Your Questions About Successful Traders Make

Michael asks…

can somebody recommend some books or links for stock market investing?

i already have some experience in futures and margin and i have made some investing demo and real money. can somebody recommend some books or links that can help me be more successful in the market please?

John answers:

If you have experience in futures and understand margins, try these

Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
How to Trade in Stocks, Jesse Livermore
Millionaire Traders, Lein & Schlosberg
One Up on Wall Street by Peter Lynch
Reminiscences of a Stock Operator, Edwin Lefevre
The Disciplined Trader, Mark Douglas
Trader Vic-Methods of a Wall Street Master, Victor Sperandeo
Trader Vic II-Principles of Professional Speculation, Victor Sperandeo
Trading for a Living, by Alexander Elder
Trading in the Zone, Mark Douglas

Investors Hub – http://www.investorshub.com/
Investors Business Daily – http://www.investors.com/default.htm?fromad=1
Naveller – http://navelliergrowth.investorplace.com/portfolio-grader/
Schaeffer’s http://www.schaeffersresearch.com/
Smart Money – http://www.smartmoney.com/
Trading Markets – http://www.tradingmarkets.com/
Zacks Research – http://www.zacks.com/

Good luck

William asks…

How can I become a market maker on the New York stock exchange?

How Can I get a job as a market maker?
Do I need an MBA?
I want to get a bachelors degree in an engineering discipline.

John answers:

The easiest way to become a market maker is to buy (or rent) an exchange membership (cost around $300,000), find a brokerage firm or clearing firm that will clear your trades (need deposit of $100,000);
register with the SEC as a dealer (legal work cost about $1000), deposit sufficient trading capital ($250,000) and hire an independent accounting firm to audit and attest to your numbers.

Unless you have years of brokerage experience no firm will hire some one as a floor trader since there are many with some type of industry experience are waiting to move down on the floor..

No one cares what degree you have or don’t have as long as you have industry experience.
There is nothing in the academic world that prepares one to be a floor trader, let alone a market maker.

Try finding a job with a major brokerage firm or a firm that has a floor operations. Take any job the firm has, and it will not be as a trader. You need securities industry experience, if not in the trading areas you can also try to get into stock loan,. P&S, cashiering. You can also start as gopher in an in-house trading room,. Take any job in the industry to work your way to the floor.
With summer coming, you may be find temp jobs in the industry.

To be a trader you need to be a good investor, so start reading Investing for Dummies by Eric Tyson
In the meantime, learn all you can about the markets and how securities are traded. Here’s some books you should consider
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
How to Trade in Stocks, Jesse Livermore
Millionaire Traders, Lein & Schlosberg
One Up on Wall Street by Peter Lynch
Reminiscences of a Stock Operator, Edwin Lefevre
The Disciplined Trader, Mark Douglas
Trader Vic-Methods of a Wall Street Master, Victor Sperandeo
Trader Vic II-Principles of Professional Speculation, Victor Sperandeo
Trading for a Living, by Alexander Elder
Trading in the Zone, Mark Douglas

All successful traders have addressed four major policies and have very strong discipline to follow them
1 – You need a written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself. Always use stops either to protect you on the down side or to lock in profits on the up side. Never trade on emotions, when emotions get involved walk away. Don’t try to out-smart the market, you’ll loose but if you always take what the market is willing to give you, you’ll be successful. Other words, you don’t trade against the trend since the market is always right. And NEVER trade on emotions, once you let emotions in your trades you will loose
2 – A written money management program is essential. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested. Never go into a trade without knowing when and where you are going to get out of it. Never let a loss on a trade get greater than 8%-10%, always take you loss and walk away – don’t loose more than you need to and don’t be afraid to take the loss. Remember you never can get hurt taking a profit. Never average down, but you can average up.
3 – You must have sufficient trading/investment capital. Use your own money, there’s no need to go into debt so that you can trade and/or invest. Margin can be used but only with restraints, never let the account wall below 45% equity. Unless you fully understand margins you should not use it.
4 – A full and complete understanding of the rules & regulations of the industry. If your going to play in the game be sure you know the rules of the game and always follow them.

Unless you are willing to study and follow the above you will never make it as a trader. To be successful as a trader it takes work and constant study of the markets and the products traded in those markets, there is no easy way.

Linda asks…

Can you name 3 most important things you need to be successful in the stock market ?

John answers:

Hi there… Great question!

1) Money management / position sizing

2) Mastering your own psychology (greed & fear)

3) Developing and testing a good system (notice I didn’t say “buying” or “reading about” one – there is NO holy grail, only salesmen of them – the “best” system is the one which you design to fit YOU and your trading style). Also, don’t fall into the trap of mistaking entry signals alone for a “system”. Entries are the LEAST important part (didn’t even make my list of the top 3 as you see. Tackle Exits/Stops/Targets once you master these 3.

Additionally, I suggest you spend a lot of time reading, and a lot of time demo trading. Go for CONSISTENCY over huge profits (which are often followed by equally huge, unrecoverable losses). Good authors to start with are Alexander Elder and Van K. Tharp.

Also, I have to STRONGLY disagree with the lughead who said women can’t trade. In fact, I recently read an article which suggested that women trade better than most Wall St. Pros. They were tested along with people from other professions and backgrounds. Wall St. Traders scored right in the middle. The worst were doctors and pilots – the author speculates due to ego, inflexibility, and reliance upon established systems. The best scorers? Artists, musicians, and WOMEN. Reason? Intuition and pattern-recognition, also important keys to success. Incidentally, I spend hours studying charts each day – my wife (who knows nothing of trading) often walks in the room, takes one brief glance, and says “that one’s going to go up”. She has yet to be wrong.

Best of luck!

-=BK

James asks…

Is 30K too small to start as a day trader?

Just curious what is the average amount a day trader starts with in the stock market?

John answers:

Before high speed internet connections, one had to go to the brokerage to day trade at the terminals there. At that time the minimum amount they would accept to open a day trading account was $100,000.

Now-a-days you can “trade” with almost any amount. But to “day trade”, as in high frequency, you need a margin account to cover the three day delay for sell orders to be cleared.

But be aware that the majority of day traders LOSE money. Only a few do well.

My opinion on that is those that want to be day traders have a compulsion to trade all the time, even when the suspect movements of a stock aren’t clear at all. They are merely guessing. And for them it is more about the excitement, the adrenalin, instead of clear thinking about making profits.

For most it is very advisable to not jump in to day trading. Sure at times you will make good money but then lose it.

I have seen people be successful for years, then lose it all, including their house. The problem with the losses is that once the money is gone you have less money from which to make money.

The good news is that you can invest or even be a rather avid and frequent trader without day trading.

But I would suggest you keep your day job.

With $30k and desire to try your hand at more frequent trading, here is the plan I would suggest.

Put the $30k in to the brokerage and buy high yield stocks to produce income. That will give you $30k in margin to use. Let that build some cash over a year. Use the cash
and any profits for stock trading. BUT if you lose and your account balance, assets minus margin debt, falls below your $30k then stop until you are on the plus side again with the dividends adding to the account.

That way you can see if you can generate money by day trading without losing all your investment. That way you are basically only risking your profits as a novice trader.

I give the same type of advice to anybody wanting to “play” the market. It is what they mean when they say only use your “risk” money or “Only gamble with the house’s money” (meaning profits).

Good Luck.

Nancy asks…

How to become a stock trader?

I know a lot about the market and have a well performing portfolio and have learned everything so far from books, websites, and my grandpa.

Hes done profoundly well investing his money all his life and has taught me lot

I’m not here for a lecture I just want to know what I need to take in college to become a stock trader

I know you don’t really need a degree to become one but if you want to get hired you do

I’m 17 and going to be a senior next year… I have a 3.8 gpa and am taking classes like ap calc next year… I haven’t taken the SAT yet so I’m not sure but according to the psat I should get around a 1600-1800

I’m a fundamental/ value investor and want to know what to take in college and get a degree in and then where i would need to apply to get a job

I know it’s competitive and thats what drives me

John answers:

You’re right, you don’t need a degree to be a trader. Firms don'[t hire “traders”, they hire those individuals that have some type of industry experience, wheher it be running tickets on the floor, being a gopher in a trading room, some one that has worked in P&S, or cashiering.
And no one cares ahow you traded in personal life or what family members have done.

To be a trader you must first learn how to invest. You must know the products and the markets in which they trade, how security transactions are cleared and more importantly you must know the rules that govern those products and markets. So you must know what you’re doing, why you’re doing it, and how to do it.

Here’s a list of books you should consider, at least read half of them
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
How to Trade in Stocks, Jesse Livermore
Millionaire Traders, Lein & Schlosberg
One Up on Wall Street by Peter Lynch
Reminiscences of a Stock Operator, Edwin Lefevre
The Disciplined Trader, Mark Douglas
Trader Vic-Methods of a Wall Street Master, Victor Sperandeo
Trader Vic II-Principles of Professional Speculation, Victor Sperandeo
Trading for a Living, by Alexander Elder
Trading in the Zone, Mark Douglas

And when you think you want to trade, try some paper trading to test your skills without spending you money http://simulatorinvestopedia.com/ http://www.moneyworks4me.com/
and/or http://www.tradingsimulation.com/

Before you enter your first order you need to address four major policies and have very strong discipline to follow them
1 – You need a written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself. Always use stops either to protect you on the down side or to lock in profits on the up side. Never trade on emotions, when emotions get involved walk away. Don’t try to out-smart the market, you’ll loose but if you always take what the market is willing to give you, you’ll be successful. Other words, you don’t trade against the trend since the market is always right. And NEVER trade on emotions, once you let emotions in your trades you will loose
2 – A written money management program is essential. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested. Never go into a trade without knowing when and where you are going to get out of it. Never let a loss on a trade get greater than 8%-10%, always take you loss and walk away – don’t loose more than you need to and don’t be afraid to take the loss. Remember you never can get hurt taking a profit. Never average down, but you can average up.
3 – You must have sufficient trading/investment capital. Use your own money, there’s no need to go into debt so that you can trade and/or invest. Margin can be used but only with restraints, never let the account wall below 45% equity. Unless you fully understand margins you should not use it.
4 – A full and complete understanding of the rules & regulations of the industry. If your going to play in the game be sure you know the rules of the game and always follow them.

Unless you are willing to study and follow the above you will never make it as a trader. To be successful as a trader it takes work and constant study of the markets and the products traded in those markets, there is no easy way.

Be smart, stay in school, get a degree, and study, both the markets and the products traded in those markets If you want it bad enough you can do it BUT be smart about getting it

Good luck on your journey

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