First, an introduction
Hi. My name is Shaun – I love learning to trade the stock market.
As I set out in my “About” page, my aim is to share with you the trading journey I have been on for the last 30 years. I love everything about the markets and trading. The activity, the action, the ticker, the charts, the mathematics. I’m still learning, and I think I always will be. I love learning about the stock market. I started with the Johannesburg stock exchange given that I was living in South Africa at the time. The trick for me in the past was to focus my learning rather than just try every new thing that comes along. I find that in general, new traders (and even more seasoned traders) have the same issue… They chase a new strategy or new plan too quickly and too often. Trust me, that’s a loss making process. I’ll get into that another time.
The Stock Market – how exciting
It all started when my parents bought me a stock market course. To be really honest, I don’t really remember why or how it all came about. It was, after all, a very long time ago. The course was paper-based, where a new chapter was sent by post (yes the original smail mail) once a month. You could pause this process along the way if need be. Each chapter covered a different topic from the basics of investing in the stock market to more complex topics as you went along.
As part of the package, I also had access to a simulation programme where I could “paper trade” by calling a specific number (as if calling a real broker) to buy or sell shares. The expectation was that the more I learned, the more profitable I would become on the simulation, thus preparing me for the real world. This was in 1987.
The course was great. I was excited. It covered things from “Why do we have a stock market?” to “What is Fundamental Analysis and Technical Analysis?”. It was broad, but not very deep, which is probably a good start as it gave me the passion that I still have today about trading on the stock market. Back in those days – the ol’ days – things were very different. For starters, I didn’t have a computer. Few people did. My daily process was as follows:
- I checked the stock prices by looking at the newspaper every day.
- Calculations had to be done by hand. For example, I kept a running total of share prices and Moving Average calculations in a notepad table.
- For each stock I was interested in, I had to draw charts by hand on graph paper – with coloured pencils.
- I then transferred the figures to graph paper.
- If I wanted to chart a new stock, I’d go back through the newspapers to get historical data.
Fundamental analysis was mainly for choosing the companies showing strength. Technical analysis – at a very basic level (50 day Moving Average) due to the manual labour – was mainly for getting the timing of entries and exits right. Buying and selling shares involved calling a broker, asking him/her for the current price, putting in your order and waiting for the trade to be executed. If I wanted to know what was happening with my trade, I had to wait for the next day’s newspaper or call the broker again to find out what the current price was. Sounds mental when compared to today.
Black Monday, 1987
During the course and my early naive days learning to trade, I experienced October 19, 1987 – also known as Black Monday. This caught me completely unaware. It was was both exciting and shocking at the same time. I had experienced my first stock market crash. I know the market has had crashed since then, but I’ll never forget the 1987 crash. It was epic.
I eventually finished the course, but with a loss in my simulation account due to the market crash. I did not go on to trade “live”, but instead continued with my interest in the markets and kept monitoring stocks. It was about the same time that more powerful computers started arriving on the scene and charting software packages designed for technical analysis became more available. This made a massive difference. No more graph paper. No more buying newspapers to get stock data. I just typed in the name of the stock I was interested in. Within seconds I would have the share price plotted in front of me with all the moving averages, indicators and oscillators I could dream of.
With new oscillators in front of me and new and faster technical analysis indicators I then learned more and more about technical analysis and started ignoring fundamental analysis. Technical Analysis was sexier and cooler. Fundamental Analysis felt like “the old way of doing things”. I’ve changed since then though… just so that you know.
I was still quite nervous to trade as I was quite young and didn’t really have any cash flow. Knowing what I know now however this was probably a good thing.
My Lessons:
- Stock Markets sometimes crash right at the point when they seem to be going up like there’s no tomorrow.
- Trading isn’t easy… there is a lot to learn and understand.
- Education is important.
- Technology is a huge help, but can result in losing touch with the basics and can result in information overload.