Dabbling in the stock market

Yes and the reasons for that are well known (around diversification, herd following & fee's) google it if you want to know more.

Trading as a retail pro is a much different game. 95-98% of people fail. Just as most people dont have what it takes to become a pro golfer or a pro musician, most people don't have the right aptitude to become a pro-trader.

However, for those who make it, its a great business with huge advantages.
 
I looked at fund buts to be honest their performance rates for 5 year terms aren't great with a lot actually showing a negative...

I guess i'll just bite the bullet and go for it... I have a very supportive partner who is in charge of my finances in order to stop any relapses ... she may even get involved as well...
 

Stupid boy. Don't do it. The markets are not a place for somebody with no experience or know how. You will just make a lot of expensive bad investments.
 

I personally know five retail pro's who have stellar performance.

Note an edge for a retail pro is not the same thing as an edge for a fund. As the amounts involved gets larger, liquidity moving the market becomes an issue. For that reason, it is much easier for a retail pro to find an edge than it is for a fund.
 
Stupid Boy said:
I have a very supportive partner who is in charge of my finances in order to stop any relapses ... she may even get involved as well...
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Based on this maybe you should just let her decide where you should save/invest your money.
 

Re: the latter statement. How do you know this? Its a cliche right? How many traders do you know personally?

Stellar is between 100 and 1000% a year. Some top traders set themselves a target of 2% day. They don't achieve this but they can come close.

The best way to trade is to compound short term gains.

Of course, to reach the level of performance above requires a level of skill and discipline that few people have.
 
Thank you lemur and others for interesting posts on a topical subject.

What is an "edge" in this context?
 
nuac said:
Thank you lemur and others for interesting posts on a topical subject.

What is an "edge" in this context?
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An 'edge' is an advantage. So for example, when you sit down at a roulette wheel in a casino, the house has a 6% edge. The longer you play the more likely it is the casino will win. Professional blackjack players turn the tales on the casino by counting cards and put the edge on their side by about 1% (51:49). But even this small edge is enough for them to make money.

Professional traders know how to get an edge in the market in contrast to the 'gambling' like behaviors of amateurs who tend to trade on the basis of what they think is going to happen.
 

I hate to get all uppity about statistics but I am statistician so I guess you can forgive me a small indulgence:
The house edge for Roulette in the US for a standard 38 number American wheel is 5.26%
The five number bet (0,00,1,2 and 3) has a house edge of 7.89%
If the casino offers “surrender” the house edge is cut to 2.63% on even-money bets
European-style wheels (37 numbers including a single 0) The house edge is 2.7%
If en prison is offered, the edge falls to only 1.35% on even-money wagers.
“Professional roulette player” is an oxymoron. No betting system will change the casino’s advantage.
A fair roulette wheel cannot be beaten in the long term.

I agree that Lemur has used the correct analogy to describe trading. Where we differ is that I also believe that in the long run, it is not possible to beat the market any more than it is possible to beat the casino.

With thanks to Mensa International for the stats.
 
Marc said:
A fair roulette wheel cannot be beaten in the long term.

Where we differ is that I also believe that in the long run, it is not possible to beat the market any more than it is possible to beat the casino.
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Good comments guys, here is my response.

A fair roulette wheel cannot be beaten in the long term - No but blackjack can by using the correct techniques.

It is not possible to beat the market any more than it is possible to beat the casino - how do you know this. I know pro traders who beat the mkt year in and year out.

The best trader I know is a futures scalper with 25 yrs experience. He did almost 900% last year. He keeps his account a core size and takes money out every month for living expenses and taxes which explains why he is not the richest man in the world right now.
 

Time for you to do some homework and leave your bias aside. Retail pro's and fund managers are different games so the studies you refer to above do not apply.

Google Dan Zanger, the world record holder for stock market gains. He turned $11,000 into $42m in about three years. This has been audited via his tax returns.

I know Dan. Last year his performance was negative but the year before his performance was 180% annual gain. Note that because Dan is now playing with larger sums it is much harder for him to achieve stellar performance because of the earlier argument.

The other star traders I hang out with every day on the web. If you choose to believe this is fiction there is not much I can do about that.
 
Why do so many people in threads like this ( and there have been many such threads on here before ) have difficulty in distinguishing between investing and trading? Can people not see that a fund manager investing €300m in some stock for a period of time is substantially different to a retail trader getting in and out of 10 lots of FTSE futures a few times a day . Returns of a multiple of ones account size are perfectly attainable when trading a leveraged product.
 

'What do you think the normal joe should do with his excess income'- I think he should put it in the bank in a high interest savings a/c and stay away from the market especially investment products sold to the public which are usually garbage in my view.

'I can show a sequence of coin-tosses that will give stellar returns, that does not mean, that I can repeat that over the real long term.' - irrelevant reference. Good retail pro's have a defined edge as I stated above.

Re:funds comment above. As I keep saying, retail trading is a completely different game to fund performance.

Re:3 yrs? Dan Zanger made his money during the dot com boom and continues to trade successfully.

Becoming a successful trader is like any other profession. It requires aptitude, hard work, dedication etc It is not a quick easy money game like so many amateurs expect which is why so few succeed. Golf is a good analogy, some people take it up and become very good but most don't. The latter walk away after losing some money and say its gambling. This is like a bad golfer telling a good golfer his game/low handicap is a fluke.
 
Thanks Lemur for your explanation of "edge". I can understand your examples of a roulette wheel, and blackjack if you have a system

However out in the worldwide instantaneous markets can you really have a workable edge unless it is inside knowledge.

I recall Jim SLater years ago writing about the Zulu principle - to know everything relevant about a particular share/business etc. However there is always someone who knows more.
 

Traders play the price action. Its a numbers game nothing to do with inside knowledge. If you don't have an edge there is no point in trading. etc.
 
Forgive me for my ignorance, I know nothing about trading stocks, but is the OP not talking about doing what Brendan reccomends in his book "The ask about money guide to savings and investments" ? (Investing as opposed to trading ?)

I know this book is currently under review, but is the share advice that was in it still applicable, and if so would NIB be one of the cheaper / easier brokers for a novice to invest € 1,200 per month in the top ten irish shares, and then leave them alone for 5 years plus in the hope that they might outperform deposit a/c returns ?

Thanks
 

That advice is not and never was valid, investing in the top ten Irish shares at the time that book was written was essentially a bet on the Irish property market, and you can now see where that investment has ended up. Stocks give the best long term return, but you should be diversifing outside of the Irish economy also (U.S., European, Far East & Emerging markets). Use an index tracker fund if you do not have sufficient knowledge of individual shares. To maximise returns a certain element of timing is required, i.e. selling at times of excessive optimism and buying at times of excessive pessimism.
 

Have you cleared any outstanding debts? Do you have an outstanding mortgage, or do you intend buying a property anytime soon?
 
SPC100 said:
you quoted his returns for a 3 yr period.

how is it a different game?

can you give me some hard examples of the edges you can repeatedly use to gain stellar performance?

i advocate that one should buy and hold funds tracking indexes.
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how is it a different game? - Already spelled that out.

Edges - I have several. I am not going to reveal them here.

Never buy & hold anything. All investment/trades require timing.
 


What secret methods?

I have already said in answer to your question. ''What do you think the normal joe should do with his excess income'- I think he should put it in the bank in a high interest savings a/c and stay away from the market especially investment products sold to the public which are usually garbage in my view.
 
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