Equity Trading Strategies
- Thread starter boneil
- Start date
- Joined
- 7/25/10
- Messages
- 862
- Points
- 38
Ok! That's a lot more reasonable. There's kind of two things you can be looking at if you're not interested in the simple long-analysis. There's market neutral investing which you can look into; additionally, you may find option spreads interesting although it's not pure equity investing anymore. Start with http://www.investopedia.com/university/optionspreadstrategies/ if you're interested; plenty of good books on this though.
- Joined
- 8/15/10
- Messages
- 47
- Points
- 18
In you situation i would seriously consider options due to the leverage they provide. even if you gonna get lucky you can get 10:1 or better for risking 10% of ur equity. Earnings season is coming, things are volatile, get ready, look for jumps and be lucky. check out URBN for example. couple solid hits and you can be on ur way to 3m.
- Joined
- 11/15/10
- Messages
- 143
- Points
- 28
Regardless, it is still dumb to invest ALL of your savings. Even (or especially) if you are still in college. I could see maybe 2/3, but definitely not all of it.
That is, of course, unless mommy and daddy will gladly give you more money to play your trading games with.
That is, of course, unless mommy and daddy will gladly give you more money to play your trading games with.
Yike Lu
Finder of biased coins.
- Joined
- 5/10/10
- Messages
- 772
- Points
- 53
"Investing strategies" do not include pairs trading.
If you are not interested in putting in a monumental effort, the most rational investment strategy is to just go long the market and sit on it. The waters of alpha are infested with sharks.
If you are not interested in putting in a monumental effort, the most rational investment strategy is to just go long the market and sit on it. The waters of alpha are infested with sharks.
- Joined
- 9/9/08
- Messages
- 271
- Points
- 38
Having invested and traded my own account (PA) for upwards of 10 years when I first started working on Wall Street, having some 'skin in the game' can go a long way.
LRP, partial fills, execution delay and server glitches aside, a whole new psychology is introduced when you go live. I would say in the time I spent trading prop, I learned more about myself than I have in my lifetime; something that cannot be fully described unless you've been there.
Would I put up my life's savings? Probably not. The odds will be stacked against you until you figure out what you're doing - even when you do, you will be wrong a hell of a lot more than you will be right. But at the same cost as a college course, it would be an invaluable education.
<insert #tigerblood here
> Coming from a fundamental background, overlaying fundamentals onto quant strategies has been a HUGE interest of mine. An off-topic conversation for another day but there are several funds employing such strategies@boneil - If you are looking for investing (and not trading/quant) methodologies, some books suggested to me when I was still on the fundamental buy-side:
Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
- Joined
- 7/25/10
- Messages
- 862
- Points
- 38
If you want a real challenge, try Security Analysis, also by Graham =)
Yike Lu
Finder of biased coins.
- Joined
- 5/10/10
- Messages
- 772
- Points
- 53
There are two main problems with trading such a small account using a strategy other than fundamentally based buy-and-hold.
1) Transaction costs are a huge % of your account. At $5 per trade on $2000 acct size, that's 0.25% per trade, 0.5% per round trip trade. That is getting close to the maximum % some traders are willing to risk per trade, which brings us to the next point...
2) Due to minimum lot sizes and other fun stuff, your minimum trade size will be a huge % of your starting capital. I've heard 1% to be a reasonable amount to risk per trade, whereas you would probably be looking at order of magnitude 1% for a single share trade! Granted the risk is smaller when you aren't levered up, but the point remains the same. At such a huge risk per trade, even a valid strategy runs a high Risk of Ruin.
Couple this with the fact that you are trading with sharks who by and far all are smarter, have more manpower, have more buying power, have faster computers, etc... and you have a great recipe for you basically giving your $2000 to the street. Payment for an education, if your eyes and mind are open.
That's why your original question was completely ridiculous.
1) Transaction costs are a huge % of your account. At $5 per trade on $2000 acct size, that's 0.25% per trade, 0.5% per round trip trade. That is getting close to the maximum % some traders are willing to risk per trade, which brings us to the next point...
2) Due to minimum lot sizes and other fun stuff, your minimum trade size will be a huge % of your starting capital. I've heard 1% to be a reasonable amount to risk per trade, whereas you would probably be looking at order of magnitude 1% for a single share trade! Granted the risk is smaller when you aren't levered up, but the point remains the same. At such a huge risk per trade, even a valid strategy runs a high Risk of Ruin.
Couple this with the fact that you are trading with sharks who by and far all are smarter, have more manpower, have more buying power, have faster computers, etc... and you have a great recipe for you basically giving your $2000 to the street. Payment for an education, if your eyes and mind are open.
That's why your original question was completely ridiculous.
- Joined
- 5/2/06
- Messages
- 12,273
- Points
- 273
Ask every trader and they will tell you the most trading knowledge they received was during their first 10 trades. And if you plan accordingly, $3,000 is something you can use to learn valuable real trading experience.
Interactive Broker has paper account set up for students. You can ask your teacher to sign up for you and use it to play with the system and $1M
http://www.interactivebrokers.com/en/p.php?f=ibStudentTradingLab
Interactive Broker has paper account set up for students. You can ask your teacher to sign up for you and use it to play with the system and $1M
http://www.interactivebrokers.com/en/p.php?f=ibStudentTradingLab
On a serious note...if you are sooooo keen to trade real money, go to Oanda, deposit 10$ and use their (new) MetaTrader interface. You can buy/sell one unit of cross-currency rates. That way you will get some real world experience, a bit of programming and backtesting skills, and can keep the $2990 for a new laptop, or whatever you got your eyes on.
- Joined
- 9/9/08
- Messages
- 271
- Points
- 38
My impression has been that Boneil is looking to invest, not trade or implement quant strategies... and Ill make the broad assumption that he/she mis-spoke (typed?) and stumbled into the shark infected quant waters - the word trade was retracted and replaced with invest. I think we've veered off course.
A $7/trade Scottrade account and IBM pentium-2 machine would be completely appropriate hardware to start building a small stock portfolio and $2-3000 is a perfectly reasonable balance to fund such an account.
One can invest in long-term pair trade ideas, I used to pitch such strategies to institutional clients. There are 1,000,000 ways to make money in the stock market and there is a world outside of quant/algo trading - I think most of us around these parts forget that sometimes.
I would take @iHateVariance 's advice. Create a short list of companies whose fundamental business model you understand (Buffet-esque) with moderate prices, reasonable liquidity and low to moderate volatility <insert FINRA "know your client" obligations here> and you can start to get a feel for how they trend around earnings and other fundamental events and overlay your technical analysis -or- tinker around with quant signals to do the same if you are so inclined.
A $7/trade Scottrade account and IBM pentium-2 machine would be completely appropriate hardware to start building a small stock portfolio and $2-3000 is a perfectly reasonable balance to fund such an account.
One can invest in long-term pair trade ideas, I used to pitch such strategies to institutional clients. There are 1,000,000 ways to make money in the stock market and there is a world outside of quant/algo trading - I think most of us around these parts forget that sometimes.
I would take @iHateVariance 's advice. Create a short list of companies whose fundamental business model you understand (Buffet-esque) with moderate prices, reasonable liquidity and low to moderate volatility <insert FINRA "know your client" obligations here> and you can start to get a feel for how they trend around earnings and other fundamental events and overlay your technical analysis -or- tinker around with quant signals to do the same if you are so inclined.
Yike Lu
Finder of biased coins.
- Joined
- 5/10/10
- Messages
- 772
- Points
- 53
Or you are reading too much into what I write. I posted to explain that we were not assholes simply for the sake of being assholes. The question as stated originally is ridiculous for anybody who has spent serious thought on trading, quant or otherwise.
If you wan to start trading you can join a small prop trading firm that will supply you with leverage the minimum to start an account is usually around $5,000. They usually have training programs and virtual trading rooms where you can trade with experienced traders.
- Joined
- 5/2/06
- Messages
- 12,273
- Points
- 273
Just like Patak Trading?
Joy Pathak
Swaptionz
- Joined
- 8/20/09
- Messages
- 1,328
- Points
- 73
There are many trading firms where you don't have to put up any capital. $45K base and 40% of benefits is a pretty standard package with many firms.
