How Long Would It Take To Learn

Discussion in 'Stock Market Education' started by Rainman, May 15, 2015.

  1. Rainman

    Rainman Senior Investor

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    I've always wanted to stay away from stock trading because of the risks involved. But having learned, the hard way, from experience, having lost money in what seemed like an investment that I'd never lose money in, I'm willing to take more risks. But I understand that it can take quite some time for someone to be good at stock trading. How long do you think it would take someone like me who's entirely new to this to learn what it takes to actually make some money from stock trading?
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Buy low, sell high.

    Stay diversified.

    Don't expect to make money every day.

    Don't expect to make realized gains every day.

    If you're going to lock yourself into some sort of dogma that says you must sell everything and go to 100% cash at the end of the day (pattern day trading), you're probably going to have a very tough time.

    If you try to be a "scalper", you're probably going to get eaten alive by the HFT systems.


    Better to invest more on fundamentals and be patient.
     
  3. Value Prophet

    Value Prophet Member

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    All good tips, JR. However, there is one really important thing I would recommend to you, Rainman. You mention in your post you want to "make money form stock trading". I would recommend you forget the term "stock trading" and instead think "invest in businesses".

    To make money you need to invest in quality businesses, ideally business you would like to own outright (rather than a few shares). Put your efforts into learning how to find, analyse and evaluate great businesses that will provide returns in line with your risk profile and investment strategy. Invest when market price is less than the intrinsic value of the company by a margin of safety that you are comfortable with.

    Blowing my own trumpet time (excuse my self-promotion :): check out my Value Prophet web site to get all the learning you need.
     
  4. gracer

    gracer Senior Investor

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    I've always been so amazed at JR Ewing's views and suggestions with regards to investing. Some people have been discouraging me to invest in stocks before because of the risks and the knowledge one needs to learn before investing. Joining this forum has given me more ideas on investing and somehow gave me strongee will power to continue with my goal of investing in stocks. By the way Mr Ewing, would you recommend buying not so famous but cheap stocks? I know Warren Buffet once said that buying stocks from well established companies with higher prices is wiser because it pays off in the long run but do you agree with this?
     
  5. CarpeNemo

    CarpeNemo Well-Known Member

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    Like JR said, diversity is key. You're going to have a hard time learning without being actively involved, and anyone that is trying to sell you a book or information is just trying to sell you a book - the information within might be outdated or even worthless now. The best thing you can do is take it slow, start small, and make sure you spread your money as far as you can so that way if you lose a significant chunk of your investment, it's no more than a quarter of your holdings at worst.

    Aside from that, you just have to watch market patterns and try to move with the tide in your field. If you're into tech stocks like Microsoft and Cisco, it's going to be a lot different for you than it would be for a guy who has holdings with John Deere and Monsanto, so his advice might be perfectly valid until you try to apply it to your own brand of trading.
     
  6. pwarbi

    pwarbi Senior Investor

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    To learn how to trade on the markets doesn't take that long at all. What takes the time is learning the ability to try and read a market and know where it's going before anybody else. Even then your not going to get it right all of the time.

    Knowing when to cut your losses is something that will take a lot of learning aswell. People don't like to admit when they've been beaten or got something wrong. That's something in this game that you'll have to learn how to take also.
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Thanks. I'm glad I've been able to help.

    If you're going to invest in individual stocks, I think learning to use a stock screener is a good place to start.

    Some things I like to look for include low PE and PEG ratios, a history of several years of above average earnings per share and revenue growth, strong cash flow, minimal debt, expanding margins and return on equity, strong competitive advantages, unique and innovative products and services, etc.

    None of these things guarantee a successful investment, but these fundamentals are a good place to start looking. I'd say put no more than 5% of your money into any one security. At least 10-20 different stocks spread out among different sectors and industries (tech, energy, industrials & materials, consumer staples, healthcare / biotech, etc), plus perhaps a little of some other investments such as bonds, perhaps a commodity ETF, maybe a REIT, a mutual fund or 2 or an index fund, etc. A little cash on hand as well - at least 5%.
     
  8. Fredrick Jones

    Fredrick Jones Well-Known Member

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    Advise that applies to anything, whether it is the stock market or running a business. You can read all the books you want, but until you actually start doing it, there are certain things you can only find out by doing. So even a simple business like running a hotdog stand, on the surface it seems simple. Cook hotdogs and then sell them, but there are hidden traps you can not see till you actually start selling hotdogs. Everyone of those gotchas is going to cost you money. Hopefully it does not wipe you out in the process.

    So patience, going slow and starting small is the best advice. There rarely are any magic bullets, or that is my experience.
     
  9. dianethare

    dianethare Senior Investor

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    Learning the hard way of-course due to my perception of magic bullets...ought to snap out of my bubble and realize that this is the real reality and not everyone gets that silver spoon easily, one has to work hard and earn it :)
     
  10. gracer

    gracer Senior Investor

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    Thank you so much for those tips! This is a perfect example for me with regards to diversifying my investments. I'm trying to work on mutual funds right now and stocks is my next goal. Learning insights from people like you are very helpful in my decision making.
     

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