6 ms·

First, you need some kind of insight into the market that others don't have and can't obtain. If you're asking this question, you're not a prodigy of economics,

First, you need some kind of insight into the market that others don't have and can't obtain. If you're asking this question, you're not a prodigy of economics, math, or statistical analysis. Why would you be able to predict market trends better than anyone else, and especially better than the kinds of experts your competitors have?

quietthrow 8y ago
Because I believe I can learn. Because I have grit. Because I am passionate. Because my back is against the wall.
- nostrademons 8y ago
  Expect to lose a lot of money in the process then. Your competition has all of the above, plus they're already aware of a bunch of ways trades can go south, of what sort of information you need to have a leg up on the competition, of what it takes to get that information, and of how quickly you need to act on it before others get it (which, BTW, is often measured in microseconds these days). If you're really serious about this, I'd recommend starting with play money (or none at all - use a fantasy portfolio), and then actively trading like you're doing your best to make money. Do this for a while - at least 6 months to a year, and ideally through a down market - and benchmark your portfolio results to the overall market performance (say, an S&P 500 index fund). A lot of people look at the absolute dollar value of their returns, say "I made $10K trading stocks, woohoo!", and don't realize that if they'd just put that money in an index fund they would've made $25K for a lot less work. Also remember that there's a large random component to stock prices - just because some of your stocks made money doesn't mean you can double down on what you did with them, because those stocks might just happen to be the ones that went up randomly. You need to track your personal returns with them against how the stock did by itself, i.e. what you would've made if you had just bought and held it, and see whether your entry and exit points really made sense.
  - quietthrow 8y ago
    I hear yea on the microseconds but I am not thinking about hft or algo trading. I am more inspired by warren Buffett’s way and that’s what I would like to do. Play money is a good idea. Any sites you recommend for this?
    - saganus 8y ago
      A mainstream one like https://www.investopedia.com/simulator/ https://www.investopedia.com/simulator/ could be an option. This one https://www.quantopian.com/ https://www.quantopian.com/ is also interesting. It's more algorithmic trading, but has backtesting functionality and other nice features.
    - nostrademons 8y ago
      Pretty much every site is trying to sell you something - that's one of the trading strategies experienced traders are aware of, buy a security and then pay lots of finance bloggers to write a glowing tip-off about this hot new stock, then sell at inflated prices to all the rubes who are buying on stock tips. It's slightly illegal but you're unlikely to get caught, because the victims believe they're being smart and everyone else in the ecosystem profits from the practice. If you really want to do it Buffett's way, go check Benjamin Graham's books (The Intelligent Investor and Securities Analysis) out of the library, read through the last 40 years of Berkshire Hathaway annual reports, and then start reading !0-Ks from the SEC's EDGAR database.
      - quietthrow 8y ago
        That was my intention with the original post. How make a living by value investing. What all would one need to do.
    - bouncing 8y ago
      Warren Buffet did not make his fortune as an absentee investor playing the stock market. Not even close. He invested one-on-one, in businesses he thoroughly understood, after a lot of research and understanding of the business. Think less scanning a spreadsheet or stock data and more CNBC's "The Profit" -- walking around a factory floor, looking through accounts receivable, talking to the assembly team, talking to customers. THEN making a decision to invest a lot of money and steer the direction of the business.
- notahacker 8y ago
  Your back being against the wall is a very bad reason to try to reinvent yourself as an investor. People who make a living by investing either start off with large amounts of capital, a healthy margin on other people's capital because of their assumed knowledge and work ethic, or by lucking out on their friend's business venture they pumped pocket money into growing big fast. I don't think many people got successful investing out of desperation. On the plus side, if you're earning 180k a year, you can acquire the ability to not need to continue to work in your current job - assuming this is your current motivation - far more easily by cutting your living costs and investing simply and passively. The difference between 8% and 12% return on your savings entails a lot of investment skill and luck; the difference between spending $20k per month and $10k per month not so much.

quietthrow 8y ago

Because I believe I can learn. Because I have grit. Because I am passionate. Because my back is against the wall.

nostrademons 8y ago
Expect to lose a lot of money in the process then. Your competition has all of the above, plus they're already aware of a bunch of ways trades can go south, of what sort of information you need to have a leg up on the competition, of what it takes to get that information, and of how quickly you need to act on it before others get it (which, BTW, is often measured in microseconds these days). If you're really serious about this, I'd recommend starting with play money (or none at all - use a fantasy portfolio), and then actively trading like you're doing your best to make money. Do this for a while - at least 6 months to a year, and ideally through a down market - and benchmark your portfolio results to the overall market performance (say, an S&P 500 index fund). A lot of people look at the absolute dollar value of their returns, say "I made $10K trading stocks, woohoo!", and don't realize that if they'd just put that money in an index fund they would've made $25K for a lot less work. Also remember that there's a large random component to stock prices - just because some of your stocks made money doesn't mean you can double down on what you did with them, because those stocks might just happen to be the ones that went up randomly. You need to track your personal returns with them against how the stock did by itself, i.e. what you would've made if you had just bought and held it, and see whether your entry and exit points really made sense.
- quietthrow 8y ago
  I hear yea on the microseconds but I am not thinking about hft or algo trading. I am more inspired by warren Buffett’s way and that’s what I would like to do. Play money is a good idea. Any sites you recommend for this?
  - saganus 8y ago
    A mainstream one like https://www.investopedia.com/simulator/ https://www.investopedia.com/simulator/ could be an option. This one https://www.quantopian.com/ https://www.quantopian.com/ is also interesting. It's more algorithmic trading, but has backtesting functionality and other nice features.
  - nostrademons 8y ago
    Pretty much every site is trying to sell you something - that's one of the trading strategies experienced traders are aware of, buy a security and then pay lots of finance bloggers to write a glowing tip-off about this hot new stock, then sell at inflated prices to all the rubes who are buying on stock tips. It's slightly illegal but you're unlikely to get caught, because the victims believe they're being smart and everyone else in the ecosystem profits from the practice. If you really want to do it Buffett's way, go check Benjamin Graham's books (The Intelligent Investor and Securities Analysis) out of the library, read through the last 40 years of Berkshire Hathaway annual reports, and then start reading !0-Ks from the SEC's EDGAR database.
    - quietthrow 8y ago
      That was my intention with the original post. How make a living by value investing. What all would one need to do.
  - bouncing 8y ago
    Warren Buffet did not make his fortune as an absentee investor playing the stock market. Not even close. He invested one-on-one, in businesses he thoroughly understood, after a lot of research and understanding of the business. Think less scanning a spreadsheet or stock data and more CNBC's "The Profit" -- walking around a factory floor, looking through accounts receivable, talking to the assembly team, talking to customers. THEN making a decision to invest a lot of money and steer the direction of the business.
notahacker 8y ago
Your back being against the wall is a very bad reason to try to reinvent yourself as an investor. People who make a living by investing either start off with large amounts of capital, a healthy margin on other people's capital because of their assumed knowledge and work ethic, or by lucking out on their friend's business venture they pumped pocket money into growing big fast. I don't think many people got successful investing out of desperation. On the plus side, if you're earning 180k a year, you can acquire the ability to not need to continue to work in your current job - assuming this is your current motivation - far more easily by cutting your living costs and investing simply and passively. The difference between 8% and 12% return on your savings entails a lot of investment skill and luck; the difference between spending $20k per month and $10k per month not so much.