Your Questions About Successful Traders Make

Thomas asks…

Can workers in investment banks invest their own money?

The topic says it all.
Can people, for instance traders who trade for Gold Man Sachs invest their own money in stocks, forex when they are not on work?

John answers:

Of course they can but ones who don’t want trouble in their lives do it carefully.

The deal is that your firm gets a copy of your brokerage statement (you can lie or open a brokerage account in your kid’s name or whatever and if you are discovered you will be fired and possibly prosecuted). A compliance officer looks at your brokerage statement and looks for evidence of excessive trading (which means you are doing too much during the day other than your job) or hints of insider trading. If either of these are suspected, you take a career hit that goes all the way to being fired.

All these firms keep restricted lists. There are two levels of restricted – one level is that you can’t trade these securities if your mother is thrown into the street and you would like to sell the shares to afford a nursing home for Mom and the next level are ones that you can trade with permission, waiting periods, etc..

Most people who work for Goldman are making good money at their jobs and don’t have time for trading anyway (they also get a very deep understanding of they level of infrastructure that is required for consistently successful trading). The portfolios of Goldman employees as a whole is probably very boring – lots of SPY, mutual funds, boring municipal bonds, etc..

Jenny asks…

How can people be succesfull as a day trade when they have very little information?

and can you be a day trader with out trading options?

John answers:

Many unsuccessful day traders have a system based on media buzz. They scour the media for companies that get a lot of promotion then they rush to by that company…they have little skills and are paranoid about losing a tiny profit of a couple of percent. They make little money when they “guess “right and that is wiped out when they make a bad move.

IMHO a successful trader uses technical analysis in their trades. Even as little as Bollinger Bands, RSI and MACD in a candlestick chart, this is all they need to time entry and exits from a position.

They don’t care about fundamentals since that is of little consequence in their trading due to its short duration per play….they need lots of volume then the chart will tell them everything they need to know.

A non-technical day-trader is a long term loser in my opinion. Personally I don’t day-trade…too much work and paperwork for taxes…I am lazy that way 🙂

Mary asks…

Is it realistic to make $2000 a month swing trading with 20k?

I am learning how to be a swing trader. Please dont make rude comments.

John answers:

As a swing trader you mean day trader? It is possible depending on how much experience and success you have in the market. If you win more than 20% of your trades that yes it is possible depending on the number of shares you hold and the number of trades you make daily. Your asking if you can grow your money 10% within one month? Its a reasonable amount but you can also lose 2000 depending on how the market moves. It all comes down to you as a trader and how successful you are and how much knowledge you have in trading.

Lizzie asks…

Can you day trade on fundamentals rather then technicals?

I know day traders using technical analysis, but I find that I can do just as well by relying on fundamentals and keeping up with the latest news, I also look at moving averages.

John answers:

Day trading based on news fall in different category and doesen’t belong to either fundamental or technical style of investing. News based trading is good and there are people who make money by following this strategy.

Trading on stocks which are fundamentally sound is a technique that all smart traders apply. At least here they doesn’t fall victim to sudden crash in prices.

Theoretically one should not practice day trade, but my personal experience suggest that there is nothing like right or wrong in stock markets at least.

Things which work is right. One just has to understand what he is comfortable at. For instance Warren buffett and Peter Lynch both were highly successful but both followed different approaches. Buffett is of the philosophy that one should not hold more than 10-20 stocks in ones portfolio while on the other hand Peter Lynch held more than 1400 stocks at one point of time while he was manger at Fidelity Magellan Fund.

Being 8 years in investing now, I would suggest one should listen to his heart and do what he believes in.

Best of Luck!

Amit Agarwal

Helen asks…

Can someone please explain the stock market to me?

I understand the stock market is a complicated system but can someone give me a some what detailed explanation of how it works, how to buy and sell stock, and some tips to be successful in the business?

John answers:

So you say you want to learn how to invest in the stock market.

Education is the key ingredient. Read all you can get your hands on about investing and the stock market. Knowledge is power, so become an educated invest before making your first buy.

You could start here:

I recommend a starter book called “The only investment guide you’ll ever need” by Andrew Tobias

If you want to become a member, this is another good Organization to learn from:

Your next task is to figure out 4 things.

The amount of risk you’re willing to take?
No risk, Low risk, Medium risk
You get the picture.

What kind of investor do you want to be?
Saver, Speculator or Specialist

How long to want to invest?
Day trader, Short term, Long term or Life long

What do you want to invest in?
Stocks, Bonds, Coins, Precious metals, Money Market, Real Estate,Etc.

There are different styles of investing so learn them all and then pick the one that suits your risk tolerance and tastes.

I chose to be a Dividend Investor. I do reinvest my dividends and that buys me more stock. Since I’m in it for a life time I do not let the roller coaster ride of the stock market influence my decision to sell. I have set up an excel spread sheet of stocks that I have considered to buy and loaded them on to a portfolio on yahoo finance. When I copy and paste the current prices into spread sheet my excel spread sheet tell me when to buy, hold, or sell. It does this by the criteria that I set up in the formulas I created in my spread sheet. I research all the companies before they go my spread sheet.

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