MarketWatch posted an article this past week about a youngster with 10k in his pocket who is looking to “score big” in the stock market. His original question was as follows:
“I have $10k sitting in my TDAmeritrade taxable account, ready to trade with, but I’ve been learning about investing for the last 1-2 months. I bought ‘The Intelligent Investor,’ and ‘A Random Walk Down Wall Street.’ I’m not done reading the books, yet, but how will you know when you’re ready to start investing? I’m anxious to get started, but how do I know if I’ll be ready?”
You can see the full article here:
The advice he received from six industry pros will be helpful, but I wanted to add a few more that I believe will help him on his quest for outsized gains using the markets as his vehicle.
1. Find a mentor that teaches Equity Options trading in a plain language format. If you are looking to “score big” the chances of doing that with 10k in stocks is near zero. You need leverage. I HIGHLY recommend checking out Youtube channels like “TastyTrade” or even better “TickerTank” with Nick Fenton. I have never met Nick but when I started in options years ago I found his videos helpful and easy to understand. Then, if you become interested in options join a trading room with other experienced traders. Jeff Kohler AKA the “Option Addict” runs TALive which is a great idea generation and educational service: http://tradingaddicts.com
2. Pickup a book on Technical Analysis. The two books you are reading are classic, must reads, no doubt about it. But fundamental analysis isn’t going to help you score big in the markets in any timely manner. In fact those books are going to emphasize that outsized gains can’t be achieved. There are a lot of great books on Technical Analysis you can get used on Amazon. Stick to ones written by John J. Murphy, Martin Pring or Thomas Bulkowski.
3. When you feel ready to put that first trade on, have a strategy for entry as well as exit. This will help to curb some of the emotion that will come with placing that first sum of money in the market. Let the trade work (or breakdown) adhering only to your predefined entry and exit levels. Don’t look at your account balance to make your trading decisions. Risk management and position sizing is the Holy Grail of trading. Have a plan and stick to it no matter what the trade does.
Good luck!
@omahacharts