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Forum - Wall Street Pit    Stock Due Diligence for All

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From: rmlinden (Rep: 351) reply to rookie_traderDate: 01/23/2011 04:09
Forum: Wall Street Pit - Msg #2072456Thread #673148961 (Rec: 5)
Re: new trader here. i am a college student, learning to trade for a living. Can ...

1) dont aim at making money, aim at not losing it. Preventing and cutting losses is much more important than making money. If you manage to not lose money in nasty situations then the money will come in due time.

2) be realistic. what are your goals? 20% 30% profit per year? Get real, it wont happen. You may be happy if you actually manage to make money.

3) learn these terms:

4) this is a very tricky one but why are the RSI, ADX and MACD essentially the SAME indicator? It may sound strange but they are. Different inputs, different outputs, but they tell the same story but in a different dialect.

5) click my name, there are TONS AND TONS of links for you to read. messes up the links, so you need to copy paste the urls, not just click em.

6) Dont be so naive to think that what others say is true. This appplies to the minor details, but also the greater schemes. On a grand level people whine that they are either a technical trader or a fundamental trader. That is bullcrap. In order to trade you must understand technical, fundamental and timing. You must be able to read balance sheets, you must understand how the accounting rules allow companies to lie, you must understand how share emissions work, you must understand chart patterns, volatility, timing, trending, float locking, iceberg order patterns, you must understand that L2 stockquotes are riddles with lies, hidden trades etc.

7) DO NOT DAY TRADE! If you want to commit financial suicide then day trade on a small account. If you want to lose the money you worked for then you should be dumb and trade against the computers.

8) stick to the weekly patterns . Longer timeframes on good companies. As i stated in section 6, you need both the technical and fundamental elements. you might be spot on when it comes to your fundamental analysis, but if the market decides against you then you are screwed. ALLWAYS FOLLOW TECHNICALS ON FUNDAMENTALLY SOUND COMPANIES.

9) do not trade stocks that recently made a pop. The market is like an inflatable bed. You know the type with the air pockets. There is a limited amount of money in this half inflated bed. When you press down at one point the bed will inflate somewhere else, but it will not inflate more than it can. The money in the market is the air in the bed. It flows around. The different zones in the bed, to which air can flow, are the SECTORS. Sectors will be in favor as the money flows in, but when they losing their favor then all the stocks in that sector will deflate as the air is taken away and moved to another sector. So when things have "popped" then you must think twice before entering into it, you must be certain that it has room to move.

10) an important strategy: Buy into a stock AFTER you decide what the sell point will be. Then as the stock rises you start selling batches into the gains. Take profit as the stock goes up. If you buy for $10 and take 30% at $13, then it means that the stock can move below $8 before you actually start to make a loss. It is called locking in gains. Be aggressive with your profit taking, more so with your loss taking. Again ... aim to not lose money, dont aim to make money.

11) understand this and understand this well. You are entering into a world where you will "fight" against others. You will compete against people that have decades of experience and that have infinate money. A big absolute loss will wipe you out. Such a loss is NOTHING for those people. They can take a beating, you cant. Period. Also you are pitting yourself against super computers that are right next to the exchanges, they have the data before you do, they will correlate it to 1000s of other stocks even before you will recieve the quote data. Do not day trade and do not trade manipulated stocks.

12) ONLY TRADE stocks that have an average daily volume of 200.000 or more.
13) ONLY TRADE stocks that have low debt, that have enough money and that earn money.

14) do not believe the average "technical indicator" articles. The internet is made up of parrots. Everyone copy pastes and they lose the true meanings and intentions of knowledge.
Then hop onto the internet to see the bullshit that people write about it.

15) focus on the technical indicators ADX, RSI, MACD, Chaikin Money flow. Then (and this is not a joke) go find yourself 20+ articles per technical indicator. But make sure that you find different articles, not the usual copy paste stuff. Study those articles and find the spots where the authors don't agree with eachothers. Those are the things to think about.

Again ... open up my portfolio and start your study from there.
Go to stockcharts and start an account.
Then when learning you should NOT use the online charting stuff, print the charts out and draw in the trendlines by hand.

The most important bit of information follows here:
Trading is about popularity, the more people go into a stock, the more shares will swap hands. Understand that people WILL work hard at you liking them, They will work hard to ABUSE their status to sucker you into following them. You are just a sheep that needs to be trained like pavlovs dog. You will be handed a few rewards, you will be prepped, you will be taken for a fool and get ripped off. Distrust anyone with a large following. Stand on your own two feet and ALLWAYS stick to the basic trading rules. Average shares outstaning > 200k, insider ownership <40%, NO DEBT, it must be making money, it hasnt moved alot and most important it isnt getting flooded buy BUY and BOOOOOM posts. When everyone is in the stock it is at its top. Your task is to find the ones before they move and frontload.

As a side node: put "trendtrader" on watch. See how a sleezeball and pumper like him posts. You will learn how pumping works, you will see a dirtbag at work. Do NOT trade his stuff. He is here for your learning experience and entertainment.


I screw up at a regular basis

"An investor is one who smokes a pipe, and strokes his chin wistfully while he watches his losses mount. A trader doesn't own a pipe." morequesnoans21


There is the moral of all human tales;
'Tis but the same rehearsal of the past.
First Freedom and then Glory—when that fails,
Wealth, vice, corruption—barbarism at last.
And History, with all her volumes vast,
Hath but one page


Reply to rookie_trader - Msg #2072444 - 01/22/2011 20:30

new trader here. i am a college student, learning to trade for a living. Can you please give me some pointers on what i should study to learn to a great trader. thanks so much for your help

NOTE: This message was originally posted on 2011-01-22 20:22:53 by the rookie_trader.

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