Help me choose what to start trading

[Gazed416]

Hello all,

I have spent a few weeks trying to learn the stock market. In essence it's not a difficult subject, but it's a bit complicated when there's a lot of different opinions on different companies, risks, and so forth.

I do understand that there's risks involved in basically every form of trading, so eventually I decided that I would not like to pursue the stock market. So, I thought about Forex. I'm in day two of learning about Forex, but is it worth it? Besides it being a much bigger market than the stock market - Is it worth my time to invest into currencies which I honestly don't feel excited about?

I've read a bit about REITs, ETFs, bonds, at the time of learning about the stock market. I don't think it's the risks that put me off.. Just my level of excitement isn't there.

The only thing that I was a bit excited over was swing trading or day trading on the stock market. But then the risks were a bit too much for me to be like "I'm fine losing a certain amount of money per month if things go wrong".

I know that I want to plan for my future but I just don't know what to do. I know nothing about crypocurrency, so I'm not even considering it at this point in time.

 

[bobcpt]

With all due respect, spending a few days on a course or reading up on trading/technical analysis won't turn you into a succesful trader. Dont fall for the hype you see in advertisements. Like most things in life, it is a skill that takes a lot of time to master. Perhaps you should ask yourself whether you want to trade (i.e. frequently buy/sell) or invest which takes a longer term view on stocks etc.

Trading requires that you study charts on a daily basis to identify low risk entry and exit points. You are essentially trying to outsmart other market participants at identifying by being better than them at identifying market moves. Yes it can be done, but you will need a disciplined approach to the market and there is no place for 'excitement'.

Secondly, most people don't have the fortitude to execute stop losses which can prevent a small loss from turning into a big loss. There are only four outcomes when you open a position: a big loss, a small loss, a small win and a big win. The latter three will cause your trading capital to grow, while the first one will destroy it. Read up on risk strategies and how to size your trades, e.g. the 2% rule.

If you still want to trade, I would recommend that you read a few books on technical analysis, chart patterns, money management and trading psychology. Here are material that I have found useful:
- Trading like a stock market wizard - Mark Minervini
- Candlestick books by Steve Nison
- Chart pattern books by Thomas Bulkowski
- Unholy grails - Nick Radge
- Garth McKenzie's courses (Traders Corner)

With regards to the instruments that you should trade, remember that it the price movements that cause you to make a profit or loss, not the type of instrument that you are trading. Start with unleveraged instruments like ETFs as they tend to have much lower volatility compared to stocks etc. Leveraged instruments (futures, currencies, cfds, option etc) can cause you to lose more money than you have available in your trading account.

 

[cguy]

I have a similar take to @bobcpt. If you want to trade systematically (as opposed to deeply researching the dynamics of a sector), you need to be really really good just to have a positive expectation.

This will require a LOT of reading and experience trading - most people will lose money initially. Those that haven’t will probably lose it eventually.

Essentially, you can’t really make money consistently without an edge. What will your edge be?

 

[Gazed416]

With all due respect, spending a few days on a course or reading up on trading/technical analysis won't turn you into a succesful trader. Dont fall for the hype you see in advertisements. Like most things in life, it is a skill that takes a lot of time to master. Perhaps you should ask yourself whether you want to trade (i.e. frequently buy/sell) or invest which takes a longer term view on stocks etc.

Trading requires that you study charts on a daily basis to identify low risk entry and exit points. You are essentially trying to outsmart other market participants at identifying by being better than them at identifying market moves. Yes it can be done, but you will need a disciplined approach to the market and there is no place for 'excitement'.

Secondly, most people don't have the fortitude to execute stop losses which can prevent a small loss from turning into a big loss. There are only four outcomes when you open a position: a big loss, a small loss, a small win and a big win. The latter three will cause your trading capital to grow, while the first one will destroy it. Read up on risk strategies and how to size your trades, e.g. the 2% rule.

If you still want to trade, I would recommend that you read a few books on technical analysis, chart patterns, money management and trading psychology. Here are material that I have found useful:
- Trading like a stock market wizard - Mark Minervini
- Candlestick books by Steve Nison
- Chart pattern books by Thomas Bulkowski
- Unholy grails - Nick Radge
- Garth McKenzie's courses (Traders Corner)

With regards to the instruments that you should trade, remember that it the price movements that cause you to make a profit or loss, not the type of instrument that you are trading. Start with unleveraged instruments like ETFs as they tend to have much lower volatility compared to stocks etc. Leveraged instruments (futures, currencies, cfds, option etc) can cause you to lose more money than you have available in your trading account.

Thanks for the great feedback. I'll think about Forex a bit more and I'll definitely look into ETFs more.

 

[Gazed416]

I have a similar take to @bobcpt. If you want to trade systematically (as opposed to deeply researching the dynamics of a sector), you need to be really really good just to have a positive expectation.

This will require a LOT of reading and experience trading - most people will lose money initially. Those that haven’t will probably lose it eventually.

Essentially, you can’t really make money consistently without an edge. What will your edge be?

You see, the risks involved feels like gambling. Maybe even worse because I'd have to spend so much time learning something just to lose money, as opposed to gambling/betting, where you bet that a horse will win even if you don't study the sport.

 

[cguy]

You see, the risks involved feels like gambling. Maybe even worse because I'd have to spend so much time learning something just to lose money, as opposed to gambling/betting, where you bet that a horse will win even if you don't study the sport.

If you don’t have an edge, it is exactly equivalent to gambling (and the spread cost and fees will imply negative expectation). If you do gain enough of an edge, you can consistently make money. The whole challenge to trading is figuring out your edge.