Australian (ASX) Stock Market Forum

Trading/Daytrading for a living

whenbob

whenbob
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Re: Trading / Daytrading for a living

Hi all, This is my first time on the forum. I also am a fan of rich dad poor dad and am a fan of the philosophy. I am about to start trading in shares and trying to learn as much as I can. I have been using Incredible charts for practice over a couple of months now and will be in the asx stockmarket game in June. I must admit that i have had misconceptions about how much can be made in the market and appreciate what all of you have had to say on the subject of making a living from trading. I have selected a few stocks with consistant patterns over a number of years which I will start with and see how I go. Any advice offered for someone just starting out would be appriciated.
 
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Re: Trading / Daytrading for a living

Hi whenbob

Checking out stocks with consistent chart patterns is an excellent start. Hopefully you've checked out what time of the day to enter and exit by looking at hourly charts. After all you want the pattern to hold its shape so you've got the best chance of follow through. Theres often a lot of movement over the day.

Most importantly you need to rehearse your actions for when you eventually get hit with a 'code blue' You want your primary response to be the correct one so it sets the scene and burns a memory into your brain should you recognise threats to future positions. Just like your immune system the first exposure to a new infection can be prolonged and painful but once the brain and the body establishes a memory future exposures bring about a rapid protective response. Ever wondered why some people have short fuses? Works the same way.

Cheers and best wishes
Happytrader
 

whenbob

whenbob
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Re: Trading / Daytrading for a living

Hi Happy Trader, Thanks for your reply, I have taken on board what you have to say. Thanks for your reply and advice.
regards whenbob.
 
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Re: Trading / Daytrading for a living

Can i ask for those people who make profits, do any of you actually compound (re-invest) your profits? or do you just spend it and start over again?


I think alot of people dont realise the power of delayed gratification, because even taking small profits whilst compounding over years will take your position into a whole different area.
 

tech/a

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Re: Trading / Daytrading for a living

Absolutely.
Terribly powerful and a "secret" to genuine wealth creation.

Its not the analysis that makes the profit its how its used.
 
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Re: Trading / Daytrading for a living

When money is made the temptation is to reward yourself. Pressure also comes from spouse's etc. Avoid the temptation and you will have that profit working for you also. When you have a decent capital base it is then time to start allowing yourself some rewards. It's just a hard slog to begin with and that's that.

Cheers
 
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Re: Trading / Daytrading for a living

The funny thing is that there could be 2 different traders which


Person 1* Trades and earns 100% p/a (example) but spends his earnings.


Person 2* Trades and earns 20% p/a but compounds his earnings.


5 yrs later the person that spends is still forced to make the same returns if not more which means they are still in the same position and there bank account isnt progressing.

The person who compounded his profits can now even achieve 50% less Return on Risk trades from his original 20% p/a but because he has such as large capital base he will still out earn Person 1 by far.

And if you continue this patter you will see that Person 1 will always be a sucker and have to trade another day, where is Person 2 will have so much capital that he can invest into areas which will give him a passive income and he will never have to work ever again if he doesnt choose to.


I dont think the problem lies in how well you can profit but how well you can keep your money once you have it and still have it work for you.

P.S But if you do make high % profits and you compound it imagine how fast your account will grow.
 
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Re: Trading / Daytrading for a living

tech/a said:
Responsible and calculated use of leverage can increase the power of compounding even further.

I know of an example where $30K is now $310K in 3.5yrs even after last weeks belting.

Imagine if those returns were the same for the next 3.5yrs it would amount to over $3.1 million, and again another 3.5 would amount to $31 million

So in 10.5 yrs based on those results you could have a bank of around $31 million?

hehe i would prefer to earn 10% p/a on $31 million then 100%p/a on $31,000.
 
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Re: Trading / Daytrading for a living

Hi Ageo

My understanding of what you are generally saying is that for a given income requirement then obviously the larger your investment capital, the lower the required yield you need to generate that required income. Currently I need a tad over 5% yield from our income portfolio to meet my and mrs bullmarket's annual living expenses.

Being retired and an investor whose #1 priority nowadays is income :iagree: 100% with you :)

cheers

bullmarket :)
 
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Re: Trading / Daytrading for a living

Ageo said:
The funny thing is that there could be 2 different traders which


Person 1* Trades and earns 100% p/a (example) but spends his earnings.


Person 2* Trades and earns 20% p/a but compounds his earnings.

If he's trading for a living, what is he living on?

cheers,
Chemist
 

tech/a

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Re: Trading / Daytrading for a living

Depends on his capital base.

$500K traded on Margin, or even $250K on margin would be able to do it easy and still compound with a 20% return on total funds.
 
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Re: Trading / Daytrading for a living

tech/a said:
Depends on his capital base.

$500K traded on Margin, or even $250K on margin would be able to do it easy and still compound with a 20% return on total funds.


You hit the nail on the head, all im trying to point out is that of course you need to live but people tend to increase there "living standards" as there income increases which in my opinion is the worst thing you can do since you will never progress onto financial independence.


And since alot of people here are part time traders (still have another source of income) its wise to compound as much as possible to benefit down the track.
 

tech/a

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Re: Trading / Daytrading for a living

Yes and when they take a living expense drawdown there is of course 50% tax on trade profit if held less than 12 mths.

When you think about it a business which costs a$200K would generally supply a reasonable wage.
One that cost 1 or 2 mill would then be expected to generate much more return for investment for the owner.
 
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Re: Trading / Daytrading for a living

Ageo said:
You hit the nail on the head, all im trying to point out is that of course you need to live but people tend to increase there "living standards" as there income increases which in my opinion is the worst thing you can do since you will never progress onto financial independence.

of course people would much rather have lived a good life than to die with 100million dollars to their name but not have enjoyed a cent of it

plan 4 tomorrow but enjoy the moment just in case u dont get 2mrw... everything in moderation
 
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Re: Trading / Daytrading for a living

Nizar im not saying not to enjoy yourself but wouldnt you prefer to sacrifice a few things in a 5 - 10yr time frame and then play for the rest of your life?


I always remember a saying

"Play now and Pay Later"

or

"Pay now and Play Later"


For me i prefer the latter, (but im 23) and i know once i start to play i can do so everyday for the rest of my life if i choose to.

P.S it doesnt mean i dont have a good time, i enjoy life everyday but even if my income increases i still behave the way i was at the start. It just means i dont go blow money on fancy cars (been there) and other liabilities (bad debt). But hey thats my goal to be in a position to never have to work ever again but it might not be someone else's goal.

Adrian
 
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Re: Trading / Daytrading for a living

I like what you are covering here, re compounding profits.
Why would anyone do anything but reinvest these profits?

The fun is all in seeing your capital base grow.

I have a question to raise.

I am working on a small capital base, and am trying to grow it so I don't have to borrow, and take a marginal loan.

I took $1000 12 weeks ago, put in an extra $800, and my portfolio is now worth $5,400 in this period.

My goal was to turn this into $10,000 in the first 6 months of trading, so i'm halfway there.

I didn't expect to reach it, but surprisingly got halfway there quite quickly, until this bugger of a market consolidation the past week.

I'm happy with this so far, but I am worried about tax.
Anyone in/been in a similar situation?
i.e. with the growing from a small base, what did you do about tax etc...

I want to grow this, compound the returns, and achieve financial freedom. Nothing extravagent, just a small 4 brm house in rose bay, cruiser, convertible merc, etc....

Cheers
 
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Re: Trading / Daytrading for a living

I conduct at least 4 trades per day and have considered day trading full time. I have done very well since Nov last year....but only takes one error and ................. the game can be over. I currently hold a big parcel of shares in lvl and if they don't come out of suspension all my profits since Nov are gone and more !
 
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Re: Trading / Daytrading for a living

Pharaoh,
Perhaps you should not consider a margin loan to be a negative but instead consider it to be a positive.

Assume that you had a margin loan offering 50% loan on the stocks in your portfolio. Your $1800 to invest would increase to $3600 to invest.
The $3600 profit you have made would be $7200 profit. ( less 3 months interest)

Margin loans can be a good thing, especially in boom times.
 

Porper

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Re: Trading / Daytrading for a living

123enen said:
Margin loans can be a good thing, especially in boom times.

I agree margin loans and cfd's are good when used correctly, but as I found out last week, a small correction in the market equates to a big loss from your capital base.

If your margin to equity ratio is not too high (how much you borrow as a percentage of your account) then we all live to fight another day.

I wonder how many people have been margin called last week, or maybe sweating it out at the moment, hoping it will all come right.

Some people are forced into using loans or cfd's to make a reasonable profit but it has it's risks as we found out last week.
 
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