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The official James is going to take the plunge thread

Discussion in 'Beginner's Lounge' started by jampola, Apr 11, 2010.

  1. jampola


    Likes Received:
    Apr 11, 2010
    Yep. 1st post and I'm going to document myself on throwing a couple of thou down the gauntlet that is the share market. Why am I posting it here? Because I have always had an idea of documenting something significant in my life for others to read/discuss/give me sh*t about! And since I've been reading about this forum for a few months now, I thought there is no better place to post this junk!

    Firstly, I'll introduce myself. My name is James and I'm from Melbourne. I work as a Business Analyst at a reputable energy retailer and have had an interest in the share market for some time!

    To give you all a bit of background, I feel I have what you would call "advanced beginner" experience in the share market (I have experience in trading on paper and on the ASX share market game for roughly a year or so). I have an average understanding of charting and looking for trends, double bottoms/tops etc etc.

    I have always had an interest in the share market (and I wont lie, this was based solely on the idea of getting "rich" quickly when I was younger) but as I have grown older and hopefully wiser (i'm 26 now!) I have realised that this isn't always the case. From what I can gather, getting rich can happen, but this is over time and entirely based on the capital that you initially invest.

    As a beginner, the only advice I can give a person is do your research and don't jump in blind. Figure out a technique, try trade on paper with a technique and see if it works. If it works, try see if it works after a few trades over a couple of months. When you trade on paper, account for the administrative costs of trading and if after 2 or 3 months you're ahead, give it a shot.

    I know you want to see results in $$$$$ now but seriously, you need to be realistic. It can happen but only if you have some serious capital to put in! But if you can actually put in 10 or 20k to start off with, don't! You risk the missus sending you off to the local F1 motel, telling your mother in law and you losing a decent wad of your money. I think contrary to what quite a few people say here, 5k is a reasonable amount of money to start with. Yes, you won't see MASSIVE returns but it's better to be safe than sorry yes?

    I am doing this because I see it as a challenge and I also see it as an opportunity of a second income when moving OS to Thailand (my wife resides there, and please, don't think of it that way, she has more money than me sadly!!). in short, a weekly income of $250aud is a lot of clams in Thai baht! I think I can achieve this over some time on the share market and would be quite a reasonable second income whilst OS.

    When I was trading on paper, I was using a technique of charting and looking for double bottoms and looking for short term trades (anywhere from a few days to 3 or 4 weeks). If you are unsure about charting or double bottoms/tops etc, google is your friend! There are plenty of sites on the interwebs that can explain this. Type in "Double Bottom" or "Charting" on youtube and you'll be in the win.

    So for me, jumping in, I will be starting with a capital of $2000 and will be trading on the ASX 200 with CFD's (Contract For Difference). If you are an really REALLY new to trading without much confidence, I wouldn't suggest trading with CFD's. I'll go into this later.

    Firstly, I could put in more capital than $2000 but this is an amount that I am prepared to lose if something goes drastically wrong.

    Secondly, with CFD's... In short, think of it as taking finance to buy a certain amount of shares with minimal outlay. For example, you buy 100 Caltex shares at $25.00 a pop, That's $2'500 you'll have to fork out normally (plus your fee's associated with buying) but with CFD's, you would only need to fork out a certain percentage of your shares (lets say 10%) - so your capital would be $250. Lets imagine that a week later, your Caltex shares raise to $27.50 and you sell. That's a $250 profit (minus applicable fee's etc).
    But, had Caltex gone down to to $22.50, that's $250 that you would be in debt to your CFD broker.

    In laymens terms, you can have big wins, but big losses. There are CFD brokers that allow you to create accounts that wont have you lose more than your initial invested capital, which I highly recommend if you are just starting.

    For me, on advice of a friend, I have signed up to a site called the chartist dot com dot au. The guy is a guru who provide ASX tips with buy in's, sells and and get out prices and from what I can gather, he's been pretty spot on with a lot of trades so far. I'm planning on using his tips along with my own intuition. I think these sites to the advanced trader may be a bit of a fad but for someone like me with not too much experience, is educational as well as financial.

    I have applied for a broker account at ignmarkets to which i'm waiting for email confirmation for. (for CFD providers, you usually have to provide a bit of documentation as technically you can create debt, therefore they need to know where to find you to chase that debt!) and to start with, I will follow mostly the advice from thechartist.

    There are plenty of sites that offer advise and what not. Look for reputable sites and they will help you out on the educational side of things at the same time.

    That's about it for now. All I can say is do your research until you feel comfortable and only put in whatever you can afford to lose. Also, wish me luck and I'll post updates here so to how I'm traveling!

    Criticism, praises and questions welcome. I hope I don't sound like too much of a tool with all of this!

    Edit: Also, don't be discouraged from what others say from forums, friends, family, etc. There is no harm in trying, within reason of course! Also, don't become emotional. Stick to your exit strategies. Remember, you win some, you loose some.

  2. So_Cynical

    So_Cynical The Contrarian Averager

    Likes Received:
    Aug 31, 2007
    Nice write up James and good luck with your CFD's...you got me thinking and remembering when i got started about 3/4 years ago i was very keen on CFD's to, so read a couple of books and had a trial account for a while...but decided they weren't for me due to time constraints, my personality and past experiences with gambling.

    Anyway was thinking about your $250 per week aim and it just occurred to me that in another 2 years, if i can keep my portfolio and dividend stream growing at the rate its grown over the last 3 years...ill be able to move to Thailand or the Philippines or Kenya or wherever. :) assuming i can find a girlfriend/wife with a decent house.

    LOL .. good luck James.

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