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Re: Help! Re The Share Market College

Fractus,

I definitely second what Julia said.

One of the very first rules my mentor (not from SMC) taught me: "Never trade with money you can't afford to lose."

With all due respect, your in-laws are probably not the most investment-savvy business people, who can make buy and sell decisions without being emotionally influenced by the need to earn an income from their last remaining Dollars. In that, they're part of a huge majority of Australians - and there is at least anecdotal evidence that more than 80% of wouldbe traders are forced to give up after a short while.

During the 15-odd years that I have been a full-time trader, I have lost count of the number of fellow travellers who have given up. A lucky few found a way back into paid employment. An even smaller number realised that trading wasn't for them, so they cashed in their chips, put it in low-risk cash, and make do with whatever interest that pays them. Oh - there is the odd exception: people who are still managing a small fortune because they started with a large one and only limit themselves to "play money" that - see above - they can afford to lose.

Now, on the sunny side, it is possible to make a living from trading. It only requires several years of studying either business/ accounting/ corporate law, or technical/ mathematical/ statistical science and trade by probabilities. Neither will give a guarantee that the student will graduate to be a great successful trader - just like you find in any other trade or profession that some become good plumbers/ electricians/ nurses, while others, in spite of the same apprenticeship/ schooling do not.

After many months (duration depending on the students' learning capabilities) of training, asking lots of questions, demanding proof of those 34% profits, comparing the predictions against a logical Plan and subsequent outcomes, it may be possible to start paper-trading. That means, you have developed a Trading Plan, tested its efficiency on years of historic data, then you start using the methodology to follow the Market. You write down any buy and sell decisions without actually executing the trade on Market!, and calculate your ratio of profits and losses. Ideally, paper-trading should run for one year because that exposes you at least to a full business cycle.

If, after one year, your paper profit exceeds 90% over the entire year, try your successful Plan with real money. Note however, that the psychology of suddenly "working" with real money, rather than "playing" with Monopoly notes, will reduce your success rate by about two thirds.

PS: Be aware that sellers of trading courses will argue dead-set against the above. That's because their income increases the more clients are trading and paying Brokerage on every trade. If a trade turns out a winner, the education was excellent. If you lose (they don't!) it's: "Bad luck. Persist. You'll get it right next time!"