Is there any full time Shares Traders who can answer the following question?
How much capital (money) you require to start with, to give you a decent chance at earning a modest living, as a full-time Shares Trader?
If you are a Shares Trader, overall what approx percentage do you make from your capital?
EDIT: I will change my expectations, to aim for $20K per year (on average).
Yes, Shares is very risky.
I have been doing Shares for a while and from past experiences, I have done alright.
Many of the top wealthy billionaires make their fortunes from the Share Market.
So I have always asked myself, how do they succeed?
It can't just be random luck.
Thanks for the link.
Will have a read.
Agreed. Most billionaires are there due to hard work. Some via unlawfulness. Very few are 'share traders'.
And of course some are successful through luck. Pick 1000 traders choosing to buy or sell a single share each day, after 1 day you will have 500 winners, 500 losers. After 2 days, 250 will have won twice in a row, after another day 125 have been successful 3 times running, 62 the next day, 31 the day after, 15 the next, then 7. Finally we have 3 who have made the right call 8 times in a row. If you ask them, they won't talk about luck or statistics, they will have a 'system' that has been working for them. Bollocks.
And I ask you which top billionaires made their fortune via the sharemarket. I can't think of any, except perhaps Warren Buffett, but he required substantial contributions from his friends and family to bank roll his early investments. And he would very strongly advise against share 'trading' as a path to wealth.
If you trade shares for a living you need to trade all the time to pay your bills. You lose the one great advantage of the the small investor, the ability to do nothing or stay in cash.
By all means spend time learning more about equity markets. Your questions show you have a lot of gaps in your knowledge, and would have a lot of disadvantages if you tried to become a full time trader.
There are different 'methods' to trading.
The probability of a stock going up isn't the same as the probability of it going down.
The problem is that you will need a lot of capital, in order to make enough after you balance out your gains from losses.
EDIT: yes many of the billionaire are investors not traders.
Also out of 100 traders, only 1 would be successful, so the odds aren't good for traders.
Also out of 100 traders, only 1 would be successful, so the odds aren't good for traders.
So I think you agree that trading is not a good idea.
What amount per week would you call a modest living?
$50K per year?
Depends how you want to gear it. You can borrow to invest. I lost tens of thousands at my first attempt at trading shares. Never gone back to it. You probably have better luck working up to be a professional gambler.
I won't be gearing or doing CDFs.
Just buying blue chips stocks.
@congngo: There's really only a handful of "blue chip stocks" in Australia - the banks, a couple of big miners, the two retail giants, and maybe a telecommunications company or two.
None of these stocks are doing well enough regularly enough to get the 20% (or even 10%) that you're chasing.
@pjetson: You don't need to regularly make 20%….I think you have misunderstood…
You make 2%-4% here and there, and it adds up.
@congngo: I don't think I misunderstood. You'll need 5 stocks that regularly make 4% (or 10 that make 2%) to add up to 20%. And they'll need to make that much week in and week out. That just isn't realistic, in my opinion.
Who do you think is actually making 20% on stocks year in and year out?
@pjetson: Say that my goal is to make $20K per year.
If I buy and sell stock and say that I make $1K from selling this stock, then I would only have to do this 20 times per year.
I wouldn't have to do this weekly.
For example, I brought RIO and SXL yesterday.
Today I sold it and made $1K from RIO and $600 from XSL.
I would only have to do this 20 times. Not every week.
@congngo: Yes, but are you sure you can pick the right 20 times to buy and sell?
Rio Tinto seems to be on a downwards trend lately, with a few small blips upwards in the less than half a percent range. Are they at the bottom of this movement now, in which case it might be wise to buy? Or will the downwards trend continue? If you buy now and it continues down, you'll lose money.
Let's say that you purchased Rio at 57.38 on Tuesday - it's about 55.10 at the moment, according to Google. You'll have lost about 4% so far, in just three days. When will it rise to 60 so that you can make say 4%? It hasn't been at 60 since May.
It's a rare event that you're going to be able to buy a share today and sell it at a 5% profit tomorrow.
Google says that Rio closed at 54.87 last night, and opened at 55.80 this morning, up almost 2% overnight. It's lost most of that gain already today, and who can tell for sure what it will do for the rest of the day. When do you buy, and when do you sell? Do you try to ride out a potential loss hoping the share will come good, or do you sell now before it gets worse?
@pjetson: I purchased RIO at under $55 and sold it for $55.80. It only needs to go up a little for me to make money. If I have made some money then I will sell. You cannot be greedy. If you are too greedy then you don't realise the capital gains.
My other share that I have is RTA. I have had it for only a few month or so, and it has gone up more than 30%!
EDIT: I've just sold my RTA. I took the profit. Can't be too greedy.
So, you want to make about $1000 per week. Let's make everything nice and round and ignore any other costs.
If you can make 5% on your share trades in a week (not an easy task at all) - you'll need to have $20,000 invested in shares that rise in value by 5% in that week to make your $1000. Good luck in finding shares that will do that week in and week out!
Let's say that you can find shares that rise 2% a week every week - you'd need to have $50,000 invested in those shares. If you can find a regular 1% rise, you'd need $100,000.
What if your shares rise and fall (like most do)? You'll need to have more money invested to average the same $1000.
And this won't be a business where you can slack off - you're going to have to be chasing the money all day every day, or you'll lose.
I suggest that you "pretend" to invest say $50k or $100k for at least a couple of weeks and see how you go. I think that the ASX and perhaps other sites have virtual trader "games" that you can play as if it was real money.
Many of the large cap stocks do rise and fall regularly.
Some rise and fall more than 5%.
You are not looking to make 5% on $20,000 everyweek.
But looking to make 5% on $100,000 each month.
@congngo: The key point to take away from that is that they rise and fall.
Let's say they rise by 5% one week, and fall by 5% the next week, and they do that over and over. The net result is a great big zero.
You'd need to be swapping in and out of stocks at exactly the right time to make any money at all. If you don't judge (or guess) right, all you will do is lose.
Most people fear what they don't understand… most people aren't professional traders, and rather rely on "what they heard". Therefore there is a lot of fear in the general public.
Like anything subject you want to do well, you will require education. Know what are getting yourself into. Inside out. Start small. But start. You will make mistakes, but that is good, you learn the most from mistakes.
One substantial benefit of getting into trading is the extra information you will receive. The stock market always finds out first. In everything. (you will understand this more later)
One last piece of advice, don't be a gambler. Blindly relying on a magazine tip, "expert" (who is usually a salary-man) or a hunch isn't even a good way to gamble. A casino is faster to get a result and you don't pay tax.
Your 100K bankroll is more than enough to begin with. Also aim higher, at least 20% in your 1st year. Realise that buying shares is just one of many ways to make money from the stock market. You can also make money selling. Be prepared to study your tail off and aim to pursue this full time.
Thank you for the advice.
I have got a friend who have done full time trading for many years. Looking to learn of him.
In the past, I have also purchased small cap shares that have gone into administration.
So now I prefer larger caps shares. Smaller gains but smaller risk.
I am not a fan of CDFs, as I do not trust the MarketMakers and don't believe that I have any chance in beating them.
I am looking to buy blue chip stocks where its SP has taken a big hit due to reasons that the company can overcome.
Cheers
I was always told not to trade in markets that arent going up or down, and only trade what you can afford to loose ..
I understand that if the markets are steady, you can only sit back and watch.
Yes there is a chance that you could lose everything, hence only use what you can afford to lose.
This is why I dont plan to gear or leverage.
I am also favouring companies with good dividends.
This way, if I am stuck, at least I woud get some dividends for my shares.
'good' dividends, what does that even mean? Dude I would stay well away, you are going about this the wrong way .. I can tell from what your saying that you want to somehow make a living from trading, but saying things like …
"I am also favouring companies with good dividends.
This way, if I am stuck, at least I would get some dividends for my shares."
Your not factoring in if the price goes up or down and what your move would be following this …exit strategy etc.
You need to have principles set in stone, and stick to them religiously before you even dream about becoming a billionaire on the stock market ..
Yes principles and discipline will be important.
I am not looking to make millions, just essential needs.
"If you want to loose all the money you have then you can choose to become a full time share trader" - By 1 of the full time employee for one of the share trading house
For example, if you have $100K in funds to invest and you make about $10K profit per year, that's 10%
But you said you wanted $50k per year, so if you can get that 10% profit per year, you'd need to have $500k invested. If you could manage only 5% profit per year, you'd need $1M invested. And so on.
The 10% was an example.
I am looking for more than 10%, maybe 20% as Son of a Zombie mentioned.
With your level of knowledge of the market, I can't see it being at all realistic for you to earn 20% on your money. Or, for that matter, even 10%.
Not with my level of knowledge.
But I will have help.
@congngo: Sorry to say this, but the only help you'll get like this, is how to help you loose your money. Think about principles and discipline ..
Mods, can you please close this thread.
I have plenty of comments to think about.
Thank you.
You just missed out on this:
Fitbit Shares Rise 50% On First Day Of Trading, Valuing Company At Over Six Billion Dollars
The San Francisco-based company opened and closed today with shares priced roughly 50% above its initial public offering of $20. Fitbit currently sits at $29.68 a share, leaving it with a value of over $6 billion.
If you can pick one of those a year, and you have plenty of cash to invest, you're set.
On the other hand, guess what happened with the other 99.99999% of IPOs…
I don't trust IPO… I think most IPO would give you a loss, that IMO.
https://www.ozbargain.com.au/node/194057
"My skill sets are in IT and education" : it will be a million times easier to make that 20k or 50k sticking with what you know, just because the first idea you put out there wasn't received as well as you hoped doesn't mean you should deviate into a field you have little to no chance of succeeding in.
I am doing both!
Well I've 3 things going actually.
If you've been share trading all along, and earning more than your job, I really don't understand the whole point of your original post, especially the part about wanting to know how much money you need to start with.
This is a terrible idea.
I strongly recommend you read a book called a random walk down wall street prior to investing a dollar in 'trading'.
You can make money in the share market on average over time as the interests of equity holders align with the interests of the business management/board/staff and usually customers. This is low risk, but modest return.
You can occasionally make good returns if you discover an equity or other investment that is mispriced should your theory prove correct.
And you can get 10 heads in a row approximately every thousand times you flip a coin ten times.
Many 'traders' making outsize returns are of the coin flip variety, masking the 999 who lost varying amounts of money or made small gains.
There is a school of trading that seeks to arbitrage small discrepancies, between markets, and this is a legitimate strategy, but it takes very substantial capital reserves to get a fraction of a percent return (although you can conceivably repeat this frequently). And you need to be 100% sure of yourself, if you are, for example, trading $100,000 in the hope of a $100,012 return.
It is not a path to easy success.
Read this thread:
https://www.ozbargain.com.au/node/179896
Edit: I am not a full time share trader. I have known a few reasonably well, although all but one worked on an 'insto' desk. I know a few full time 'investors'. I think all would agree with my comment above.