David Jenyns, a successful trader in his own right, interviews long-term trader and friend Stuart McPhee about the need to learn stock trading if your time is limited, and how to start out as a trader.
Stuart: A questioner has asked what is the best to trade if you are time poor. There are methodologies you can use that really don’t demand a huge amount of your time and the obvious one is trading stocks using medium-term trends.
In fact you don’t even have to check things every day. You don’t need to scan every day. My medium term funds I scan once a week. Admittedly when I’m in a trade, I’ll monitor during the week. So far as scanning and identifying new opportunities, it’s a once a week thing. I think a lot of people scoff at oh, only a few hours a week or one hour per day or less than an hour per day.
Absolutely you can trade using a particular style that doesn’t demand a huge amount of your time. Trading stocks medium term trends is certainly one of those and is the most obvious and common one for people who are time poor.
David: I think a lot of people are facing this. The next question is: I’m a beginner in trading and I started trading the forex about six months ago. In one of your videos, you recommended for beginners not to start with short term trading such as intra day trading. For a person like me who has a full-time very demanding managerial job with the aim to trade on a part-time basis as a starting point, what type of trade would you recommend: forex, futures, stocks etc? What type of trading, swing trading position trading and can you specify timeframes, medium term or longer term?
Stuart: There may be people out there who start trading foreign exchange straightaway and make a killing. I just know that’s going to be the exception rather than the rule, and it’s going to be a very rare exception. I really believe in laying the foundations. The groundwork for me is to learn stock trading for a period of time and just concentrate on trading stocks. They are the easiest, you won’t get hurt if things don’t go your way. You’re not trading with leverage, you can’t lose more than you physically have, where with some of the other products you can.
It’s just the easiest way to start, it’s a great grounding and then if you can’t trade stocks profitably consistently, then you’re certainly not going to be successful trading the others. That’s why I believe in starting with the basics.
When you have a demanding job time wise and trading such a short term instrument as forex, it’s difficult. The beauty today is you can place conditional orders and place our stops physically as soon as we get in so we don’t have to watching the screen but I think so far as analysis is concerned and doing other things it can be demanding of our time.
David: He also asked regarding swing trading and position trading or a particular method of trading. If you were to put a label on it so he’s got somewhere to start.
Stuart: Yes I just say learn stock trading using medium term trends. Analyze peaks and troughs. Identify those and those stocks achieving higher peaks, higher troughs, that’s the sort of thing I’m interested in. Good solid conservative, medium term steady sort of movement stocks.