Is the Stockmarket better than Sports for Trading???

[WhyAlwaysMe]

If you trading on a TA basis is it possible to transfer your skills to the stockmarket?

I have just read a book called 'Strategic Stock Trading' by Michael Swanson which I found to be very good. It is only a short book but I found it to be a good introduction and is TA based. There was a bit about reading graphs, quite a lot on pricing psychology and also chapters on how the stockmarket works.

Does anyone here trade the markets?

[LuckyYou]

I don't know about that as I didn't trade the stockmarket but I can tell you for sure that the billionares is not trading in the sport exchange which is making me much more calm...

[shadowninja]

I've been trading various financial markets with moderate success. The problem for me is that you don't know when an opp will come along. At least with the likes of football, you know when the game starts and ends.

The benefits are that charges are a lot lower. You can even do spreadbetting in the UK so no tax to pay, just pay the spread. Also, leverage is possible and providing you use stops and don't take the piss, you will be fine.

Using purely TA isn't a problem because enough people do it. Just see for yourself how the market reacts at support and resistance levels. Forget the more complicated technical indicators.

And don't buy and hold. It may come back but it may take 25 years.

[Knight Rider]

I don't know about that as I didn't trade the stockmarket but I can tell you for sure that the billionares is not trading in the sport exchange which is making me much more calm...

Not strictly true Lucky. This guy bothers and apparently in the video description he's the UK's Warren Buffett so he must be worth a few billion surely.

Personally i've never heard of him.

[MalcolmSm1th]

Be careful, be very careful.

If you are talking about short term trading then you are going to need very expensive feeds and you are up against the boys in the City with their fancy machines and uber-algorithms.

If you are talking about trading longer term then I feel that the small investor has no chance in the markets.

In the 90s, to explain my credentials, myself and my partner, Ted Hogson, set up Smith & Hodgson Ltd and we were the first company to sell on stock market price data for the small investor under licence. it took us about three years to convince the stock market what a small investor was (they thought that a small investor was someone who could invest something like £100k a week!)

So I would like to think that I know what I am talking about when it comes doing TA in the stock markets. And having tried it with Metastock I and a lot of others realised that we hadn't a chance. Anyway, despite glowing reviews of the data service in the Investor's Chronicle the company folded when Ted died.

There was a saying in the brokers' firms that the TA specialist would be the man in the corner who couldn't afford to have his suits dry cleaned and eat his own fish paste sandwiches for lunch. I will believe that.

Okay, I am new to sports trading, I have to admit but from what I can see here with tools such as this one we are all on a level playng field. Here we have more of a chance than in the markets. The impact of world events is less on our trades than in the stock market - a typhoon in Indonesia will have less of an impact on the 3.10 at Hereford than my holding a pile of shares.

I would suggest staying here and if I have one complaint about sports trading is that I wish that I had discovered it earlier.

[LuckyYou]

Not strictly true Lucky. This guy bothers and apparently in the video description he's the UK's Warren Buffett so he must be worth a few billion surely.

Personally i've never heard of him.

Yeah I am so dazzled - Look what wiki knows about that guy

http://en.wikipedia.org/wiki/Peter_Webb

[WhyAlwaysMe]

Be careful, be very careful.

If you are talking about trading longer term then I feel that the small investor has no chance in the markets.

Why do you say this? If you are buying and holding for a few weeks or months etc then surely the advantages gained from quicker feeds would be negated.

The book I read said that nearly all small investors struggle because they make the same type of mistakes. They buy off newspaper tips, don't use stop losses, get emotionally attatched to companies they hold shares in. Also many small investors tend to buy into the tail end of rallies and generally time their entry and exit points poorly.

If you do your own research and don't rely on brokers or analysts why can't you do well? If you can manage risk and trade with disclipline then you can at least cut out a lot of the basic mistakes.

I don't doubt your experience and ability in this but aren't you being a bit overly negative? Being a small investor needen't be all disadvantage. And one difference between the stock and sports markets is that the stockmarket rises by 7-9% a year over time.

[shadowninja]

And one difference between the stock and sports markets is that the stockmarket rises by 7-9% a year over time.

Certainly, trying to trade ultra short term is hazardous for the newbie without good money management and discipline.

And trading fundamentally makes sense until you realise that the market can move unexpectedly thus leaving you in a massive hole blaming the market because it's stupid or illogical. I always chuckle when some retail trader starts blaming the market for his losses.

But one mistake a newbie makes is to assume the market always rises in the long term. You can't make a living off this.

Example 1) Let's say you saw the FTSE drop from its high of about 6670 in 2007 to 6100 at the end of 2007 and you bought shares then (and being a noob there's no reason why you wouldn't have seeing it fall - noobs try to catch falling knives). And then it plummets to the lows of 3500. It took nearly 3 years before you saw a glimmer of break even. Where do you intend to get your income from for 2008, 2009 and 2011? And what if you'd bought NRK who fell from £15(?) to £3 (where many people I know bought) to 80p(?) before being nationalised?

Example 2) Let's say you were a trading god and picked the very low in March 2009. In order to benefit, you'd have to invest so heavily because you're holding long term that you are relying on dividends to live as well as your savings. So we're talking buying at least £100k's worth of shares. Buying £5k so it doubles to £10k over 3 years is meaningless - who can live off £5k profit until the next recession/major low in 25 years' time?

So the only way to make a living from the stock market is by learning to trade in the short to medium term which means not relying on "the stock market always goes up" notion.

[MalcolmSm1th]

Why do you say this? If you are buying and holding for a few weeks or months etc then surely the advantages gained from quicker feeds would be negated.

The book I read said that nearly all small investors struggle because they make the same type of mistakes. They buy off newspaper tips, don't use stop losses, get emotionally attatched to companies they hold shares in. Also many small investors tend to buy into the tail end of rallies and generally time their entry and exit points poorly.

If you do your own research and don't rely on brokers or analysts why can't you do well? If you can manage risk and trade with disclipline then you can at least cut out a lot of the basic mistakes.

I don't doubt your experience and ability in this but aren't you being a bit overly negative? Being a small investor needen't be all disadvantage. And one difference between the stock and sports markets is that the stockmarket rises by 7-9% a year over time.

Hello, I am not being overtly negative but take one step back at the City of London.

All those nice buildings have to be paid for. The ground rents in the City are collossal, the fees for everyone involved has to be paid for. That money comes out of the commission fees the buy/sell spreads and then, on top of that, we have stamp duty to pay. And if we do make a profit on our 7% per annum we have CGT.

The barrow boys in the City will know of movements before you do. The end result is that you are at the back end of the queue for information and the fees wipe you out.

Making money with Technical Analysis alone dpesn't work in practise because the markets run on TA as well as Fundamental Analysis (FA). And that's where it's hard for the small investor to get the information unless one spends a fortune on specialist literature.

Yes, the data looks good, the charts look nice but believe me it isn't that simple. I have spent years poring over the screen of MetaStock and other TA applications and I can say, from experience, that TA is only a small part of the market otherwise everyone would be doing it.

With trading the footie markets we have more of level playing field. And I can tell you that the stock maket isn't anything but level.

[WhyAlwaysMe]

You both make good points. A value investing buy and hold approach won't produce an income as Shadowninja says and as Malcolm notes the fees and informational lag are huge issues.

The reason I got interested is a friend of a friend is a daytrader in the USA. I don't know how he does but he does do it for a living. However he does work for a broker so that may explain a lot.

It will amuse to read I once blew my whole trading bank in 10 minutes on traded options in 1998 I think. I started with £1K buying and selling the FTSE index and picked winner after winner, rolling it up to £6K in just a few months. It was about six or eight winning trades in a row. It were like shelling peas. Then I had my first loser of around £1K. Determined to make it back as fast as possible I put the whole £5K into a buy option on the FTSE. It was a Friday afternoon and after the market closed the Russians defaulted on their soverign debt sending the markets into a huge tailspin. Needless to say it was a total wipeout and also the end of my stock trading ambitions.

At the time it devastated me but now I regard it as a great lesson and excellent value for the money really. Aswell as not gambling unless you have advantage it taught me that you can have long winning periods even if your gambling is -EV, the most dangerous of all situations really since you can really get the bug for it, kidding yourself you are +EV when infact you aren't.

So when I heard about this guy in the USA I thought that perhaps there were opportunities now. Infact with the tinternet etc I would have thought something might be possible but your replies flag up the same sort of worries I have.

Are all private day traders doomed to a -EV existence then like the punters doing lucky 15's in Ladbrokes?

So the only way to make a living from the stock market is by learning to trade in the short to medium term which means not relying on "the stock market always goes up" notion.

Did you mean shorting by this? Shorting has always sounded rather good fun to me .

[WhyAlwaysMe]

Making money with Technical Analysis alone dpesn't work in practise because the markets run on TA as well as Fundamental Analysis (FA). And that's where it's hard for the small investor to get the information unless one spends a fortune on specialist literature.

Yes, the data looks good, the charts look nice but believe me it isn't that simple. I have spent years poring over the screen of MetaStock and other TA applications and I can say, from experience, that TA is only a small part of the market otherwise everyone would be doing it.

With trading the footie markets we have more of level playing field. And I can tell you that the stock maket isn't anything but level.

Well at least you developed some transferable skills .

Hope you didn't end up like this dude .

http://youtu.be/goABzyuEfYI

[shadowninja]

Did you mean shorting by this? Shorting has always sounded rather good fun to me .

Being open to go long or short and not holding into the pit of hell... If you were shorting and holding from 2003, you'd have probably gone bankrupt before the crash.

[shadowninja]

Well at least you developed some transferable skills .

Hope you didn't end up like this dude .

http://youtu.be/goABzyuEfYI

http://youtu.be/vIMwMsY0ndo