Introduction to Trading the Financial Markets (With Q&A) - Page 4

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  1. #31
    Arthur is offline Banned
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    Quote Originally Posted by Pushn'lbs View Post
    Huge thanks Arthur! This is exactly what I have been looking for. You sir, are awesome!
    Let me know if other things come up!
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  2. #32
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    Arthur are you aware of price action trading? I'm sure you could use it when trading stocks but my question is do you think it could be a successful strategy especially with so much fundamental information going into equities vs forex.
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  3. #33
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    Quote Originally Posted by Bigd41190 View Post
    Arthur are you aware of price action trading? I'm sure you could use it when trading stocks but my question is do you think it could be a successful strategy especially with so much fundamental information going into equities vs forex.
    I know a lot of Forex traders who trade SOLELY off of price action and basic to advanced technical analysis. Though the Forex market is indeed driven quite a bit by fundamental factors, news isn't coming out on the daily basis. Big macroeconomic events like jobs and what not only come out every so often so in-between those big events, price action trading is the name of the game in my opinion. Keep in mind that I have done very little Forex trading though so I only speak based on what I've heard and seen.

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  5. #34
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    I have always thought and been taught that to make a living off of the stock market you need to have TONS in your account. Is that true?

    I have heard that if someone has 30k in their account they should expect about 1k-2k a month in profits if they are considered a good trader. So to make 6 figures in investing, you need to have $120-$240k already in a trading account.

    Does that sound right?

  6. #35
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    Quote Originally Posted by LIGHTWEIGHT View Post
    I have always thought and been taught that to make a living off of the stock market you need to have TONS in your account. Is that true?

    I have heard that if someone has 30k in their account they should expect about 1k-2k a month in profits if they are considered a good trader. So to make 6 figures in investing, you need to have $120-$240k already in a trading account.

    Does that sound right?
    100% incorrect. Good question by the way, thanks for bringing it up. Account size is very important in that you need to have sufficient equity to deal with losses you encounter, which are bound to occur every single month, it happens, no matter what your experience level is. That is as far as equity goes though, it does not limit how much you can make or lose. As I said in the L4P Stock Contest thread, my intraday portfolio is a 10K equity account leveraged to 100K and my swing portfolio is a 10K equity account leveraged to 20K. I live off of the income from both of those and I make WELL over 1-2K a month as well.

    I would say that 7-10K is the minimum equity level you need in order to survive mistakes all while having enough (with leverage) to enter into at least 2 positions of correct size. Anything under 7K (unless highly leveraged) starts to become low if the purpose is to make income. You'll make profits without a doubt assuming you know what you're doing BUT it should not be expected to make income. All the 4K and below is just plain risky because its definitely not enough for income but also very potent to be wiped out by mistakes.

    I tell anyone who tells me they are slowly losing money and have under 4K in their portfolio to close the account and move on or add capital. Its almost impossible to grow those little accounts out because your gains are limited by small positions and your losses can ultimately completely wipe you out, do the math, risk to reward not good.

  7. #36
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    Ahhh ok, so the key is leverage? I think I'm going to study and do the mock accounts for about 4-5 more months. Once that time is up, I was curious what investment I would need to be able to live off of assuming I have reasonable profits/losses.
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  8. #37
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    Quote Originally Posted by LIGHTWEIGHT View Post
    Ahhh ok, so the key is leverage? I think I'm going to study and do the mock accounts for about 4-5 more months. Once that time is up, I was curious what investment I would need to be able to live off of assuming I have reasonable profits/losses.
    Well the KEY isn't leverage, its just a fundamental tool you should employ (with caution of course).

    In a perfect world, I'd tell everyone to take 25K and open an account with a big house. That way you get 2/3/4:1 leverage (depending on the broker, probably 2 though) and you are not going to be limited by the PDT rule so you can day-trade freely assuming its what you want to do (don't forget that over 85% of people who day-trade lose money).

    However over time you will find ways around things, better specialized firms that do certain things, etc. Like I said I have 10K with TD as a swing portfolio (2:1) and 10K with TMGC as an intraday portfolio (10:1). I've also heard of swing traders who just have one big 50K portfolio and stick with that. It all depends on what you want to do and what you want to accomplish.

    In the end though, don't shoot for income as a goal, shoot for profits, you'll find that to be quite difficult in the first place

  9. #38
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    Arthur,

    Do you mainly swing trade equities? I would like to mainly swing trade but I want to know how much fundamental Analysis comes into play because there are so many stocks out there and so many opportunities based on technical analysis. I'm sure the fundamentals reject price action signals at times with stocks.
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  10. #39
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    Quote Originally Posted by Bigd41190 View Post
    Arthur,

    Do you mainly swing trade equities? I would like to mainly swing trade but I want to know how much fundamental Analysis comes into play because there are so many stocks out there and so many opportunities based on technical analysis. I'm sure the fundamentals reject price action signals at times with stocks.
    Nowadays I mainly intraday trade equities HOWEVER swing trading equities does not mean you have to go big on fundamental analysis. I know many one to two week swing traders that are 85%+ technical with minimal fundamental analysis. Don't forget that you'll still want to know important fundamental events that could drive price action a certain way regardless of technicals such as earnings for example.
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  11. #40
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    Great read, thank you!
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