Recap – Stock Market Journey (Beginning)
Previously, I mentioned how my stock market journey began in the late 80’s and how I was caught up in Black Monday, the stock market crash in 1987. My journey was well underway… and my passion still young and naive.
The 90’s and some real life trading on the Johannesburg Stock Exchange (JSE)
My love for the stock market and its mechanics, for continual learning about more technical analysis tools, for scanning the charts and making simulated trade decisions never really waned. There were periods when I was more “on top of it” and periods where I didn’t pay any attention to the markets or what was happening in the trading world. I still had my technical analysis software on my computer and a daily download of stock data. To that I added a healthy dose of “Stocks and Commodities” magazine and any other books I could get my hands on. Consequently, my trading life (in theory) was all very fascinating indeed.
After university I started working in the Financial Services industry. After a short period, I started a mini investment club with a few colleagues. We would meet with trade ideas, which would then be discussed and actions agreed on. We had a broker in Johannesburg, which I would contact by phone. Due to our location, we traded the JSE (Johannesburg Stock Exchange). Some trades we won, and some trades we lost. Our biggest losses were realised when we traded on rumour and hearsay – and they happened fast! Our profits came in more slowly and were often realised when we stuck to a plan. So, when I traded diligently and according to my rules I tended to make money. When I broke rules and traded on the emotion and tips and hearsay from others in the group, we lost money. I didn’t have any real knowledge at that time of trading psychology and the impact that actually had, or risk management, or much else I would consider crucial in my trading nowadays.
My live trading experience with a “real broker” was now well underway.
Technology pushes trading forward
Over time computers and technology progressed and the Internet arrived. You could actually start executing trades online. This meant that you could quickly look at the current share price and actually put a limit or market order in to your computer. Again nothing as advanced or complicated as we have today, but a very basic system of entering trades. Your broker was still your best friend and having someone on the end of a phone line was still very important.
Life happened – as it does. My trading was very scattered and infrequent. I traded for seasons and then did nothing for seasons – sometimes very long seasons of no trading at all. Deep down inside, I still had that passion.
The London Stock Exchange (LSE)
In the late 90’s I moved to the UK, working in London. This piqued my interest in trading stocks and shares on the London Stock Exchange (LSE). Online brokers were more abundant and available. Having to speak to a broker became less common as everything you needed to trade became available online. Stock data was still pricey, but “real-time” execution of trades became easier. The process I had experienced before repeated itself… I executed live trades with my new online broker. Some I won, and some I lost. I didn’t really make much money, but then again I didn’t really lose much money either as I was tended to trade smaller amounts.
At times I did online courses or went to various free seminars. The aim of the free seminars was to give you a teaser, and then get you to buy into the bigger full day or multi-day seminar, which often cost as much as the size of my trading account in the first place. The hook was that trading the stock market their way would make lots of money. I attended some of these. They were exciting and often sparked a greater desire to trade more and more, with or without the strategy they had recommended. Sadly, I often lost more money…
I wasn’t very consistent in my approach. I seemed to struggle with sticking to my own rules and plan. I was on a low if any trade didn’t work according to plan, and on a high when I made a small profit.
Boredom with any given approach set in often, resulting in frequent flitting and wondering from one thing to the other – hoping to find the holy grail that NEVER made a losing trade. I never found it. In fact, it doesn’t really exist.
So what else did I dabble with in trading around that time?
I’ll just make a short list here shall I? No doubt, I will have forgotten many of the shorter affairs with various trading strategies or mechanics.
- Stocks
- Spreadbetting
- Level II screens
- Following the Ax on the Nasdaq, scalping small amounts in the day
- (Contracts for Difference) CFDs
- Pin bars
- Point and Figure
- Many, many different technical analysis indicators
- Pre-market moves
- No strategy at all – aka NO IDEA!
- How the moon affects the markets (Didn’t do this, but read about it with a great deal of interest)
- I think I’ll stop now…
My Lessons:
- Trading Rules and a Trading Plan is key to success. Don’t flit and float from one strategy to the next.
- Hearsay and rumour is a shortcut to making large losses and introducing massive RISK.
- Risk management and money management go hand-in-hand.
- Never underestimate the impact your mind, attitude and mood has on your trading – Psychology.
- There is no holy grail in trading.