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Starting with not enough funds?

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ekwipt

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I've read a few topics with the same problem, although I guess mine is a little different.

I have some term deposits, gold and i've allocated a percentage to the stock market, have never traded before, done some reading and chose to go with TheChartist Growth recommendations.

I've allocated $12,000 for my stock and will eventually hold 20 positions and i'm using Commsec. I'm now a little worried after $20 buy/Sell for each of these positions i'm already effectively down $800. I could get an extra $8000 which would bring my pool of money to $20,000.

Maybe this is what i should have done at the start? I like having a little cash in the bank for emergencies, but now i'm thinking my positions might be too small???
 
Re: Starting with too lower funds?

20 positions with $12,000 is ridiculous, frankly. I'd be looking at 2 or 3. If you want that sort of diversification with such a small amount, buy an index fund.
 
Re: Starting with too lower funds?

ekwipt said:
... i'm thinking my positions might be too small???
Click to expand...
Hi ekwipt,
Welcome to ASF!

I'm thinking if you're asking this question you need to learn.
The best thread here is by SirO:
https://www.aussiestockforums.com/forums/showthread.php?t=14370

Whilst I can't offer advice, I will offer my opinion, for what it is worth.
My first hurdle is picking something that is rising.
The next hurdle is breakeven (after brokerage, both buying and selling).
With larger brokerage (your Commsec and my netwealth),
you don't want the brokerage to rule your trade.
I prefer $3,000 per trade (but have gone as small as $1,100)
Start with one or two trades, watch how they go.
Learn as much as you can; here, the library, Utube.
Find out if you are an investor, a trader or a gambler.

In my opinion, don't touch your banked money.

Clement trading weather,
 
Re: Starting with too lower funds?

notting said:
The Lirbrary.
I can't believe they still exist.
Go to Rome and check out the ruins of the slave trading yards too.
Click to expand...

You mean you don't read the newspaper on one of those wooden stick things?

I have to admit to being sort of spoilt when it comes to libraries. This is the garden to my library that backs right onto the Harbour. I never use it though.

Back on topic, perhaps the OP can clarify if he wants to trade or plans to invest longer term?
 
Re: Starting with too lower funds?


I assume you have checked The Chartist for position sizes? Ask them if you have not.

Regards

Rick
 
Re: Starting with too lower funds?

notting said:
The Lirbrary.
I can't believe they still exist.
Go to Rome and check out the ruins of the slave trading yards too.
Click to expand...

I forgive you, but this is not dyslexia.

I'm not talking about the Great Library of Alexandria.
 
Re: Starting with too lower funds?

ekwipt said:
I have some term deposits, gold and i've allocated a percentage to the stock market, have never traded before, done some reading and chose to go with TheChartist Growth recommendations.
Click to expand...

A recommendation is, after all, just that. It is not an iron clad guarantee of a positive return.

Have you researched and formed your own opinions on these recommendations, and then followed up on the results of your opinions?

No matter who or what you are following, it is folly to follow them blindly.

ekwipt said:
I like having a little cash in the bank for emergencies
Click to expand...

Cash is king and most importantly it is instantly liquid.

Anyone who does not allow for emergency scenarios is asking to be chewed up and spat out.

McLovin said:
20 positions with $12,000 is ridiculous, frankly. I'd be looking at 2 or 3. If you want that sort of diversification with such a small amount, buy an index fund.
Click to expand...

Agree, you are spreading yourself too thin. Even with the increased number of $20k you talk about you are 4% down before you even start, then account for selling at some stage, that becomes 8%.

burglar said:
Find out if you are an investor, a trader or a gambler.

In my opinion, don't touch your banked money.
Click to expand...

You have all the time in the world, the markets aren't going anywhere.

If your money is secure in the bank while you still have fundamental decisions to be made, neither is your money.

----------------------------------

There are 3 clear choices; increase your funds, take less positions or take more time to develop a clear and concise strategy.
Most importantly, ask questions. Absorb what you feel you need to, disregard what you don't.

That is the value of ASF.
 
This maybe more helpful.

Call Radge

Ask him to run simulations on

( a ) smaller capital bases
And importantly
( b ) fewer positions
Say 7

See how they fair.

You can increase the number of positions as your capital grows.

I see Rick touched on it.
From my experience less positions shouldn't hurt performance that much in systems.
 

ekwipt, if you go to the Growth Portfolio section on The Chartist site it gives you guidance on starting capital etc. I think from memory it's around $20,000 but you'll need to check. You also need a low cost broker...$20.00 each transaction is high when you can pay a third of that with Interactive Brokers. I use them and find them fine but I'm sure there are others out there much less than Commsec.
 
Re: Starting with too lower funds?


The eastern suburbs of Sydney, especially Double Bay is so pretty, but the people are ar$eholes, except for present company of course.
 
Re: Starting with too lower funds?


Can't agree whatsoever with this.

The whole point of a Systematic system is to follow the recommendations blindly. If you start filtering out you deviate from the tested systems expectancy. If you are paying for the system you need to follow it to the letter otherwise you are trading with discretion which is a totally different kettle of fish. And it's almost impossible to be profitable without experience...in my opinion;especially in current market conditions.
 
Thanks Porper, that's what I've read and what he recommends as well. I'll look more into it
 
Re: Starting with too lower funds?



Funny but this is well intended advice and maybe even "common sense" but its just wrong.
 
If you are set on trading a system but don't have a lump sum to chuck in, consider the idea that if you're working a job as well (which I assume you are) you can always put into the position the needed commission out of your wage to make the system as if commission is zero. It'll be costly but if the system is validated and you're keen on seeing theoretical returns in real life why not do everything you can to get your 'portfolio' up to a level offering survival from brokerage, and worst string of losses etc.
All the best with it!
 

ekwipt,
I didn't realise you were trading a systematic system involving Nick Radge, ...
I assumed discretionary.
Never mind.
In that case, definitely get a cheaper broker.

Ask the talking duck about almost anything involving trading.
He is the best, but don't tell him I said so! It might make his day.
 
Re: Starting with too lower funds?

Trembling Hand said:
Funny but this is well intended advice and maybe even "common sense" but its just wrong.
Click to expand...

That is fine, but it is wrong... in your opinion and probably others too.

There should always be room for lateral thought.

There is no requirement to act on it.

If you never seek the answer to 'Why?' you will never find your own answer on 'Why not?'.

It is for ekwipt to go one way or another, but think and also think outside the square. That is all.
 
Re: Starting with too lower funds?


You do not buy a system them just pick and choose bits of it. What you are recommending is equivalent to going to the Doctors and getting antibiotics and deciding to skip every second dose!!

The system works due to the sum of ALL its parts not due to you second guessing it.

Do you know what system trading is and how it works?
 
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