Your Questions About Successful Traders Make

Sandra asks…

I want to be a day-trader; what do I need to know if I am to be a successful one – hints & tips please?

I am already an investor in the stock market but wish to be a day-trader of the financial markets using spread betting. What I would like to know is what do I need to begin, i.e. what do I need to know if I am to be successful at it and make money on a consistent basis? Please help/advise with hints and tips. Thanks.

John answers:

Here are some helpful tips:

1. Actual trading is a lot different to paper trading.

2. Whilst you expect trades to sometimes hit your stop loss, it is extremely frustrating when they do.

3. It is difficult to go against your gut instinct and stick to your spread betting strategies.

4. Extremely glad I started small!

5. Even though you set your entry level and stops to manage your risks, you can always lose more if the stock opens above or below or even gaps during the day.

6. This is harder than I thought it would be.

7. Setting up many trades at the weekend and only 1 or 2 get executed is frustrating. Seems like all that hard work has
gone to waste.

8. When you have lost on a few trades I sometimes hope that I don’t get another contract note to inform me another trade has been executed.

William asks…

Any traders out there?

Do you trade for a company or for personal use?
What do you trade?
Do you make good money doing it?
How would a person become a successful personal trader or land a job trading a company’s equity?

John answers:

Hi,
I’m forex trader more than 5 years.
I’m trading for myself.

As about becoming a succesfull trader I hope those books would help you:
Market Wizards by Jack D. Schwager;
Technical Analysis by Jack D. Schwager;

Comprehensive Course on The Wave Principle by A.J. Frost and Robert Prechter;

Candlestick Charting Explained- Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris;

Trading Chaos – Applying Expert Techniques to Maximize Your Profit by Bill M. Williams;
New Trading Dimensions by Bill M. Williams
Trading Chaos II by Bill Williams – Maximize Profits with Proven Technical Techniques by Justin Gregory-Williams and Bill M. Williams

Good luck!

Maria asks…

What does being a ‘Sole Trader’ mean?

I am suppose to make a a ‘sole trader’ business as part of my commerce class. I don’t know what this is. Anyone help?
Tips on how to make my sole trader business successful are great too!

John answers:

It’s a way of carrying on a business without setting up a formal company such as a Ltd, LLC or LLP. You can trade under your own name or you can trade as another name as in ‘Ken Smith trading as Cleaner Homes.’

The benefits are: no need to register the company formally; no set up fees; easier record keeping for accounts.

The downside is that you are personally liable in the event of a claim against the business. It therefore doesn’t suit enterprises that require high levels of investment.

You must register with the HMRC as self employed and fill in your annual return and pay National Insurance contributions.

As for how to make it successful, depends on what your business is and how well you market it.

Confirm through research that there is a market for your product/service.

Create a business plan. Identify your market and how you are going to target it. What are your USPs (Unique selling points) what makes your product/service different/better than others. Prepare budgets and cash flow (money in/money out over a period of time, usually at least 6 months).

Create a marketing plan. People won’t buy if they don’t know it exists. Plan how you intend to advertise.

Remember cash is king. It’s the lifeblood of your business. Without it you can’t operate. When you are prioritising actions, put those that bring in the cash first i.e. Invoicing, chasing overdue invoices. Keep careful records and always know exactly where your cash flow stands.

Remember that loyal customers are your best promotion tools. Find ways to use them through referrals to new customers, references, endorsements, etc.

So Research, Plan, Advertise, Market, Record.
Put Cash and Customers first.

Good luck

Mandy asks…

Day Traders, how much are you guys making?

I’m curious how much money successful day traders at varying experience and capital levels have been making. What kinda percentage stock price increase and profit margins do you guys aim for?

I’ve been getting my feet wet with day trading. I have a 50k cash account (margin approved) and am merely looking at covering my monthly living expenses of less than $1000. While I understand that it’s risky, from my observation it doesn’t seem too hard to identify a stock at a point where it’ll move up at least 0.25% which would mean a $125 profit when trading $50k worth of stock. I could meet my monthly living expenses through 8 good trades…or perhaps 4 if the stock goes up 0.50%. It’s common to lose money when you start out with day trading and I have actually lost money but I’ve already recovered a substantial portion of that for a net loss of “only” $2,000 so far. Patience is a virtue with trading and I’ve moved up subtantially in that respect.
I should’ve added perhaps that I didn’t lose the money during day trading. Day trading is how I’ve made some of the lost money back. I started out not really being sure what I wanted to do. I was going somewhere between swing trading and investing. I purchased stock and intially made $2,000 on it only to see the profit disappear and turn into a loss a couple of days later. Now I know I should’ve taken the profit and run! Even though I’m focusing on day trading now I have kept a stock overnight to turn a loss into a profit or increase the profit. I’ve always been told how I’m very analytical and I think that could make me be fairly successful at this. I very much enjoy studying the charts, watching pre-market volume and general behavior as well as reading the news. Yes, it’s fun but right now also quite fun. I’m not stressed about the relatively small financial loss. I’m managing to keep the cool. And yes, I’m generally aware that success will be measured by gains versus losses.

John answers:

A good “day trader” can lose 50% – 65% of their trades.
(That’s not newbies… That’s experianced traders).
The real key is the win/loss ratio. It is resonable that you could meet the goal you’re shooting for.

You would need to understand and use;
Technical Analisys.
Money Management
Position Sizing
Trader Psychology
A “system” (created by you)
DISIPLINE
Always use stops
Always have an exit plan before you take a position.
Always have a clearly defined reson for taking the trade (feeling, hoping, expecting a stock to move doesn’t count).

The typical, successful trader takes 3-5 years to get to this point. 96% of new traders fail to get past the 3rd year.

This is hard work. You have to be reading books all the time. Taking seminars & webinars.

Start with;
Trading In The Zone, Mark Douglas
Mastering The Trade, John Carter

Laura asks…

What makes Jews so successful comparing to others?

And by the way I am Christian but my father was Jewish. So I don’t think that makes me an antisemite
Do you believe this is the real answer?

Reader Kim Bruce, in response to my article Japanese Fiddler on the Roof, asks what is it that makes Jews industrious, clever, money-seeking and so successful compared to other religious groups?

One could argue that because the Jews were dispersed throughout the world, they came in contact with many cultures and were thus able to take the best ideas of each nation and use them to their advantage.

But the African Diaspora spread hundreds of millions 1 of Black Africans all over Asia, the Middle East, Europe and the Western Hemisphere, yet despite their dispersal and contact with many cultures, Black Africans as a group have been dismal failures. For example, only one Black African ever received a Nobel Prize in Economics and not one ever received a Nobel Prize in Physics, Chemistry, or Medicine [see my 13 Black Nobel Prize Laureates] while more 159 Jews have won Nobel Prizes other than Peace or Literature.

A reader may object that Black Africans came from many cultures before they were dispersed and therefore they are not a homogeneous group that can act to help each other.

But the same can be said of Jews from Ethiopia, Spain, Germany, Persia, France, Morocco, China, Japan, and hundreds of other countries and cultures.

Ah, perhaps it is their religion? Black Africans have many religions and are thus not as united as the Jews. But there are billions of Christians in every country in the world and yet their common belief has not made them as successful as Jews.

There are many times more Catholics in Poland than Jews, yet more than half of all Polish Nobel Laureates [see Polish Nobel Prize Laureates]: Jews.

So maybe it’s not a common religion but Judaism per se, that makes Jews successful. But that does not explain the remarkable influence and power of Jews in film, plays, music, finance, real estate, banking, fashion, and other enterprises in America where the majority of Jews are secular [see Not All Jews Believe in God].

Well then, perhaps surviving constant persecution and enduring long suffering make the Jew so formidable. Then let us consider the Armenians who have been dispersed all over America, Africa, Europe, Asia, and the Middle East since 1375 [Wiki], and likewise suffered expulsions, discrimination and even endured a genocide at the hands of the Turks.

The answer is a bit complex: Jews helped each other, trusted each other, were forced into becoming merchants and traders, had a common language, formed communities with mutual aid societies, encouraged their children to pursue education. Indeed even during the most horrific of times for Jews, Christian royalty and high government officials had Jewish doctors for themselves.

When Spain needed to make a deal with Portugal or Portugal with Italy or Italy with Great Britain, those countries turned to Jews. Where most nationalities mistrusted others, Jews from the Mediterranean and the far flung suzerainties of the Ottoman Empire dealt with each other as if they were landsmen.

Forbidden by law from most professions by local rulers, the church and the unions, many Jews were forced into culturally abhorred occupations, such as tax and rent collecting, pawnbroking, and moneylending.

Since Jews had no problems trading with each other, many became merchants, manufacturers, and international bankers. Communication from Spain to Morocco was facilitated by speaking ‘Judezmo,’ a lingua franca among Jews in Southern Europe and North Africa.

Jewish merchants of Poland, Germany, Eastern Europe, Latvia, Lithuania, portions of Russia and Ukraine spoke to each other in Yiddish.

When I arrived in Israel in 1965, I lived with very distant relatives I had never before met or even heard of. Though I was a complete stranger to them, they gave me a room to sleep in and helped me register at the Hebrew University. Imagine a French Christian cousin 12 times removed coming into town and getting help from very, very distant Italian relative. Not likely.

After a few weeks I met a Persian Jewish young man (completely unrelated to me) who invited me to his home for tea and I stayed for two years.

Last year I was looking for a person to do some printing for my telecom business. He took me to a Jewish restaurant to discuss business and before my meal was finished he had introduced me to a half-dozen other Jews that could fill other needs of my business.

That’s what makes Jews successful. Not being afraid to share a customer, to network, to help a fellow Jew.

Sure a Harvard man will help another Harvard man but the guy has to be in the same social class. Among Jews, a millionaire can be eating in the same booth as a poor man and each can still do business with the other.

It’s what made Hollywood Hollywood, it’s what made Broadway Broadway.

John answers:

Yes, I think this is the correct answer — their mobility and adaptability.

However, religion adds to the mix because education is very much a part of Judaism. Many holidays are celebrated by reading from texts, either the Hagadah around the dining room table at Passover or from the Torah in Hebrew. Children start their education from birth with celebrations regarding their achievements including a ceremony for their first day of school and a bar/bat mitzvah at age 12 – 13 when they have learned to lead a service by reading from the Torah in Hebrew.
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