I don't think it's worth taking this very seriously (I am a full-time trader at a hedge fund).
Most of it is technical analysis type stuff, with very little to nothing backing it up. The decent bits of advice that I can filter out are
> Concentrate on current investments, not past or future ones.
Good advice in general. A similar motto applies in poker - once your money is in the pot, it's no different from anyone else's money. Don't get hung up on sunk costs. However, you might occasionally give a thought to your future investments, especially if your current ones are somewhat illiquid (free cash is optionality).
> Always keep some cash for short term opportunities.
Decent advice, though it's questionable how many short-term opportunities you're going to spot if trading isn't your full-time occuptation.
> You don’t need to trade every day! You don’t need to trade every day!
In fact, if you're not a professional, the less you trade, the better.
> If a company publishes earnings and the stock doesn’t move much it might be that most people already own the stock. It could go down.
Or, more likely, the earnings figure was already priced in and it is as likely to go up as down.
> Stay away from penny stocks.
Very good advice. Stay the hell away unless you have some privileged information on the the company (and even then, stay away 90% of the time).
> if you're not a professional, the less you trade, the better
I once found some numbers that relate frequency of trading to earnings for individuals, & was initially shocked by just how strong the inverse correlation is.
Though on further reflection, I'm not sure it's really counter-intuitive. The more money you spend on broker commissions, the more you have to profit just to break even.
true...wouldn't pass for particularly insightful advice on a day trading forum, never mind Hacker News.
The very first thing, volume is the cause for price, is only true in 'normal' markets, until it isn't. When there's no bid, prices drop massively on no volume, see e.g. Russia this week.
Go read Schwager, John Train, Buffett, Graham, Bernstein, Malkiel.
I think there's way too much emphasis on volume here. Sure, if price swings wildly, there will be a large volume associated with it, but if there's a large spike in volume it doesn't necessarily mean a big change in price.
So ultimately volume is a measure of interest, but for every bought share there was a sold share, so it's not a measure of performance. I would bet that higher volumes might mean lower bid/ask spreads, meaning you're paying a smaller penalty to get in/out of a position, but for most retail traders that spread isn't going to make or break you anyway.
A problem in his analysis is that 'smart money' has to look a step or two ahead of his indicators at hyper-technical data that includes the velocity of price movement, volatility and the probabilities that price trends will continue, revert or propagate. It is all mostly inaccessible to the lay investor. I don't think Warren Buffet has an ulterior motive an advocating the average inventor focus on broad, low-cost index funds, like the S&P500, where you dollar-cost average in over time. Not that I take that advice, or my own for that matter.
I always wonder where it is best to start getting into trading stock. Like a place where you can play with a few shares but are not overwhelmed with lots of fees for simple transactions. Any suggestions? Possibly in Europe?
I would paper trade for a couple of months, i.e. don't use real money but write down buy/sell actions in your journal. then see if you made money or not. real trading is a lot different but through this you get used to the process.
If you are in technology for ex., I would have a look at tech shares, you will then have a slight information advantage at least.
Trading account: either just talk to your bank (most of them provide a trading account) or find a broker on comparison websites. ultimately the trading fee, if not exaggerated, is not that important if you only dabble once in a while.
I wouldn't trade stock per se, I would trade LEAPS or use a combination of options and stock trading.
For example, enter the market by writing Puts, earn a premium and if executed you then own shares at a discount. Then turnaround and write Covered Calls on the stock for out of the money strike prices. Earn a premium on your stock, and earn dividends, and capital gains. Protect your capital by using part of your Call premium to purchase a protective put on your stock (in line with your risk profile). If executed on the Call repeat by writing Puts.
Of course there is a lot you need to know, Google is your friend.
I'm a novice trader, and agree with everything said. However, about penny stocks..... I've dabbled in marijuana stocks for 2014 and its the only type of penny stock I have or will ever touch.
The only thing I am risking at this point are my profits because that's how little faith one should have in penny stocks.
learning from only the last couple of years risks ingraining habits that might be dangerous going forward, as the last couple of years have been a bull market. Once you've been through an entire market cycle, there will be even more perspective.
[+] [-] throwaway13qf85|12 years ago|reply
Most of it is technical analysis type stuff, with very little to nothing backing it up. The decent bits of advice that I can filter out are
> Concentrate on current investments, not past or future ones.
Good advice in general. A similar motto applies in poker - once your money is in the pot, it's no different from anyone else's money. Don't get hung up on sunk costs. However, you might occasionally give a thought to your future investments, especially if your current ones are somewhat illiquid (free cash is optionality).
> Always keep some cash for short term opportunities.
Decent advice, though it's questionable how many short-term opportunities you're going to spot if trading isn't your full-time occuptation.
> You don’t need to trade every day! You don’t need to trade every day!
In fact, if you're not a professional, the less you trade, the better.
> If a company publishes earnings and the stock doesn’t move much it might be that most people already own the stock. It could go down.
Or, more likely, the earnings figure was already priced in and it is as likely to go up as down.
> Stay away from penny stocks.
Very good advice. Stay the hell away unless you have some privileged information on the the company (and even then, stay away 90% of the time).
[+] [-] bunderbunder|12 years ago|reply
I once found some numbers that relate frequency of trading to earnings for individuals, & was initially shocked by just how strong the inverse correlation is.
Though on further reflection, I'm not sure it's really counter-intuitive. The more money you spend on broker commissions, the more you have to profit just to break even.
[+] [-] dragons|12 years ago|reply
You may not want to trade based on "privileged information" either... if it's insider information you can get in trouble. http://en.wikipedia.org/wiki/Insider_trading
[+] [-] RockyMcNuts|12 years ago|reply
The very first thing, volume is the cause for price, is only true in 'normal' markets, until it isn't. When there's no bid, prices drop massively on no volume, see e.g. Russia this week.
Go read Schwager, John Train, Buffett, Graham, Bernstein, Malkiel.
[+] [-] squigs25|12 years ago|reply
So ultimately volume is a measure of interest, but for every bought share there was a sold share, so it's not a measure of performance. I would bet that higher volumes might mean lower bid/ask spreads, meaning you're paying a smaller penalty to get in/out of a position, but for most retail traders that spread isn't going to make or break you anyway.
[+] [-] rrggrr|12 years ago|reply
[+] [-] akirk|12 years ago|reply
[+] [-] nader|12 years ago|reply
If you are in technology for ex., I would have a look at tech shares, you will then have a slight information advantage at least.
Trading account: either just talk to your bank (most of them provide a trading account) or find a broker on comparison websites. ultimately the trading fee, if not exaggerated, is not that important if you only dabble once in a while.
[+] [-] icu|12 years ago|reply
For example, enter the market by writing Puts, earn a premium and if executed you then own shares at a discount. Then turnaround and write Covered Calls on the stock for out of the money strike prices. Earn a premium on your stock, and earn dividends, and capital gains. Protect your capital by using part of your Call premium to purchase a protective put on your stock (in line with your risk profile). If executed on the Call repeat by writing Puts.
Of course there is a lot you need to know, Google is your friend.
[+] [-] j_s|12 years ago|reply
https://news.ycombinator.com/item?id=5107045
Edit: specifically (in the UK?), http://www.timetotrade.eu
About a week ago there was additional discussion of their support for live trading:
https://news.ycombinator.com/item?id=7300291
[+] [-] xpose2000|12 years ago|reply
The only thing I am risking at this point are my profits because that's how little faith one should have in penny stocks.
[+] [-] tim_sw|12 years ago|reply
[+] [-] bunderbunder|12 years ago|reply
"A bull market is like sex. It feels best just before it ends."