worthwile.

It would seem that it would be better to paper trade, and work extra hours to increase your capital base and to see if your strategy does actually work, at the moment it sounds more like gambling than investing akin to people who have systems for roulette and such.

Not a trader or financial adviser so can't give you advice and don't know anything about your personsal situation.

Regarding your dad's performance if he started trading over the past year is not that bad. I doubt many here would have had a positive return over the past year and if he had just started out it goes doubly.

 

[suhm]

Had another look at your post what do you mean by cheap blue chip <2.1, the list are certainly not what people in the market would regard as blue chips. Not to say there aren't financially solid companies there.

I do like CMG, preferred RHD who they took out for a song but I don't own. You say you want to make $50 on your $2000. Including brokerage that is a 4.5% profit. Have a look at CMG's graph and market depth. Even with your small position you would have a large amount of slippage to get your order executed and how many swings of >4.5% do you see. You would have to time these exactgly as well, something those with a lot more experience have trouble doing all this for a profit that you should be able to earn in a couple of hours of gainful employment.

Simple answers for me.

1= no
2= yes
3= no
4= yes

 

[tminus]

Your dad did good not losing money in the first year.

 

[Sergio]

thanks guys, i just realise that i need to join chess for geting 10 bucks off for brokerage fee..30 bucks price tag is too ridiculous.. another day away from starting day

 

[Klogg]

I just started 3 months ago, after being inspired by some Value Investing techniques.

Since I have picked up: ZGL, AGO, ORL, MTU, HSN and BRG

So far I'm at ~break even, but they're inline with my strategy, so all is going well