I’m far from being an expert by any means, this is just my story of how I got started – and challenges that I encountered along the way.
Like some of you here, I’m a busy girl juggling both work and family commitments. My long term goal for my trading is to provide additional income for an early retirement.
What got me into trading?
Someone asked me this the other day and I really couldn’t pinpoint a specific point or event in my life that sparked my interest in the sharemarket. I have a dim recollection of my father investing in shares after being co-erced out of thousands of dollars for some flash software with all the bells and whistles. His strategy was a simple one called – B _ H _ P (if you don’t know what that means, its Buy, hold and pray). Subsequently he lost most of his investments during the dot com crash.
For some reason, sharemarket investing has always just made ‘sense’ to me, rather than investing in property. I must be one of the few New Zealanders that would rather have a share portfolio than property.
A recent investor sentiment survey conducted by ING, stated kiwi’s as bucking the trend. In more than half the countries survey, local shares were the most popular choice for investors. However, NZers cited property as our most preferred investment tool at 29%; local shares came in at pathetic 7% and in fourth place.
I’m a self-confessed course junkie. I went through a stage of about five years where I attended every share market course going. I guess I was searching for the ‘holy grail’ of investing. My mantra at the time was ‘you don’t know – what you don’t know’. I even remember driving a six hour round trip to Auckland one Saturday to sit through a 2 hour course on options trading and part of the reason was also to meet other traders.
During this time, I placed a few trades on the sharemarket – but had the same buy and hold approach like my father did.
I purchased the software and datafeeds, but I really didn’t know how to use them and at that stage of my life didn’t really have enough capital to get started with a proper share portfolio. At this stage I hadn’t encountered things like risk or money management – I’d never even heard of a stop loss.
I’m fortunate as part of my role entails managing our online bookstore which stock books on sharemarket. I write reviews, especially loved the book by Catherine Davey on CFD trading. Written like a diary, it followed her progress over about three months and she did extremely well. She became my idol of the moment – but I think that gave me a false perception of the ease of trading and I expected it to be that easy for me when I started.
Getting Started
As my story continues, it eventually took me over 5 years to pull the trigger (so to speak) and start trading on a regular basis.
There lack of capital problem was solved once CFD’s hit NZ. Trading CFD’s enabled me to get started with a smaller amount of capital. For example, with the use of leveraging an account of $5,000 dollars, means you could hold a portfolio valued up to ten times more.
Looking back, I was still hesitant in starting as no-one else I personally knew at the time was trading – so there was no-one to hold my hand at the beginning. I guess I was looking for re-assurance and feedback on how I was going, instead of muddling through on my own.
I’ve read a good book recently by a market coach that offers some really good advice if you’re just starting out and like me couldn’t actually ‘get started’. He refers to it as a trading ‘gym’. He suggests to just place a small amount of capital in your account and ‘practice’ taking small trades, using stop losses, stopping and reversing a position and pyramiding into a position. It’s well-worth a read.
So to recap, the steps I took were
1) I went about gaining knowledge, reading and courses
2) finally got together enough capital to trade
and then, THAT’s when
Most importantly Step 3) I actually GOT an education – was when I started trading for real.
Being in the market was the best education you could ever dream of getting. You don’t know how you’ll react to certain market situations unless you’re in them, with your own money. Although I thought I was well-prepared, putting my knowledge into practice was an entirely different matter.
Over the past year or more, I’ve been on the rollercoaster ride steep learning curve. BUT I’ve loved every minute of it. It’s never dull! And I’ve learnt more than I ever could imagine possible, not just about trading but also about myself and my emotions.
Looking back over the past while, I cringe - and I can’t believe I’m sharing this with you – if there’s a mistake to be made I’ve probably made it. But the thing to remember is to learn from those mistakes – that’s what will make you a better trader in the future.
In hindsight I was really undisciplined, I had a trading plan but would often disregard it and was impatient to start making big money (just like everyone else supposedly was). I think to a large degree, it would have been helpful to have a trading buddy or coach to ‘report’ to – and be made accountable for my trading actions. It was just too easy to “bend” the rules of my trading plan and still justify it to myself.
Then a turning point in my trading came when I was still struggling to find a strategy that suited my lifestyle. I found it hard to place trades during the day as I was working and found it quite time intensive looking for possible trades to take.
That’s when I stumbled across a young Australian lady called Justine Pollard. Justine was a successful CFD trader who was also doing well out running her trading as a business. She shared her knowledge by coaching and selling products that she developed. I signed up to one of Justine’s teleconferences and she talked us through all the trades she had placed during a CMC Traders Competition. Whilst looking at the charts she went through all her set-ups and explained her entries and exists which I found extremely useful.
What struck a cord with me was that she was a full time mum and spent just an hour a day doing with her trading, whilst her young daughter occupied herself.
In the competition which was held over a couple of months, she traded in the top 5% ranking, placing just 20 trades and earning a whooping 82% return on her starting capital.
Meanwhile, the top male traders had apparently been trading like crazy and across different markets but still didn’t receive too much of a different result.
The main thing that I learnt from Justine is that you don’t have to be sitting at a computer placing trades throughout the day – a simple approach tailored around your lifestyle can be just as efficient.
Which is where I’m at today with my trading. Over the past year I guess I’ve had my training wheels on and now feel that I’ve definitely become much more disciplined as a trader. I have a trading plan written on a whiteboard next to my computer at home; to constantly remind me of my trading strategy and to ensure I don’t deviate from it.
In closing I just want to leave you with a couple of quotes:
“There are no secrets to success. It is the result of preparation, hard work, learning from failure.”
- Colin Powell: U.S. Army General and statesman.
From Louise Bedford about trading.
Those who persist in this game, eventually win.
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