Sunday, July 02, 2006

Learning to Trade

Picking stocks isn't easy and neither is learning to trade. This is why most people are better off buying ETFs or mutual funds, dollar cost averaging and some of the other strategies I have suggested.

When I first started trading I tended to lose money. I would make money for a while and then lose more than I had made. This stage was the "tuition stage". This term is often used by traders.

Recently I have only lost as much as I have made. We could call this the "internship stage" :) Working for free.

Hopefully the next stage when I am trading according to the model will finally be the regular job stage. At least a side job at first.

Why bother? I have learnt a lot through this process. I think there is a high probability that I now start to make serious money from it. Unless my model breaks down and stops working that is. That's what happened to the guys at LTCM. The key to survival is to never take the kind of risks that they did in terms of leverage.

Will report detailed financial results for June soon. What I can say now is: I stayed above $300k in net worth. I lost around 4-5%. The MSCI index was flat for the month. Last month I was up when the MSCI was down. As a result I have about matched the index over these two months. In Australian Dollar terms the loss is about 1% less than in US Dollar terms.

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