A: You can but it takes time to acquire the knowledge. First pitfall is being seduced by penny shares which promise huge percentage rises. Next one is being attracted to quick win ‘Day Trading’ systems…etc perhaps trading. Sure you can get lucky e.g. KMR, but projects can easily get delayed and before you know it 12 months have passed and you're still waiting, e.g. Minco! Today I mostly trade wider trends using highly liquid, large cap stocks which are traded 1000's of times a day by the banks, funds…etc. It’s a case of ‘buy high and sell higher’ and of course ‘the trend is your friend’. Never buy a share just because it is cheap - it can get a lot cheaper! Same for a rising price - no such thing as it can’t go higher. Of course penny shares will always have a place, say in 10% of a portfolio. But they should be the execption NOT the rule. As long as you cut your losses short and let your profits run, you will make money. However you need to apply a strict stop loss, say 7% - 9% from your entry point. And you leave it with your broker so it will be executed automatically and without you being able to change your mind. Turn off your monitor and stop looking at live prices. Thats what I've learnt! Even if you are wrong 7 times out of 10 (or more) on your stock picking, as long as you apply the above discipline you will make money. I prefer to let my profits run, the reason being you need to cover costs, i.e. the other losing trades!
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A: A very interesting question indeed... here is my honest opinion. Unless you have extremely large capital I personally think it is very hard to make enough income from just trading. Let's say you can make 20% after all costs a year which would be good going. You'd need £300,000 to make £60,000. And of course if you take the money you aren't increasing capital
But what I think most of all is that if I needed to live off my trading completely I would be a much worse trader. Why? Because of the pressure of having to make money all the time. I do have in fact a residual stream of income but without that income I am pretty sure I would be less likely to take losses fast and more likely to snatch profits too quickly. I think it is really hard just to make money from trading and because you never know what's round the corner (say a terrorist event knocks 20% off your capital) I would always expect to have other income streams. It personally makes me feel more secure.. and therefore makes me a much more relaxed trader... and so makes me more money!
My feeling is a good market player could make about 20% a year. Of course some are a lot better. I think trading for income is much harder than trading "rainy day" money which is my case.
Hope all that makes some kind of sense.
A: Sorry but I don't offer a managed service as that's not really my business. I was in the brokerage industry once and we used to manage some money for clients but it was a real headache because whenever you had a bad trade or a losing run they all used to whine too much even if you made them good money over the year.
My view on investing (not trading which is a completely different beast) is different to most of the brokers anyway because they want to do things short term and generate lots of commission.
Personally, I think that taking a long term lookout is best (6 months to 4-5 years), then if you catch one of the big trends all you have to do is sit back, not worrying about what the stock has done today, is it up/down etc.
Taking this perspective 99% of the time today's stockmarket action is irrelevant.
It's been a few years since I left the financial markets so don't know of anyone I can recommend. In my opinion it would be hard to find somebody because a) most of them will want to short term trade your money generating commissions and b) finding money makers is hard enough anyway!
A: I have to disagree with the point you make regarding indices, the volatility on the DOW is 1.07 compared to say 4.57 on DGO, 1.21 on DTY.
So therefore one can argue that the DOW is a safer trade, the mistake most make is not having the funds to trade the indices to its full potential. A 1-point spread contract on the Dow (at 12115 example figure) gives you the exposure of $121,150 without any stops (full margin) obviously there are not many players that can do that, so therefore they are at the mercy of the played stop by the company in question. I have had more stressful trades on individual companies at some time. ;)
Most traders who trade the DOW do set out to be losers but for a different reason: if you take out a position on the DOW with a 20 point stop, your expectation should be a return of 60 points (3:1 risk reward). The average intraday move of the DOW is 110 points, so how likely is that you will capture 60 of them in one move? Quite unlikely and this is why most lose.
A: This is a hard question to answer. One of the biggest obstacles is finding out what is right for you. You will lose money finding out. Finding a winning strategy is hard. Believing in it is harder. Then when you find a strategy you have to stick with it and that is the hard bit - discipline. Holding firm when your trade is working against you is very hard to control. Letting it go when/if it stops working is tough. Admitting it wasn't a good strategy to start off with humbling.
The reverse is also true. Take a recent personal example bought DTY at £7.02 currently up 33 points now do I sell for a 35 point profit or ride it, only time will tell, however if you asked me on Sunday, ‘Andy, would you be happy with 35 points on a 3 day trade answer yes I would settle for that would be the answer’. However, greed can be hard to battle and one that is harder than the market most times.
So in no particular order -:
Good luck and if you are new to the game, keep the stop losses on until happy to lose your stake and sleep at night ;)
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