I feel like I ought to give you some backround. I work as programmer in a technology company in finance industry. The thing is, the company is also a hedge fund. So I get to sit on the trading floor
We developed a trading app which is used by the fund and as an almost PhD in physics I also work on some models/optimizers etc... I see the industry, or at least a good slice of it w/ my own eyes every day.
I am not trading w/ my money. In part because I don't have it
but also because let me tell you it's a very tough job which is next to impossible to do part time.
Some general observations ( some of which you will also find in the book I mentioned before):
- your purpose in life is to feed your broker. your objectives are: his mortgage, his new car and his new boat. if that's not you think it is you have to be very careful as to how you plan your trading. rmember: your broker gets payed no matter if you win or loose.
- as a private investor you can't establish a short position so your only option is bullish market. institutional investors can bet on the market going low: right now it's not your time.
- the market is roughly divided into two parts: winners - (about 10% of the traders) and loosers. but consider this: an institutional trader trades w/ *some* money. you are trading w/ yours. hedge fund gets some percentage of the money under managment up front so it does not matter if they loose or win. sure, in the long run a loosing portfolio manager won't have a job, but in the long run we are all dead anyway
- a pro trader makes money today and looses it tomorrow. if he's going 50/50 that's bareable, if he's winning *get this* 1% more often than he's loosing he's good. 10% -- he's starting his own fund. 30% -- he's an insider and he'll be facing charges if he doesn't retire soon.
the bottom line is: if you think that the market is just a gambling you are much better off driving to a casino. they only have the Zero so you'll loose much less.
read the books, do your research, stay away from the crowd, never argue w/ the market cause you can't win. do some reading in the risk managment and after all this you still feel like investing for the fun of it... well... it's your money :p
