Homework, Studying, and Simple Terms/Market Directions

2008-08-29T14:59:00.000-07:00

I know that I am a fairly new trader but I am seeing a big problem with new traders. The problem is they don't understand why they are losing money......Trading stocks isn't the most complicated thing in the world but it takes its fair share of due diligence and studying.

I think the problem could lie in a few possible areas. I will highlight these.....The first prevailing trend for new traders seems to sit with the fact that they lack pivotal skills required to make money in the stock market...like understanding fundamentals or technicals of stocks which includes not being able to read a chart......Most new traders also fail to learn or understand simple terms like SMA or MACD, and how they relate to a stock's movement. The biggest problem may be the lack of equity (money) the traders try to enter into the marketplace with.....You must have some equity freely available to create more. You need at least $2,000.00 to even have a margin account which allows you to buy on margin (use broker money for buying shares) or to short sale (borrowing shares from your broker).....The borrowing money may not be a huge deal to some traders, but the ability to short trade completes a trader. If you want to buy a stock that is currently at $5.00 a share and you only have $500.00 to trade with you are handicapped....How do you expect to take advantage of smaller moves? You would only be able to purchase 100 shares, but with a starter E*Trade account the commission would allow you to buy about 97 shares. If that stock moves to $5.20, you would have been net negative $6.58 IN THE HOLE after your commissions with an exit of the trade......On the other hand if I came along and decided to buy 1000 shares (at a cost of $5k) and had made the same in and out movements as you I would be taking $174.02 to the bank after YOUR commission rates. This should let you see what the saying "It takes money to make money" means on the market. My advice for any new or wannabe traders out there is to save up AT LEAST $2,000.00 in a brokerage account and study while you do it. Study stocks, study the market and its movements....past and present....and learn from the right people.

Blogs like "Green On The Screen" provide great insight to even older traders wanting to learn new methods....that blog can be found by clicking on the link.

I also recommend reading some good books and possibly listening to what the author has to say....Tim Sykes wrote a great book called "An American Hedge Fund".....Tim, his book, and trading system on a DVD can be found at the link below.
www.timothysykes.com

If you want to study stock charts and learn how they work and the terms associated with them then visit www.investopedia.com

First Blog

2008-08-28T13:57:00.000-07:00

I created this blog site to pretty much discuss my life as a trader on a daily basis. You will most likely be seeing the entire me, emotions and all. Enjoy is what I would tell you to do if I were someone else. I have been investing for sometime now, and have just decided to start trading a typical day trade style. I now see what I have been missing out on....I have done a whole lot of entertaining and heart pumping things in life, but I gotta say the adrenaline rush you can get from trading is pretty awesome.....Not like shooting some fully automatic weapon or anything but hey, I never figured sitting at a desk could be half way fun. Anyways I am out on this first post. Keep your eyes peeled because I will be posting again soon.

Tac Out

Tacguy22's Trading/Lifestyle Blog

Homework, Studying, and Simple Terms/Market Directions

First Blog