I'm sure the answer to this must be out there somewhere. What are the
chances someone dedicated but with litte prior financial experience
can do equal to what they are doing now (x=salary +benefits+ordinary
rate of return on capital) working a 40 hour week trading stocks using
mathematical models (as opposed to research or gut feelings)?
I was looking at Neuroshell trader as some promising software. The
user comments seem to show people making a healthy living but ...

Assume that starting captital also equals x.
What expenses might be involved (pc, software, etc.)?

Doubtful at best using nothing but financial models. If it were that
easy computers would be making lots of people rich.

Before you invest in software, try some of the online trading games
where you don't spend actual money.

If you'd like a suggestion, right now the US dollar is dropping and
oil is going up - both look like long term trends so look at the
charts for GLD, XLE, EWZ, and EWA then think about whether buy and
hold would be a better alternative to day trading. I'm not
recommending you invest in those, just that you take a look and think
for yourself rather than betting on an equation.

For trading profits you want volatility - there hasn't been much in
recent months. Also, check out the stock trader's almanac, most
profits are made in just a 6 month period of each year and that time
is just about over.

When volatility is low, look to fundamentals. Coal is doing great and
most people haven't noticed yet.

If you're looking for good information, read the Financial Times for
about six months before doing much investing.

If you're looking for a broker, Ameritrade has decent rates and some
first rate streaming quote tools.

good luck

When you look at active trading, don't forget to factor in the trading costs.

BTW, if you do daytrade, try to get some other hobby to keep busy
while watching for good trends - such as perhaps answering questions
online.

From my experience, it's the professionals who make money; the punters who lose it.

It's like a casino.

I am very familiar with Neuroshell Trader.  In one of my past lifes I
used to write stock market trading software.  As a review of
Neuroshell trader, it is the best I have ever used. It's easy to use
and customer service is great.  Steve Ward is a great guy and is more
than willing to help - when necessary. I saw him many years ago and
found him to be very knowledgeable.  One of the nice things about the
learning curve with Neuroshell trader is they provide computer videos
to teach you the software.  I've used them and they make the learning
process very easy.

In version 5.0 they are talking about a broker interface.  My
understanding is that the software will make the trades for you.  One
more way to take emotion out of trading.

I do want you to know, so that you can take want it into account, that
I'm listed on their web site as one of the Real Traders.  I also will
be beta testing version 5.0.

If you use this software it will not be necessary to spend 40 hours a
week trading - unless you want to daytrade - and even that, once the
models are built - won't take 40 hours a week.  If you daytrade,
staring at a computer screen waiting for a buy or sell signal can
become kind of a drag.

The best models I have built, trade during the day but not necessarily daytrade.

Can you make a living?  That's the question.  I believe that you can
only after you have been burned really bad.   Why would I say that? 
Once you have been burned really, really bad - only then will you
understand margin and not following your systems buy and sell signals.

Start slow, build models that trade over a couple of weeks time - long
and short.  Trade mutual funds - I like Profunds.  You can go long and
short.  And they have "ultra" funds.  Which are double funds.

Once last thing, daytrading has to be a job - it can not be fun.  Fun
stuff excites you, jobs do not.  If you are daytrading for the "fun"
of it - and it becomes not fun - well guess what will happen - you
will make it fun and there is only one way to do that - taking larger
and larger risks.

One last hint if you do decide to buy the Trader, use walkforward
testing and paper trading.  It's easy to build models that look great
when YOU DON'T TEST THE MODEL OVER DATA IT HAS NOT SEEN!

In other words build the model from, let's say, 3/12/1994 - 3/12/2004
then paper trade the model on data it has not seen from 3/13/2004 -
3/12/2005.  And even that is a bit on the short side, I will sometims
paper trade 3 or 4 years.

I hope this helps.

These were truly useful comments. I think the viewing of it as a job
part is especially interesting. I don't think I would have a problem
about that as I have never gambled and I think I would find the
modeling interesting but I don't want to have "money on my mind." If
you have a regular job you think about the money you have but you may
not be planning what you could do to earn more in your hours.

the odds are against you, but it can be done...

but a lot of knowledge and pain must be endured first...take it from
me I wiped out my account a few times following "get rich" systems off
the internet..

try dowloading the free e book fromhere and also there is a demo
trading account here...which is a fully functional realtime account
with virtual money....so you dont have to lose the real stuff whilst
testing out any software you may purchase..

http://www.livecharts.co.uk/daytrading.htm

Don't do it. Don't even try. The major banks spend millions every year
refining their computer trading models. They hire
math/physics/computer science PhDs to build new models. They have
supercomputers churning through live trade data.

Trying to beat them at their own game (computer model driven trading)
is the equivalent of betting on your son's little league team against
Major League All Stars.

Let's assume you need to earn $100K in returns every year as a trader.
Let's assume you have no costs. Let's assume you can earn a 100%
return. That means you'll have to put up $100K at the outset.

Would you take $100K to Las Vegas and play it? Think about that for a second.







Many casino games pay out ~90% of bets in the long run, so you could
reasonably expect to lose only $10K. On the other hand, the financial
markets are not kind to amateurs trying high-risk strategies. Could
you expect losses of no more than 10%?

You might consider letting experts manage your funds instead of trying yourself.
Check out www.forex-traders.info where they offer managed forex accounts
resp. forex managed accounts with outstanding traders who do the trading for you.

Like someone mentioned earlier, the pros make the money and the
punters don't. If you don't plan on doing a significant amount of
research you have two options. Don't invest, or go through a broker.
Basically there are two types of brokers.

1. Discount - inexpensive, however you will receive little service or
help if you need it.
2. Full Service - Costs vary but will be more than discount but you
will typically get some great service (depends on the company of
course) and a broker will usually fight for your fills and market
position if you feel short changed.


I would suggest researching the net for brokers, to start try this one
<a href="http://www.ifgfutures.com" target=_blank">International
Futures Group</a> I have used them in the past and they helped me
along when I didn't have the time to sit and watch the markets.

Try futuressource.com for a good place to find a broker. Or simple
google it and do the leg work yourself!

there ARE ways to make money trading,
but forex is much better than stocks.
and it doesn't need to involve expensive
software, signals, or hefty broker commissions.
i've traded with success starting with no previous experience
using the system i found at http://www.rapid-forex.com
(there's a free 20 part ecourse about it there)
of course you need to do free demo trading to practice,
and be certain you're not undercapitalized or impatient!
the options technique there even shows how you can use
other people's 'supercomputer' calculations for yourself.

as for mechanical trading techniques, they CAN work over
time but mostly they only make a small percentage profit
overall. people and funds do use them, but depending on 
the computer model's filter it will enter in too many
flat (inactivity) trades, losing money from the spread.
it's better to have some trading knowledge before embarking
on this road anyway so you can protect any profits during
news announcements which computers can't take into account.

whoops not to mention a decent speed connection (not dialup)
so your orders don't experience slippage. and of course a 
decent pc (most trading systems only work on pc unfortunately)
- a slow pc or connection WILL ruin your trading efforts.

hmm- I think the answer is yes it is possible to make it work. It
isn't just the big guys who make the money. Stocks go up, sideways and
down over time- every move is charted and mapped. The success of
others doesn't effect you as a small trader. In todays discount
trading world the transaction costs are low. Mistakes are costly but
VERY instructive. Emotions and excitement are enemies of the precision
you need.

Start with a model simulator if you can't afford the 25k minimum
needed to day trade. Use long term options to multiply your buying
power. Beware of fear and greed. Get out of losses fast with short
stops and let profits run. The biggest uncontrolable aside from an
external crisis and above mentioned factors is overnight and weekend
where a stock or option may change drastically in price from one day's
close and another day's open on news you haven't heard until too late.
There is almost always a trend you can see and it is within this trend
that you should operate. If you concentrate on relatively large orders
rather than lots of smaller opportunities you will make (or lose) more
on each trade, and can stay close to 3-4 issues whose movements you
can get in sync with.

I would say that once the techniques are learned the play is more like
surfing than science.

TJ