julianne carol -
Here's what I would do, in this order...
1. Buy "Trading for a Living", by Dr. Alexander Elder. Read it from cover to cover. You'll learn:
a. The psychology of the stock market (bulls vs. bears).
b. Classical chart patterns (trends, support/resistance, triangles, etc.)
c. How to mathematically construct all the usual indicators, including MACD, RSI, stoch, etc.
d. The ASSUMPTIONS behind the indicators. VERY IMPORTANT! Never use an indicator unless you understand what it's telling you and why.
e. The differences between trend-indicators and oscillators, and why it will kill you to use one when the other is warranted (hint: never use an OSCILLATOR when the stock is TRENDING).
f. Money management techniques, such as setting loss-limit stops.
g. How to implement a trading SYSTEM.
2. THEN I would start looking at charts on the websites (since they are free).
3. Based on the types of indicators and timeframes I wanted to use, THEN I would look for software and a data provider.
4. Then, implement a paper system, and trade it until you are comfortable with the entries, exits, and the FACT that you won't ever be 100% right!!!
5. Then move to real $$$, and enjoy the ride.
I think that unless you perform at least MOST of these steps, you will become a TA'er who knows just enough to be dangerous to yourself! One who looks in the chart for patterns that she wants to find... who follows one indicator today, and another tomorrow... who lets emotions cloud a trade, because "Well, THIS stock is different"..., or "Well, I can't take a loss on THIS trade...".
I have spent 5+ years at this to date, and am still working on it. My latest 2 steps: 1) Building a Visual Basic program that will optimize a system using up to 100 stocks at one shot... Much better for me than what SuperCharts or Metastock can do. 2) Building a trade profit/loss template, very similar to what Rainier posted about a few days ago...
I have a system that uses weekly data, two particular indicators, and provides the following results on average:
a. has a 50% winning rate (1 out of 2 trades make a profit).
b. has an overall average trade profit of 12% (including both wins and losses).
c. average trade length = ~5 weeks.
As you can see the per trade profit isn't real high, but with an average trade length of 5 weeks, I'm able to reuse the same money over and over again in a year, which makes it compound very well.
I use this system for most of my money, but also take a part of my IRA for longer-term investments (like SNRS).
Keep us up to date on how you're doing, and what you're learning...
Loren |
