Becoming a trader - where to start?

Apologies if this has been asked 100 times already (if there's an existing thread that covers this, let me know!).

Anyway, having recently quit my full time job, I have a lot of free time on my hands while waiting for another role to come up so I thought I'd spend some time learning how to trade (as opposed to investing, which I've been doing for the last few years).

There are so many books and websites out there on trading, I don't know where to begin. I came across a recommendation for Daryl Guppy's books which seem good, but even he has many books to choose from! I'm willing to spend time reading and learning before I get stuck in and make my first trade, but I'm wondering how much learning I would need to do to get to that point.

So for you seasoned traders, if you were starting from scratch with knowledge about investing in shares, what would your steps be to become a trader, and what timeframe would you be looking at before making your first trade (assuming you could spend your days doing this)?

Thanks in advance, and apologies again if this is in a FAQ somewhere.

PS My plan would be to trade within the NZX only at first, to keep tax simple.

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Originally Posted by Cricketfan

Apologies if this has been asked 100 times already (if there's an existing thread that covers this, let me know!).

Anyway, having recently quit my full time job, I have a lot of free time on my hands while waiting for another role to come up so I thought I'd spend some time learning how to trade (as opposed to investing, which I've been doing for the last few years).

There are so many books and websites out there on trading, I don't know where to begin. I came across a recommendation for Daryl Guppy's books which seem good, but even he has many books to choose from! I'm willing to spend time reading and learning before I get stuck in and make my first trade, but I'm wondering how much learning I would need to do to get to that point.

So for you seasoned traders, if you were starting from scratch with knowledge about investing in shares, what would your steps be to become a trader, and what timeframe would you be looking at before making your first trade (assuming you could spend your days doing this)?

Thanks in advance, and apologies again if this is in a FAQ somewhere.

PS My plan would be to trade within the NZX only at first, to keep tax simple.

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Short answer: Don't.

Slightly longer, around of retail 99% "traders" fail due to lack of skill (There is also adifferenc between day and monthy trading). If you think you are in the 1% then my advice is read up and invest overseas. Youy wont be able to day trade in NZ due to liquidity etc. Maybe you can do the Forex market from NZ but that an entirely different skillset.

I would suggest sticking with "investment" and learning it properly.

Hmmm, okay, well there goes that idea!

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Originally Posted by Cricketfan

Hmmm, okay, well there goes that idea!

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You are easily swayed, if that is the way you approach goals then maybe Don't is the best answer. I don't trade however form a small investment starting 30 days ago I have seen a rise in my investment of 15% Thanks ATM. ZLD. Now if I could do that every 30 days I would be happy to be a Trader. The problem it seems for a beginner is psychology, read some good points here. It also depends on how much you are starting out with and the options that come with that. Reading this site and following some threads from the beginning to end is very educational. You will see some champion a particular Company and some detract but the least you should dois some of your own research on the chosen investment. Experience is the best teacher.

There will be as many suggestions as to how to go about trading as there are people on this forum :)

A few of my suggestions would be as follows...
1. Suggest you read all of the posts by KW as a starter for 10 - for short term trading I believe TA is the way to go as you are really betting on short term emotion in the market.
2. Also have a read any posts you can find of a poster called Phaedrus - also a TA guru that used to post on this forum - unfortunately most of his charts are no longer available which is a great pity.
2. Liquidity is very important.
3. Be very very prepared to lose some as you won't always win that's for sure. Or to put it another way, if you cant afford to lose some then don't start. Its essentially gambling.
4. Start small to see how you go.
5. Good luck - its good fun

Thanks Pedro. I had a look at this thread KW started: http://www.sharetrader.co.nz/showthr...ries-and-exits

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1. When to BUY
I only ever buy companies that are in an uptrend. (Tried buying downtrends, lost a lot of money). The trick is to know when to enter. Get in too early, and the uptrend may turn out to be a dead cat bounce, or fizzle out. Get in too late and you may miss most of the run. My favourite entry point is when the 50 day moving average crosses above the 200 day moving average and the share price is above the 50 day MA. While you miss the early run, the risk of the uptrend not continuing is somewhat abated. I have tried entries based on just the share price crossing above both MA, but 3 out of 4 picks fail to continue on. I confirm the trend by watching the MACD (needs to be in positive territory).

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Just to check my understanding of the above, would SUM have had a BUY signal at $5.40 a few days ago as indicated by the attached chart?

Attachment 8769

Also when he says "MACD needs to be in positive territory", is that referring to the green MACD line in the above graph? What does the Divergence histogram indicate?

Suggest you do some reading on TA if you want to follow that path - there are a few threads here that should point you at some books that are worthwhile reading - for example "Books on Technical Analysis" is one thread that I saw on a quick search - you could also start using the free version of "Incredible charts" which will allow you to practice some TA and to make some dummy trades on more liquid markets than the NZX - it is not something you will master overnight in my humble opinion. FA is still very important whatever else you decide to do.

As I said earlier - good luck and keep reading - there is a wealth of information on this site as it has been going for quite some time.
It's just a matter of finding the posters that make excellent unbiased posts of which there are many on this forum. (Unlike some of the other forums that you may come across)