DeviouslySimple

I've spent some time studying and also doing online trading, about 3 months reading, less than 2 months watching someone trade a bit and then about a month trading solo.

I am curious how people approach online trading in general, what tips they have and their experiences. I'll go on with my own in detail on a reply soon but I want to introduce this with the following:

First off, the way interest rates are now, you are simply being robbed of your money if you put it in a bank. 1.5% interest doesn't beat inflation, nor does it cover all the ridiculous check, deposit, late, overdraft, transfer, finance, bank, tax, and fee fee fee this fee that which the banks subject you to.

In order to get an investment a step above this, you can get a bank funded CD which locks up your money for X months (or a year+) but usually will get you 2-3% instead.

T-Bills and government bonds will net you 4-6% annually on your money but can tie it up for quite a while. Now, the 30 year bill is out of active circulation which has changed the game slightly.

Finally, you have the stock market which averages 7.3% annually (some random study, no I don't recall the source. Each business source tends to fudge this figure a lot regardless), although the idea of a market-wide average is very faulty if you want to talk about your real dollar.

And private investments, real estate, "ventures", personal businesses can earn a far higher return. Especially the commercial end of credit card and finance charges against consumers, etc...

There has to be a better way than working a standard 9-5, getting taxed 20-35%, taxed again for good measure, and then paying bills, which if you have a mortgage/car/student loans/any debts involved in with...can get ugly. Besides robbing banks or becoming prostitute/hitmen (I can't stomach the crossdressing part of this, damnit).

Rodney

I'm unsure of the market right now and am, like a lot of people, taking my 1-1.5 percent inflation loss on savings right now rather than committing anything.

That said, you left one important factor out of your list of options -- the tax advantages of real estate. While real estate doesn't make much money in the short run (will probably lose money for years, in fact), the tax advantages are supreme. With the mortgage interest writeoff from a home, plus depreciation and other expenses on a small income property, Uncle Sam will see very little of your cash. And yet despite these "losses," your investment grows over time. This is a wise move for the energetic person who makes a good income.

Cynthetiq

no day trader has made as much as a normal employed trader... at least in the short life as the day trader.

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jimk

i know a few people who have set up a home office & make a living day trading, but they all have considerable pit experience.

but for the most part, i agree with cynthetiq - day trading seems to be a way for full time professionals to fleece another piece of the population. you, by yourself, have a slim chance of competing with merrill, morgan, refco, etc.......... in the long haul. they have a lot of money to pay people to stare at screens & act on them.

if you give it a go, i would recommend starting really small in size, and if you DO find a way to consistently make money, ramp the size up until you can afford to buy an island.

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raw power is a guaranteed o.d.

raw power is a laughin' at you & me

-iggy

nowthen

Unfortunately, and at the risk of sounding harsh, you are going to have to do what most successful independant traders have done:

1) Study, come up with a winning system, take what money you have and start trading. Get arse kicked by market and loose all your money.

2) Work shitty job until you have enough money to start again, all the while studying some more. This time its different.... you get chewed and spit out even quicker this time, and this time you also owe your broker a hefty chunk of change too.

3) Start to realise a few of the real truths about trading, as you work that shitty job some more to come up with another pot of money, first of all to pay back your debts, and then start trading again.

Continue this cycle a few more times, and you will know a *little* about the markets. I am sorry, but independant trading is no more the key to financial freedom than becoming a Formula 1 driver is. Yes, you can earn a lot of money if you become a successful trader or a Formula 1 driver, but, I wouldn't pin all your hopes on becoming either.

If you can, try to get a job with a pro trading firm (making the coffee, running copies, whatever) and work your way up. Working for a pro firm will teach you a lot about discipline. It will clear out a lot of your psychological weaknesses, a thing which it is very hard and very expensive to do on your own account. And remember, most of the "big", i.e. famous traders worked for serious firms before trading on there own. That is where they got the experience, and the money.

Oh, and, good luck! If you really want it, it can be done.

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"People are always blaming their circumstances for what they are. I don't believe in circumstances. The people who get on in this world are the people who get up and look for the circumstances they want, and, if they can't find them, make them."

George Bernard Shaw

jimk

now that was good advice.

any experience you can gain on someone else's dime in this biz is a screaming do. otherwise you're gonna make a LOT of mistakes and pay for them yourself.

__________________
raw power is a guaranteed o.d.

raw power is a laughin' at you & me

-iggy

JTC

nowthen

I can tell you've been there done that

I've been burnt a couple of times myself in the market and it's definitely all about experience, having a system and the discipline to stick to the system. Most day traders go in with the idea of making enormous gains on a few trades. If you go in with this thinking you may as well be going to the Casino.

The potential is there if you are prepared to put in the effort and learn the ropes. For this you need patience and persistance. The suggestion of working for an investment bank is great as you are essentially getting paid to learn.

Seriously, I suggest you go for it. Just don't risk too much too early. Even if you have a good run to start, you will get burnt and you need to be prepared for this.

I'd actually love to have a section on TFP about money. Tilted Coin maybe. All the budding millionaires could network and discuss strategies for making a fortune.

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Jdoe

I have recently decided to invest myself. Due to some unfortunate circumstances this year, I have had some money come across the table that I want nothing to do with. I am pretending it doesn't even exist to me.

I also have a job where I make a nice bit of money. Combining the two I have decided to take two-fold route. I have invested $3k into an IRA, and set aside another $3k to be put into the IRA next fiscal year. I then invested a large sum into a no-down mutual fund. Then I invested another sum into a no-down mutual fund (in a different company than the first) that is bond oriented. There are a lot of options with mutual funds.

That is all based on pulling out at 59 and a half. The long term. Next I will get a bit more risky. But that will be money that I earn on my own. Doing it two-fold like that is good if you want to be safe and confident, without knowing too terribly much.

On the real-estate side...that is an EXCELLENT option. The owner of the 'company' I work for is VERY successful. My success and the success of those around me is based on his genius. And we do quite well. Guess where he got his start? Personal property, and then commercial property. He retired at the age of 36 thanks to that. And does what we work for him now as a 'hobby.' If you take the time to learn the ins and outs, real-estate can do a LOT.

Jdoe

JTC

Yeah for sure Jdoe.

There is a tonn of money in real estate.

Here in Australia over the last few years there has been an enormous boom. Prices have been increasing at around 30-40% per year and people have been making amazing gains. With interest rates so low EVERYONE decided to get into property. The government are now running inquiries into the price of houses as they're becoming unaffordable for first home buyers. Sydney prices are just ridiculous and the rest of the country is following.

That being said most people here are expecting the market to cool fairly shortly. There are still bargains out there, just they are harder to find right now.

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