Ask Colin

Canyou advise me on starting out as a trader?

The detailed question was:

I have been reading your web pages in particular your comments about Stock doctor I am interested in learning about the stock market and was called by a company called Smartequity who are in Qld and sells for $10,000 a program which seems really easy but I don't know if it's genuine or not. I loved the program because it was basically a program which you used to buy shares that were rising and sell them as they go down I then purchased a subscription with stock doctor but am having trouble with understanding the technical data (I haven't watched any of their Webinars yet) I feel that it's a program for long term investors where I want to find some good shares that are rising so I can buy and sell (if I can work out when to sell) I have contacted Fat Prophets who seem ok but I've read bad reviews about them and also Protrader who seem OK Can you give me any advice?


I am not legally allowed to advise you because I do not have an adviser licence. Instead I teach investing. However, you are not really asking about investing, but about trading shares, which is a quite different activity. There are many questions about trading I have already answered in Ask Colin on the website, so I hope you have read them.


As for Smartequity, I do not know them, but have heard this same sales pitch many, many times over the years. They are telling you what you want to hear/believe and are looking to take your money with no guarantees. Remember that well over 90% of people who try their hand at trading lose, no matter how much they have paid for courses. It is a far more difficult game than investing.


If you want the best instruction I know of the book The New Trading for a Living by Dr Alexander Elder is where I would point you. I have known Dr Elder since the mid 1980's and have worked with him on some of his trading camps. He is very sound. The book is well-written and you should be able to understand it if you have basic education in the markets.


Beyond that, start small and stay small till you have experienced a full bull-bear cycle. It is sometimes easy to win for a while in a rising market, but as Warren Buffett famously remarked: when the tide goes out again we see who is swimming naked!


I hope this is of some help.