stock picking simplicity, what am I missing ?

[paul2129]

Hi Guys, I joined this forum the other day, I later learned that you're a forum which mostly deals with the Indian Markets, however, you were very kind to me, and therefore, since I'm sure stock trading is similar the world over, I wanted to ask you a bit of a crazy question.....

I've dabbled with fantasy trader type games for almost 10 years now, so I've seen some of the pitfalls, and certainly learned some lessons, and devised a strategy of sorts, theres just something I don't understand.

firstly, I just intend to trade stocks, its what I had success with previously, and what I'm comfortable with. I would do the following (however I know I still have a lot to learn)

1, spread my risk over a 10 to 15 company portfolio
2, make sure I'm investing in various sectors of the market
3, make sure I'm somewhat with companies in various countries, there are some nice AUS stocks as well as USA and of course my own UK
4, take a long term approach, and learn how to implement the various buying and selling 'orders' to have some fine control over purchase and loss

and now my actual question ........

theres a website call barchart.com ? and likely many others that list in order, stock with the highest growth, whilst they're all generally incredible performers, some look more volatile that others, but a lot look like safe bets. Having examined these companies, I've looked how they've performed in terms of percentage increase over 10yrs, 5yrs, 2yrs, 1yr, 6mon, 3mon, 1mon, and made the assumption that if it's done so well so far (and doesn't look particularly volatile) that it's more likely than not to continue in that way, at least until some reasonable profit has been earned. Having picked one company, I went ahead and chose around 40, which, before I invest, I will work that list down to the best 15 or so before buying..... and whilst I'm waiting of a fund transfer into my online trading account, I will try out my intended purchases on the fantasy trader.

is it me, or is this easy ?

 

[bashasm]

why not just choose stocks from NIFTY 50 or Nifty 100

 

[TraderRavi]

why not just choose stocks from NIFTY 50 or Nifty 100

he is from britain.

 

[Newbie Day-Trader]

Hi Guys, I joined this forum the other day, I later learned that you're a forum which mostly deals with the Indian Markets, however, you were very kind to me, and therefore, since I'm sure stock trading is similar the world over, I wanted to ask you a bit of a crazy question.....

I've dabbled with fantasy trader type games for almost 10 years now, so I've seen some of the pitfalls, and certainly learned some lessons, and devised a strategy of sorts, theres just something I don't understand.

firstly, I just intend to trade stocks, its what I had success with previously, and what I'm comfortable with. I would do the following (however I know I still have a lot to learn)

1, spread my risk over a 10 to 15 company portfolio
2, make sure I'm investing in various sectors of the market
3, make sure I'm somewhat with companies in various countries, there are some nice AUS stocks as well as USA and of course my own UK
4, take a long term approach, and learn how to implement the various buying and selling 'orders' to have some fine control over purchase and loss

and now my actual question ........

theres a website call barchart.com ? and likely many others that list in order, stock with the highest growth, whilst they're all generally incredible performers, some look more volatile that others, but a lot look like safe bets. Having examined these companies, I've looked how they've performed in terms of percentage increase over 10yrs, 5yrs, 2yrs, 1yr, 6mon, 3mon, 1mon, and made the assumption that if it's done so well so far (and doesn't look particularly volatile) that it's more likely than not to continue in that way, at least until some reasonable profit has been earned. Having picked one company, I went ahead and chose around 40, which, before I invest, I will work that list down to the best 15 or so before buying..... and whilst I'm waiting of a fund transfer into my online trading account, I will try out my intended purchases on the fantasy trader.

is it me, or is this easy ?

Long-term investing, especially based on fundamentals isn't a perfect science, it's more of an art-form, so there's a lot of room for discretion & there's no way to tell if it's that easy or not. I guess that's one reason many traders rely on technicals/charts because then you can set a fixed criteria for buying & selling, & then you can backtest various criteria on historical charts or manually forward-test it for a few months or years, & if it shows profitability after considering slippages, brokerage, taxes & other costs, then it's easiER to say that it would likely continue to be profitable in the future for some time to come whereas with fundamentals, you never know what big news might come next day or next month or whatever, & it's much more difficult to pinpoint StopLoss & TakeProfit levels. Anyway, I'm a chart-trader, so I guess I'm biased in that direction but trading/investing based PURELY on fundamentals seems less "scientific" (for the lack of a better word) than trading based on technicals/charts, in fact, even mixing the two might be a good idea. Having said that, of course, there are people who trade purely based on fundamentals & succeed but I don't know if it's very easy or anything close to being a perfect science.

 

[paul2129]

Sure, I shouldn't suggest that it's easy, I know it's not, and I guess the risk is related to the potential reward, whilst I'm sure it's possible to out perform typical bank savings account rates, certainly here in the UK, I'm keener, obviously, if I'm going to the trouble, to see a worthwhile gain. I can afford the loss, I'm not sure I'd enjoy it, but it's a little bit of a game, trying to prove that I can do it. I have my own business, and ultimately that's always going to be more productive financially for me than the stocks, but I've had an interest in this for 10 years or more, and the practice, via fantasy trading games and apps has worked out quite nicely, I'm so curious to find out what would happen with real money. I read about reading charts, and it's very technical, perhaps more suited to those who have a lot of time on their hands to monitor this stuff, I don't think it's for me, and I'm just not smart enough to comprehend it !

thanks for your comments and your help

 

[gregferns]

Sure, I shouldn't suggest that it's easy, I know it's not, and I guess the risk is related to the potential reward, whilst I'm sure it's possible to out perform typical bank savings account rates, certainly here in the UK, I'm keener, obviously, if I'm going to the trouble, to see a worthwhile gain. I can afford the loss, I'm not sure I'd enjoy it, but it's a little bit of a game, trying to prove that I can do it. I have my own business, and ultimately that's always going to be more productive financially for me than the stocks, but I've had an interest in this for 10 years or more, and the practice, via fantasy trading games and apps has worked out quite nicely, I'm so curious to find out what would happen with real money. I read about reading charts, and it's very technical, perhaps more suited to those who have a lot of time on their hands to monitor this stuff, I don't think it's for me, and I'm just not smart enough to comprehend it !

thanks for your comments and your help

Hi,

I would like to just some thoughts of mine here.

As @Newbie Day-Trader said going purely on fundamentals will not cut it alone. I feel one needs to combine both fundamentals and technicals to properly select stocks especially for investment purposes.

I DO NOT CLAIM TO BE KNOWLEDGEABLE as there are better people than me. ... But if i were you and i could trade on US and World stocks, (which i am trying to do since i am a NON RESIDENT INDIAN) the simplest thing would be to use both fundamental + technical analysis to select the stock you would like to invest in.

I do not know much about fundamental analysis but i would look at stocks like McDonalds, Microsoft, Apple, Ford etc.. Stocks i know which have good potential in long term growth and very likely not to disappear over the course of a few years.... Something along those lines but at least after doing decent research into the companies...

And then i would use technical analysis to see if i can enter at any low levels of those stocks ... i know its not easy to pinpoint lows but the technical analysis will at least help us to see if any stock is at a good bottom or rather at the end of a down trend and likely to move up in the near or mid term future.

Experts please feel free to criticise my thoughts as it will help me also in the long run.

PS - On a side note -- I heard from someone that you cannot invest directly into shares of US Stocks.. It has to be CFD's... Is this true ?? Or can i buy 10 shares of Apple if i want and if i have the possibility of doing so ??

regards
Greg

 

[Newbie Day-Trader]

Sure, I shouldn't suggest that it's easy, I know it's not, and I guess the risk is related to the potential reward, whilst I'm sure it's possible to out perform typical bank savings account rates, certainly here in the UK, I'm keener, obviously, if I'm going to the trouble, to see a worthwhile gain. I can afford the loss, I'm not sure I'd enjoy it, but it's a little bit of a game, trying to prove that I can do it. I have my own business, and ultimately that's always going to be more productive financially for me than the stocks, but I've had an interest in this for 10 years or more, and the practice, via fantasy trading games and apps has worked out quite nicely, I'm so curious to find out what would happen with real money. I read about reading charts, and it's very technical, perhaps more suited to those who have a lot of time on their hands to monitor this stuff, I don't think it's for me, and I'm just not smart enough to comprehend it !

thanks for your comments and your help

Right, true. In the short-run, whilst markets are trending, you could easily beat interest-rates with shock on a strong bull-run, & of course, a lot of investor-types feel like God when markets are trending, only to be brought down to Earth during that one bad year or bad months when there's a huge correction or a big fall, or when well-known companies blow up due to internal issues, which is why, in the long-run, most people seem to either not beat compounded interest-rates or even lose a lot of money. Other than that, if you have the risk-capital, which wouldn't affect you & your family financially, then you can play with it if you want to, & see how it goes. Good luck!

PS - On a side note -- I heard from someone that you cannot invest directly into shares of US Stocks.. It has to be CFD's... Is this true ?? Or can i buy 10 shares of Apple if i want and if i have the possibility of doing so ??

Who are you talking about specifically? I'm not sure if I've ever heard of that one. As far as I know, CFD's are illegal for US residents (& might be for Indian residents too or may be a grey area under Indian regulations), though they're legal in the UK, so for US & Indian residents, buying US stocks directly might be the only legal option available. Though UK residents might be in a great position in that they can invest through the CFD route, & the last time I checked, CFD's are treated differently by UK tax-authorities than regular stock-trading income since CFD's are considered gambling & gambling-income is tax-free in the UK; not to mention, CFD's offer higher leverage than stocks, so they facilitate greater capital-efficiency (or greater losses, whichever way you want to look at it).

 

[gregferns]

Right, true. In the short-run, whilst markets are trending, you could easily beat interest-rates with shock on a strong bull-run, & of course, a lot of investor-types feel like God when markets are trending, only to be brought down to Earth during that one bad year or bad months when there's a huge correction or a big fall, or when well-known companies blow up due to internal issues, which is why, in the long-run, most people seem to either not beat compounded interest-rates or even lose a lot of money. Other than that, if you have the risk-capital, which wouldn't affect you & your family financially, then you can play with it if you want to, & see how it goes. Good luck!



Who are you talking about specifically? I'm not sure if I've ever heard of that one. As far as I know, CFD's are illegal for US residents (& might be for Indian residents too or may be a grey area under Indian regulations), though they're legal in the UK, so for US & Indian residents, buying US stocks directly might be the only legal option available. Though UK residents might be in a great position in that they can invest through the CFD route, & the last time I checked, CFD's are treated differently by UK tax-authorities than regular stock-trading income since CFD's are considered gambling & gambling-income is tax-free in the UK; not to mention, CFD's offer higher leverage than stocks, so they facilitate greater capital-efficiency (or greater losses, whichever way you want to look at it).

I meant someone told me that i cannot buy stocks listed on NYSE etc DIRECTLY.. LIKE I SAID I WANT 10 SHARES OF APPLE (NOT CFD's)...
The person said i CANNOT buy direct shares but i need to buy CFD's only...

Anyways i think only with IB we can do that...

And yes i know US citizens aren't allowed i think the Cfd etc.

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[Newbie Day-Trader]

I meant someone told me that i cannot buy stocks listed on NYSE etc DIRECTLY.. LIKE I SAID I WANT 10 SHARES OF APPLE (NOT CFD's)...
The person said i CANNOT buy direct shares but i need to buy CFD's only...

Anyways i think only with IB we can do that...

And yes i know US citizens aren't allowed i think the Cfd etc.

Sent from my POCO F1 using Tapatalk

You could ask that person about this RBI notification - https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10192&Mode=00

6. The permissible capital account transactions by an individual under LRS are:

1. opening of foreign currency account abroad with a bank;
2. purchase of property abroad;
3. making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments; 5acquisition of qualification shares of an overseas company for holding the post of Director; acquisition of shares of a foreign company towards professional services rendered or in lieu of Director’s remuneration; investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes;
4. setting up Wholly Owned Subsidiaries and Joint Ventures (with effect from August 05, 2013) outside India for bonafide business subject to the terms & conditions stipulated in Notification No FEMA.263/ RB-2013 dated March 5, 2013;
5. extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 20136 .

I think there are Indian brokers (especially bank-brokers), who have tie-ups with foreign brokers, that also allow buying of US shares by Indian Residents, though IB might be the cheapest & least cumbersome option.

 

[gregferns]

You could ask that person about this RBI notification - https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10192&Mode=00

I think there are Indian brokers (especially bank-brokers), who have tie-ups with foreign brokers, that also allow buying of US shares by Indian Residents, though IB might be the cheapest & least cumbersome option.

Thanks... Will go through this...

Now another thought... SORRY OP FOR A POSSIBLE OFF TOPIC ...

now if i open a NRE (or NRO) demat account through lets say FINVASIA so i can trade in Indian equities or indices derivatives etc even in intraday.... But then I'm supposed to have only 1demat account right?.. i think I've heard all brokers say you can't have more than one...

Therefore if i open another trading account with IB ..... Is that even possible? And if possible then it means i can buy and sell international stocks etc?

::: Confusion:::



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