Newbie Do's & Don'ts

[excel]

Reo. Do you base your decision upon volume, float, share price, percentage of your portfolio or how liquid you are at the point of entry?

The opinion below is based on trading for a day trade or short swing trade.

I look at volume first. If volume isn't enough I need to go in with an amount I know if I need to get out I can without creating huge downward pressure.
I like getting in day trades when I look at 10 day moving average and two hours into trading already is over 60%.
With an upward trend going on at same time along with good technicals it allows me to take a bit larger position than one that is trading average volume and still waiting for stronger upward trend.

As far as share price goes if the stock has bounced already off the 5 day or other indicator I'm looking at if it's already half way to next resistance I'll get in smaller then I would if right after breaking resistance as it has lot more to go before volume may slow down due to those thinking it's not strong enough to break next resistence.

The float,outstanding shares, authorized, I'm only concerned with when I'm going long term.

As far as percentage of your portfolio, yes, that's something I definetly look at.
I want my money working for me at all times.
If I get into a stock with to much of my portfolio it takes away from other plays that come up.

I've lost out on way to many bounce plays because I didn't have any cash sitting there.
Never again.

Everyone has different idea's about your questions, as they should because there are so many different ways to trade out there which entails many different strategies.

Keep asking questions. One who asks questions is a winner in my book.

If you have missed any posts by Lance and Harbs they have some excellent posts about trading styles and money management on their ibox now.
I have learned a lot from them.
You'll see a lot of posts full of wisdom relating to your questions.

http://www.investorshub.com/boards/board.asp?board_id=212

[gramps2]

A 'newbie' Do....

"It takes more 'Guts', 'Gusto' & 'Brains' to sell!...Than it does
to 'BUY'!!

gramps

[bbgold]

For Lazarus a Newbie Do
NEWBIE DO...

first of all - great advice from BOB.

i like this: NEVER risk more than you can afford to lose. If you have $100 to put into the markets consider that you will be risking a night out dinner and a movie for the entire family, or something comparable, that you will not be able to Enjoy if you lose those funds.

TO THAT I WOULD ADD ...when you make a winning trade --- take some $$ of the table and consider turning portion of those profits into something tangible like that dinner out or a movie for the family bob mentioned ...or a fishing pole or a lamborgini or whatever.

dont put ALL your winnings back into another bet. translate a portion of them into a reward or something with less Risk.

i take a portion of my profits from penny stocks and move them into my PENNY LANDS account. it is still an investment but much less liquid and i am forced to hold for a longer period but less likely to lose.

to date i have purchased 14 properties with profits from penny stocks all paid for with CASH - including a condo i deeded over to my eldest son. Week before last I purchased 5 acres in fremont valley [about 20 miles north of mojave] and last year i picked up this 3.6 acre property.



I would not sell this property cuz its a great place to go for the weekend with the kids. sunrises and sunsets are Awesome:



by squirling away some of my profits like this i protect myself from making some foolish trade where i put in all my chips and lose.

imo opinion its very important to translate your winnings into some type of Reward. dont make a pile of $$ and then plow it ALL back into the market. Make sure to Reward yourself for any Success that you might have. Do not put all of your Eggs into one basket but look to use what you have to get you something that you will Enjoy and Always be there, where stocks might not.

Lazarus

[bbgold]

Newbie Do- Read, Learn, Ask Questions, Practice
You will hear it a lot from traders who started trading without taking much time to Learn before they started trading, they learned 'the Hard way' from having losses. Take the time to read and learn as much as you can about trading, money management, technical analysis, psychology, etc Before you begin to trade. If you are not sure you understand something then Ask questions. There are Many sources of information on the internet and from people on iHub that can give you insight to whatever you do not understand, if you ask. Once you feel you have a good understanding of what it takes to trade then Practice. Do not use real money but paper trade some stocks with what you have Learned to see if you can Successfully apply it. If you can Successfully paper trade some profitable positions then you can start to Consider using real funds. Give yourself some Time to make sure you have been through different market situations. Applying what you have learned can be different in Bull or Bear markets. Make sure you know the difference and how to recognize price trends so that you are not fighting against the prevailing trend with your trades. If you can have Successful paper trades and can recognize different stock and market conditions to trade then you will be ready for the move to trading with real funds.

The markets are like a calm pool of water with dollar bills floating on the surface for you to reach down from your boat and scoop up with your hand. What many don't realize is that underneath that pool of water is a sleeping alligator waiting to take your hand off if you are not careful.

Newbie Don't
NEVER risk more than you can afford to lose. If you have $100 to put into the markets consider that you will be risking a night out dinner and a movie for the entire family, or something comparable, that you will not be able to Enjoy if you lose those funds. Your savings are your lifeboat and if you choose to cast it out on the calm pool of water and are not careful the sleeping alligator can be more than happy to tear out the bottom of the boat and leave you swimming to stay afloat. NEVER borrow money to trade, otherwise you are just borrowing someone elses boat to sink and you will have to replace it somehow when it is gone. When you are considering whether to Risk your money in the markets consider what other Useful things you could do with that money and that if you make a mistake you will Not be able to use the money for those things. Many who start trading do not realize how quickly a few small losses can accumulate to Large losses, or how Big that One loss might be. I know that I did not when I started trading in 1987, and again in 2000. I did not study much, learned only a little ahead of time, "Hey, markets are going up. What else is there to know?", paper trades all were profitable, and had my boat sunk within a year of trading on One trade that went bad. Take the time to Learn and Practice what to do Before you use real funds. Learn how to make your trades Safe with stops and hedges. It might take you a year or two to become comfortable with what to do in different situations but that is a short time to study to have the next 20-40 years, or more, to trade Successfully.
I hope this Helps. Sincerely, Bob :^)

[timhyma]

RIGATONI- I completely agree with you. The filings hold a wealth of information on a company.

I like to pay attention to the legal matters in the 10-K- as this is where a lots of problems can be seen. i.e. vendors not being paid, patent infringements, outright getting sued for making bad choices, etc..


I use http://www.nasdaq.com/ as a source to get them. just plug in the symbol and hit info quotes. Next hit company filings, then select the report you want (either 10-Q or 10-K for this message).

Here is one to look at (VTSI)to show the risk invovled (I own a small position already)-
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001162327%2D03%2D000067%2Etxt&FilePath...

First thing is look at the balance sheet- notice the cash on hand in the assets? Concern number 1- no cash (which increases risk)

Next look at liabilities- slight incease over last year (and book overdraft liability?) concern number 2- are they paying their debts (more risk added, imo).

Next is stock holder deficit- aproximately 9 million shares added to the outstanding (totals 46% of authorized). Not serious dilution, but shows they could be using stock to pay the bills, which brings the price per share (pps) down, making it less attractive in some cases.

Not going into the accounting parts of this- but look at cash flow. This will answer some of the above concerns, along with the managers discussions.

Gramps- hope this helps a "newbie" <g>.

[RIGATONI]

Newbies ~Do~ Become accustomed to reading Quarterly filings.There is a wealth of information in there that cuts through all the inaccurate posts on many boards.





~Rig

[renshen1]

Newbie do: Beware of following other traders daytrades. The obvious risk is that you'll probably get a higher entry and lower exit price. Learn to make your own entry/exit decisions.

[OldAIMGuy]

Newbies, Don't forget that the people on TV do not have your best interests in mind when they talk. Their business is putting a "spin" on minor news events to make them more "interesting."

Be rational in your investments and ignore the TV news. If it's on CNBC, it's already too late for you to do anything about it.

Best regards, Tom

[Capitalist]

Newbie DO: Understand what a gap is.

Not sure if this is the only definition out there but it's one of them:

A gap up occurs if today's low is greater than yesterday's high.

A gap down occurs if today's high is less than yesterday's low.

[teapeebubbles]

NEWBIES do learn about bashers and how they affect stock prices

***A MUST READ***

http://messageboardfools.com/bashers.htm

[teapeebubbles]

NEWBIES must do: How much risk can you handle? Risk is always part of making any kind of investment. But no one says that you have to be foolish about it Remember, 20/20 foresight is better than 20/20 hindsight.

[teapeebubbles]

**NEWBIES_DO** EXCELLENT FREE Schedule D program -

http://americanware.netfirms.com/downloadfull.htm

[teapeebubbles]

***ATTN NEWBIES*** 20 GOLDEN RULES FOR TRADERS

Want to trade successfully? Just choose the good positions and avoid the bad ones. Poor trade selection takes a heavy toll as it bleeds your confidence and wallet. You face many crossroads during each market day. Without a system of discipline for your decision-making, impulse and emotion will undermine skills as you chase the wrong stocks at the worst times.

Many short-term players view trading as a form of gambling. Without planning or discipline, they throw money at the market. The occasional big score reinforces this easy money attitude but sets them up for ultimate failure. Without defensive rules, insiders easily feed off these losers and send them off to other hobbies.

Technical Analysis teaches traders to execute positions based on numbers, time and volume.This discipline forces traders to distance themselves from reckless gambling behavior. Through detached execution and solid risk management, short-term trading finally "works".

Markets echo similar patterns over and over again. The science of trend allows you to build systematic rules to play these repeating formations and avoid the chase:


1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming.

2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat.

3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool.

4. Short rallies not selloffs. When markets drop, shorts finally turn a profit and get ready to cover.

5. Don't buy up into a major moving average or sell down into one. See #3.

6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble.

7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can.

8. Trends test the point of last support/resistance. Enter here even if it hurts.

9. Trade with the TICK not against it. Don't be a hero. Go with the money flow.

10. If you have to look, it isn't there. Forget your college degree and trust your instincts.

11. Sell the second high, buy the second low. After sharp pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try.

12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel.

13. Avoid the open. They see YOU coming sucker

14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom.

15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it.

16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.

17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action.

18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.

19. Bottoms take longer to form than tops. Fear acts more quickly than greed and causes stocks to drop from their own weight.

20. Beat the crowd in and out the door. You have to take their money before they take yours, period.

[gramps2]

A 'newbie' Do!

If you're gonna play the pennies....

You 'MUST' consider the following!

Subject: 'Leverage' aka 'Money Management'

You must use percentage/leverage, if you do, it becomes your friend.

Let's say you bought 'XYZ' @ .02 and for whatever the reason, you're still holding all your initial and subsequent buys. You come home from work one day and find it closed @ .075.... that's over 300%.... "I think you're starting to fall in love?" if you don't sell some now! Don't get caught holding a bag because you read some faceless and nameless post that said 'It's going to .12".

The thing has already given you over 300%.... in order for it to give you 1 more 100% it must "DOUBLE!!!".... 'hello!'

You're overdue. Sell some of your little boy/girl friend and go to cash and start looking for another 'Lolla Lovely' or "Mr. Wonderful'.

The attributes your new love interest should have should be the following:

1) The PPS should be at least 200% lower than the PPS of the stock you sold.

2) It should meet the same criteria that made you buy 'XYZ'.

3) If you don't find it today......"THERE'S NO RUSH".......'that's why God made tomorrow!'

The more shares you have the more 'bang for the buck'.

"LEVERAGE is KEY"!!!!!

Take care.

gramps

[teapeebubbles]

"Good judgement is usually the result of experience. And experience is frequently the result of bad judgement. But to learn from the experience of others requires those who have the experience to share the knowledge with those who follows."

[gramps2]

This is a 'newbie' don't. (repost)

"Had to get out of XYZ stock because I had to pay my rent, what is a good re-entry point?"

Very sad.

That is a paraphrasing of a public post that was directed towards one of the i-hub Guru's this week. I don't think the post received a reply for obvious reasons.

Have to get this off my chest.

You shouldn't be using monies for investing/gambling that you'll be needing for household expenses! It's crazy.

If you are your only responsibility that's one thing, but if you have other souls looking to you for food, shelter and education, playing the market with 'rent money' is 'NUTS'!

Just don't.

gramps

http://www.investorshub.com/boards/read_msg.asp?message_id=2538822

[Myst]

Dews.

Screen for plays that meet your criteria.......assuming you are at a level of skill that can identify criteria that meets your trading style and objectives. If not, research and learn before you part with your cash.

Newbies (especially those with limited funds......under 10k) should do themselves a favor and play only stocks that are valued less than they are worth. That way if they choose wrong, the odds of the play coming back to breakeven or higher are greater so the play can be held longer. This eliminates virtually ALL penny stocks.

Find a screening tool (there are several free ones on the web........do a google search for "stock screens") and search for quality stocks that are valued less than they are worth (and not necessarily "undervalued" stocks). I use VectorVest for stock screening and highly recommend it, though it isn't cheap. Pays for itself though, in my opinion. All my screens include the criteria "Stock Value > Stock Price".

Here's an example of a screen for stocks under $10 that are valued for more than the current price:



After the screen for the proper stock candidates is accomplished, a newbie should have a disciplined approach to trading the stocks he/she is interested in. I use the X_DEV system, which you can investigate by clicking the link under my signature if interested.

Good luck!

[excel]

Buying high and hoping for miracles kills.

So very true.

[DCschmoeka]

On a similar note and applying the Bandwagon Theory which norms just posted:

If you are late to the party, be sure you dont forget to leave in time before the whole thing goes to hell.

[DCschmoeka]

DONT chase and hold! .......................

Many times, you will watch a stock that is shaping up for a run, but you cant make up your mind about getting in, or you cant fill. At the moment you decide to get in or at the time you finally fill, the stock is much higher than the entry you would had desired.

The heat of the moment took over, and you are in considerably higher than you planned.

But a bad entry is the beginning of losing money. Trading is about discipline to stick to ones plans.

Let´s say you planned to enter at .50, but you got in at .56 - your plan was to ride it to .60 or a bit lower.
Now lets say the stock seems to top out at .58 on bid, with your entry at .50, you will gladly take profits. However, with your entry at .56, you will most likely only cover your commissions, so AFTER getting in the trade, you CHANGE YOUR PLAN and decide to "hold for more"..... now your stock retraces to .52 and you are RED, you become nervous, "average down" or "cut your losses" or "hold thru the dip"??
Now, you are not cool and acting smart as you should in order to survive in the market, you focus on that trade, miss other trades, you get caught up in PSYCHOLOGY. Just an example.

So when you chase, stick to your initial plan, and settle for smaller gains. Chances are that you will sell for a loss on a retrace, which might take a few hours or a few days.

Best thing is to avoid chasing, yet it is not always possible. So if a stock runs past your desired entry level, you have the following options:

- Pass. There WILL be a next trade. Stock exchanges are here for more than 100 years, and they are here to stay.

- Scalp it. You buy much higher than you planned to, so you get out with a small gain after a few upticks. Buy .56 sell .58 for example.

- Wait for a dip. On every run, there is a retrace. You will have the chance to fill close to your desired entry in many cases.

- Go Light and average. If news is stellar, or if you exspect a hard run, get a small starter position. On a retrace, you double or triple your position for a nice average. IF the stock really runs hard and never retaces, you have at least a small position to participate with less risk and much less pressure on you. But those stellar runs dont happen often, dont hope to get one when you need it.

Always re-check your strategy for the trade. Why do you like the stock, whats your target, whats your timeframe, what is the stop loss?

Buying high and hoping for miracles kills.

[gramps2]

A 'newbie' Do!......(my Wife reminded me about this one)

Years ago after a string of stupid/bad trades I came up with this idea.

'POSTERS'!........don't laugh!!!!!!

It's very easy to get caught up in the moment......you're watching multiple positions, some up, others down. You're constantly checking for news. You're hungry. One of your 'flippers' looks like it's about to run.....one of your longs just released financials, you don't have time to read them because you've got 3 e-mails/PM's you haven't responded to yet!.......&.......'ya gotta go to the 'potty'.....You say to yourself "what should I do next?"..... (Sound Familiar?)....I'll take a SWAG (scientific wild ass guess)..... "you went to the potty"!

During 'moments in time' like this it's very easy to lose your discipline!!!

When this happens you make 'DUMB desicions' that turn into BAD/stupid trades!

To combat this 'temporary syndrome', make yourself a few 'posters', one word or one line 'bullets'!!....put these literary 'epics' on the wall over and around your 'monitor', the door to your office, inside the 'frig'.........even the 'POTTY'!!!

Heres a few of my 'oldie but goodie' dope slap posters:

"CHILL"......."LEVERAGE is KEY"........"DON'T FALL IN LOVE"......."Take FIVE & DFRAG"........"TAKE YOUR TIME!"......."NOTHING WRONG WITH GOING TO CASH"........"HAVE YOU TAKEN YOUR $$ OFF THE TABLE YET?"......

You get the idea.

I made my 1st poster in Kindergarten.....brought it home and showed 'Ma'.....she gave me a 'hug'....then she nailed it to the 'ice box'!

Take care.

gramps

[njnorm]

The Bandwagon Theory:
A Glimpse At How The Market Really Works

(exerpt from Tools & Tactics For The MASTER DAYTRADER
by Oliver Velez and Greg Capra) - some of the best reading you'll ever do!

Imagine a bandwagon that is rolling forward at a quickened pace. Music that is very pleasing to the ear is being played from speakers from each side of this bandwagon, and a few people on the back of the wagon are partying, having the time of their lives.

The music, loud and clear, starts to attract many other onlookers that happen to be idly standing on the sidelines. These onlookers, unable to resist the sweet sounds being played, run to join the party that seems to be going on.

Progressively, more and more onlookers jump on the back of this bandwagon, and those few who were enjoying the first phase of the party begin to leave.

As the crowd of the new party animals on this bandwagon grows larger, the bandwagon finds it harder and harder to move forward at the same pace. It slows, enabling more and more late onlookers, witnessing the great fun, the chance to jump on.

The crowd grows even larger. Larger and larger the crowd grows, until the bandwagon, heavily laden with bodies of drunken party animals, can no longer move forward.

It finally comes to a complete stop.

Now that the bandwagon is at a complete standstill, more people jump on. And why not? At this point, joining the party is easy. Absolutely no work is required, for individuals wanting to join the crowd no longer have to run to jump on board.

But the nature of the bandwagon is to move forward. It's motionless state is unnatural, and therefore cannot last. It tries to move forward but can't.

The crowd piled on back is too large. It must free itself of the heavy burden. And it does.

It quickly shifts itself into reverse, and jolts backwards, knocking a few of the party animals off the back.

The music stops.

Puzzled faces from the crowd begin to emerge. Before anyone figures out what's going on, another backwards jerk takes place, only this one is move violent. Another large group of people get thrown off the back.

Now reality sets in.

The FUN has turned into a NIGHTMARE of EPIC proportions, and panic begins to run rampant. Some decide to jump off to their deaths. Another thrust backwards sends an even larger group of drunken, offbalance people, hurling to the muddy ground.

It doesn't stop.

The jolts backward continue, each successive one more violent than the last. At this point, only a few die-hard dwellers are holding on, their very lives hanging in the balance by a very thin thread.

Failing to be completely free, the bandwagon angrily puts the pedal to the metal, and this final thrust backward is so vicious that it's front wheels lift high off the ground, momentarily suspending the wagon in a perpendicular position.

The last of the hangers-on crash to the ground, broken and maimed to no end.

At this point, a new group of onlookers emerge from the nearby woods. They are clean and serene. Each move they make is deliberate and powerfully energetic, for they did not take part in the tragedy that just transpired. Or did they?

A few of the dejected souls lying on the ground take a closer look, a look that reveals something very interesting.

This seemingly new group is not new at all. It is the same group that was seen quietly exiting the party before it came to it's violent end.

An even closer examination by a few more beaten-down onlookers reveals something even more stunning.

This group not only exited the party early, they were the originators of it!

"My God," someone exclaims. Paralyzed, and unable to move freely, all these dejected souls can do is watch, as the masters of the game go back to work, again

No sooner does this bandwagon's wheels hit the ground, than this professional platoon bolts for the wagon. In a flash they are onboard. Easy

The bandwagon, now free of the larger crowd, can move forward freely and gracefully, comfortably carrying the more astute group with it.

It's pace quickens, and before long a smooth elegant stride is in place. After a few more miles of uninterrupted movement, someone from the masterful group flips on a switch, and suddenly the loud sound of entertaining music starts up again.

Someone yells, "OK everyone. Here they come. Let's do it again."

Within moments, those who were the former victims of the backward crash become interested again. The music almost calling them from the grave.

And once more the never ending cycle repeats.


(the hidden wisdom embedded in these metaphors, will allow you to claim a higher level of understanding and mastery at the game of the market).

Happy trading all and hope you enjoyed this long exerpt!

Norms

[Hacktheripper]

The hardest part in my conversion to investing in the penny stock arena was the abuse to my faith and belief that what was printed was more or less accurate. At that time I was commonly known as the sheep.

Soon after investing in penny stocks I took my first really big hit on a stock. It was later found out to be a P&D play out of Canada. A hand scanning company that had 99.98 percent accuracy.. I am sure some of you remember this one a couple of years back. (kinda like the car that runs on water LOL)

I could not believe it nor let it go that I was scammed. The SEC knew about the scam and "tried" to track them down, however, the scamsters were long gone...

Man was I pissed... I wrote everybody I could find, filed forms, and complaints to several governmental agencies. Guess what.. no response...

Well my anger slowly burned away and I finally came to the realization that "the system" was too large and no matter how hard I try to do the right thing, my voice was powerless.

I turned my frustration from one of fighting the system (even tho i was a victim) to one of finding out how the system worked.

After spending some time around OTCBB land you will begin to see the bigger picture. Companies do their pump and dumps, wait a few months, change their company names and symbols wait a few months more and do it all over again. Wash, Rinse, & Repeat.

Shell companies are well known for their hype on "reverse mergers". Rumours will abound about huge reverse mergers on low float stocks and the stocks go from .02 to .35 in a few days/weeks and slowly drift back down.

I am not saying every company works this way, but many do in OTCBB land. That is why it is important to "analyze" PR's and try to understand what the true purpose of the promotion is all about and to make sure your on the right side of the trade.

So what do I do. My trading decisions were torn apart from listening to friends, colleges, chat room chatter, etc... well to say the least those options did not work for me.

I found the Swingtrade crew on RB (a good bunch of traders). They ultimately flew the coop of RB and landed here at IHUB.

During this time, and I cant state exactly when, I met OMNI. I knew how to "read" a chart at that point, or atleast I thought I did. If the stock was going up in value, it had to be a good stock... right??? LOL

I was amazed, that almost 70% of this guy's (OMNI) posts were showing green and many were substantial upward PPS. I could not believe it. Well, each week I would read as much as I could, and listened very closely to what OMNI had to say.

Through everything I have learned one fact stands clear, the charts tell 90%+ of the story. When to buy, when to sell, and when to hold. Because of his techniques, I have gained enrichment not only in my knowledge but in my portfolio as well.

OMNI thanks for the education, your help, and all the time you have spent in making myself and many others better traders.

[BullNBear52]

Some newbie tips.....

http://www.investorshub.com/boards/read_msg.asp?message_id=2576526

http://www.investorshub.com/boards/read_msg.asp?message_id=2576931

http://www.investorshub.com/boards/read_msg.asp?message_id=2579064

[gramps2]

This is a 'newbie' don't.

http://www.investorshub.com/boards/read_msg.asp?message_id=2538822

"Had to get out of XYZ stock because I had to pay my rent, what is a good re-entry point?"

Very sad.

That is a paraphrasing of a public post that was directed towards one of the I-Hub Guru's this week. I don't think the post received a reply for obvious reasons.

Have to get this off my chest.

You shouldn't be using monies for investing/gambling that you'll be needing for household expenses! It's crazy.

If you are your only responsibility that's one thing, but if you have other souls looking to you for food, shelter and education, playing the market with 'rent money' is 'NUTS'!

Just don't.

gramps

[gramps2]

A repost.

If anyone feels that a subject has already been covered, please feel free to revisit it. We all have a little different style, wrinkle on any subject.

If 'newbies' see, that the same advice is coming from all different directions/posters it'll sink in, I hope.

I thank all the people who took the time to post here!

I'll bet you've already saved a least one 'newbie'!

Take care.

gramps

[SpillWay]

DO go to Investopedia.com and click on their SIMULATOR link.

Here you can set up a complete "practice" account and buy and sell stocks without risking a dime. You are given $100,000 to trade with and it is not only educational, but sometimes fun since you aren't using your own dough.

Also get familiar with the rest of Investopedia.com. It is a valuable source of info about the markets, charting, analysis, and lots of other cool stuff.

They have one of the best candlestick tutorials anywhere on the web.

And best of all, it's free.

[KastelCo]

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=19886681

[jenna]

Newbie don't and do's

DON'T follow anyone into a trade that says simply "xyx looks good" mostly because they are reading 'most up' lists and the stock happens to appear there. Usually the trade is over way before the "declaration" 30 minutes later you'll hear them say "Did anyone follow me into this trade" but if the trade is down, you hear ....nothing at all!

Do some homework. A 'guru' suggests a leader, even a spiritual leader worthy of reverance. That is "bull" The best trader is a NERD. Studying at night, reading reports, setting up plays in advance and entry targets in advance much like a teacher sets up a lesson plan. Reading about pending earnings reports or mid-quarter reports, pending mergers, FDA approvals, etc. A research nerd works up to 3 hours a night, but can slide into a play easily during the session because its already set up well and the targets (entry, exit, support and resistance are clear). The "Macho" and failed trader needs no preparation, he/she won't read they just go where 'the action is' They are "above" reading and certainly think they will KNOW when the TIME is right to enter although you have no suggestion of when that time is until its over and they are "in already" This makes a novice feel inadequate when in reality, it might be just a pat on the back or a game for that particular trader. It takes time to learn to trade and a good, practiced trader will lead a novice to the right time slowly and in advance, carefully explaining the strategy, and give you ample time to enter and set up your stops.


DO NOT SCALP but set up longer term positions (not 3 to 5 minutes but rather 30 to 90 minutes or even 120 minutes) I have met 3 good scalpers in my last 7 years as a professional trader and they are so rare they are often on tv, lecturing in trading shows and money shows, and rightfully have best sellers written on the subject. They are as rare as a Dodo bird.

Do not chase the same stocks until you "get it right" Check you trading accounts. Are you in one stock too many times as opposed to varying your plays across sectors? Trading one stock too much suggests "DESPERATION" and gambling as if 'waiting to get that trade right".


Do look for strong sectors if you must be long, but when the prevailing trend is down DO NOT SWIM against the trend looking for a long thinking its a final and bottom. Its not its just a "pause that refreshes" until the prior and longer term trend continues (whether this be a 5 minute chart or even a daily chart) its the same.

Don't sit on the sidelines waiting for the market to go up. Get your feet wet and play those shorts. There are very good shorts setting up in the dow and previously impenetrable sectors. Check for signs of severely overbought charts. Some stocks are up on fumes, and with an impending earnings report, they cave in like a rubber mask or deflate like a stuck BLIMP.

[Capitalist]

lmao!! You go it! A newbie DO

Do read the article that I wrote called "Strategies, Strategies Everywhere, But I Don't Know What To Think!"

That might help to clarify how to classify and choose from among all the different types of strategies out there.

It's on the IBox for the "Cap's Trading Diary" board.

[WinLoseOrDraw]

so according to the DOs and DONTs posted so far, a newbie should...

go short because the market is trending down and go long because when everyone is selling is when you should buy. after going long and shorting the newbie should exit quickly if there is a profit and let it run to maximize the profit and have a tight stop loss to limit losses and have a wide stop so the position can exercise patience.

did i miss anything? :)

[SpillWay]

DO remember that you are the market. It is not some
ghostly shadow that does mysterious things out of your
sight. It is what you make it, what I make it, and
what every other trader makes it.

The market does not go up by itself, it's the traders
buying more than the sellers are selling that makes it
go up.

And don't blame every misfortune on the market. Examine
closely the actions that led to the disappointment and
learn from it.

[SpillWay]

DON'T fall in love with a stock. By that I mean, if a stock is approaching your previously established stop loss price, don't change your stop loss just because the stock has been good to you; you've made a tidy profit and you want to give it another chance to turn back up.

For sure the stock has no loyalty to you. It will turn on you faster than a raging tiger.

[SpillWay]

Thou shalt neither buy nor sell when thou art in a state of panic.

If you have set realistic exits for a position, in both the up and down directions, you should never have to panic sell.

[wahz]

do:



1.buy at support and sell at resistance
2.trade with the tick and not against it
3.the trend is your friend in the last hour. Don't expect the trend to change as volume increase in the last hour.

[junkyardbear]

Newbie don't get over confident/cocky.
You hit a few lucky ones and you think wow this is easy!
So you put way too much money on the line....
Bamm game over:) Get it BAMM.lolhahaha

[WinLoseOrDraw]

except now he can't listen to you, becuase you posted that on a bulletin board.

-g-

i like what you said. everybody screws it up at first, so bet accordingly.

[Chris McConnel]

Newbie Don't:

Don't listen to people who post on bulletin boards.


Newbie Do:

Truth is discovery.

Go make mistakes.

When your tired of losing money, start reading every book you can find on trading, till something hits home. You'll find what you are looking for.

[WinLoseOrDraw]

Newbie DON'T...

until you've learned what to do with real stocks, don't play with stocks so cheap you can buy them in 25,000 lot increments and only lose $500.

[sublime]

newbie don't panic!


Posted by: SUBBlime
In reply to: None Date:3/10/2004 6:49:48 AM
Post #of 91115


confessions of an idiot: at the start yesterday I had 25,000 a stock. I was green and happy. as the day went on I sold something that wasn't moving and bought 75,000 more of that stock...happy! about 5 minutes later someone came on the board and said pr was coming....and then it did! I took my time reading the pr, went to the kitchen to get a coke. when I got back it was freefalling!! I didn't have a clue what was happening except that my money was dissolving before my eyes.

I figured maybe I didn't read the pr right..I thought it was great news!!what the hell???
I panicked, freaked and sold my 100,000 ____.
I watched as it went back up.
I put in an order to buy back in as it was going up, never filled.

sooooooo, I lost about $500, lost my dividend shares, and felt like a total idiot.

bottom line: another lesson learned.
<never let panic rule my decision to buy or sell.
<there is always another stock to play so get over it and move on.

i will study this mistake more and hope that the lesson stays with me. I am sharing my stupidity publically so that maybe it will save someone else from my mistake. sub


______________________________________________________________________
I don't know anything! I don't recommend you buy, sell or hold. I am only responsible for my own screwups and that's plenty!

Art is who I am, Trading is what I do.

[jenna]

The Investment books: A Beginner's Guide to Daytrading Online by Toni Turner and her latest swing trading book. It shows how to utilize the market internals, reversal period trading and the Trin/tic and of course the S&P and Nasdaq futures, setting stops, buying off intraday support etc. Don't spend zillions on seminars, $100 books and trading systems that make only the producer rich.

Trading in the Direction of the trend of course but my best strategy would be sit on the sidelines until 10:00 a.m. Some traders go ballistic in premarket and at 9:40 or so shouting about upside and "nabbing" stocks only to have them sell short at 10:00 SPIKE HIGHS.



Prepare for gap ups that ultimately crap especially after earnings reports.




Once your stock appears in the Investor's Business Daily, its time to sell off and once its "recommended" as an earnings play to hold by briefing.com, get out while the going is good. Best time to buy stocks that are volatile is in the "anticipation" before an expected earnings report, mid-quarter report, etc.

chances are very high that the anticipation will end up in a rather strong reversal (see CYMI today for an example or the "INTC anticipatory mid-quarter update") Buy the rumor and sell the news makes good sense.



Prepare also for gap fills. Sometimes stocks are down so much in the morning that traders and even some investors look for a bargain and it gets filled quickly. Keep on the lookout for any earnings reports that morning or downgrades on 'favorite' companies that might cause early buying.

[ReturntoSender]

Do trade with the strength or weakness of the industry or sector that the stock or option you are trading is most closely related to. Don't forget that there are ways that you can use to predict changes in the direction of that trading:

Short Term Indicators vs. the SMH; any index can be used - The first set of short term indicators I use are based on the put to call ratio. To go long it is best to wait for the put to call ratio to close over 1.0. On the chart below the put to call ratio now updates intraday but it is not always accurate! Intraday reading of the put to call ratio can be found here updated every half hour after the open:

http://www.cboe.com/MktData/default.asp

The more days in a row the put to call ratio prints over 1.0 this the more likely the bottom will be a strong one. The link above shows intraday readings of the P/C ratio.

Also closes on the put to call ratio below 0.50 and sometimes a bit above are indicative of a short term top. Watch the simple moving averages as well because periods of too much buying of puts or calls will almost certainly bring about market bottoms and tops respectively. On the CPC/VIX ratio; this is largely a longer term indicator where investors are likely to make more money on the long side once the short-term 21 day sma has crossed above the 200 day sma. The reverse is true as well. An investor will likely make more money on the short side when the 21 day sma crosses below the 200 day sma:

&r=4730>

>

Next I use the VIX and VXO can help to refine decision making on tops and bottoms upon reverses from upper or lower Bollinger Bands especially when the index stretches more than 10% above or below its 10 day simple moving average.

>
>
>

Also TRIN and TRINQ readings on the 5 and 10 day simple moving averages over 1.5 are bullish while readings below 0.85 are bearish. These readings don't happen often especially with the 10 day sma. They are also early indicators so the market can continue higher or lower for a while but they are reliable for indicating market turns that are about to take place.

>
&r=9586>
>

Finally some intermediate indicators that are highly effective for market timing using the NASDAQ New Highs and similar indexes are shown here. To go long: First wait for the NASDAQ New Highs to set a new low and reverse itself from an approach of the lower Bollinger Band. To go short: Wait for the NASDAQ new highs and other similar new high indices to set a new high print at, near, or above the upper Bollinger Band. I am also now using the NASDAQ McClellan Oscillator (Ratio Adjusted) ($NAMO) to confirm the above - Overbought above 25 - Oversold below -25. These charts do not update until after market close.



&r=0943>

[Capitalist]

Newbie DO

DO know the details of the market in which you're trading.

For instance, I don't know much about futures beyond the basics, so unless I learn a lot more I won't be touching them.

Can't futures contracts open "limit up" or "limit down" and stay locked like that? Also, is it possible to lose MORE than your initial investment on a long futures position? (My understanding is that you can, and this is why futures are not placed into the category of "securities" by the regulatory and licensing bodies).

[Capitalist]

...or open and close a position within the same day, but even that's not guaranteed.

[timhyma]

REO- As much as you feel comfortable with risking.

Personally, I stick to 20% max of my trading portfolio. The "safer" plays closer to 20% then the ones you have to constantly watch.

[timhyma]

Newbie Do's:

I agree with Rivet here. Always continue to invest and don't give up.

I reccommend papertrading a strategy before putting your money to work. This will lessen the burden of losses, if the play doesn't work.

Also- use trailing stops when your stock goes up. Find a percentage or amount behind the high of the day, and move up with the trend. Don't try to guess the top, and don't feel bad taking a profit under that high- cause what goes up, always corrects (sometimes drastically).

Buy a couple of investment books and read them- use the "advice" that fits your stratey. Throw out the complicated crap. Keep it simple.

Record your buys and sells as they occur. Makes tax time much easier, and you can see your results. I use an excel spreadsheet, and I know others that use a leger. Use whatever works for you.

Never buy a stock based on "hype" alone. Research the company. Minimum- check the filings and PRs for diltution and/or legal problems. Understand the risk before jumping in.

Have a plan for an exit stragety- before you buy the stock. Plan the trade and trade the plan. If the plan fails you, know where that breaking point (Max Pain)is.

Never put all your money on one stock. Keep a little on the side for the next opportunity.


Hope this helps a few folk- Tim

[was Steve]

Here is a link to 22 trading rules. Everyone should read it on occasion. i do and thats why i keep the link on my thread header. The hardest thing i have had to learn and trust me when i say i am still learning....is to learn to take a loss. In almost all cases it is best to take a loss if a trade goes wrong than hold and hope. Typically I and other traders will compound matters by adding additional funds to a losing trade making the total losses even bigger.

focus on stocks in a well defined uptrend if long or ones that have already broken if short. It is best to trade in the direction of the primary trend of the spx and ndx.

theres a couple well know traders ideas for the thread. I wouldnt say trading is ever real easy but if we dont follow the basis rules we dont have a chance.

good luck with the new thread
steve

http://www.investorshub.com/boards/read_msg.asp?message_id=1838187

[WinLoseOrDraw]

Set a maximum amount that you can LOSE on a trade, like 2% of total capital for example.

you can do this with futures - more or less - but in real life you can't actually do it with stocks because they can - and do - open halted. the only way to guarantee a max loss of 2% is to not bet more than 2%.

[WinLoseOrDraw]

How Investors Can Make Money Using Mass Psychology


can't quite put my finger on it...something doesn't feel right about learning how to fade "the masses" from an article distributed by...mass-media.

:)

[WinLoseOrDraw]

Do think - deeply - about waking up to a 50% overnight move in the "wrong" direction. Adjust position size according to intestinal discomfort.