# Now that I am through my first major error, portfolio checkup?



## clovis8 (Dec 7, 2010)

Now that CCME has gone to 0, I am wondering if anyone sees any other major problems in my current portfolio. I entered the market the first time in December and have just under 8K invested. I am adding about 1k/month. I am 37, single, and not too scared of risk. 











percentage-wise it works out like this;

XIC (14.5%)
ZQQ (12%)
XSU (11.6%)
VWO (10%)
REI.U (10%)
CM (10%)
SU (7.5%)
ZAGG (5.6%)
KO (5.3%)
PNP (5.2%)
CCO (5.1%)
FLL (3.5%)


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## larry81 (Nov 22, 2010)

you sure have tons of holding for a 8k portfolio !


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## clovis8 (Dec 7, 2010)

larry81 said:


> you sure have tons of holding for a 8k portfolio !


I agree but I don't think there is anything wrong with that, is there? I paid a total of $10 bucks in fees to buy them because of the 10 free trades I got when signing up.


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## Cal (Jun 17, 2009)

Are these non registered investments or are some in your RRSP and TFSA?

Just curious b/c of the NYSE holdings and the with-holding taxes.


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## clovis8 (Dec 7, 2010)

Cal said:


> Are these non registered investments or are some in your RRSP and TFSA?
> 
> Just curious b/c of the NYSE holdings and the with-holding taxes.


They are all in either my rrsp or tfsa.


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## warp (Sep 4, 2010)

CLOVIS:

Im not trying to be rude...just some advice.

With $7-8 K to invest I think you have too many holdings.

The commissions will take a bigger % of your portfolio value into the future.

You might be better off to buy a few broad ETF's and div stocks, and just hold them.

If you are looking for a 10 bagger...take a few K and go ahead.....but you have too many holdings.
Its usually better to buy in at least 100 share lots.

That being said,...
good luck.


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## clovis8 (Dec 7, 2010)

warp said:


> CLOVIS:
> 
> Im not trying to be rude...just some advice.
> 
> ...



I understand this when you are talking about fees but as I said I paid $10 total for these trades. Other than fees I am unclear why having multiple equities is a bad idea? 

I thought the old idea of holding a 100 lots was based on now ancient paper trading?


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## levelzero (Mar 11, 2011)

Diversity is good, but you have to keep an eye on commissions unless you plan to hold all of your positions for 5-10 years. 

Take you CCO position as an example. $4.95 to buy and $4.95 to sell for a total commission of $9.90. With only 10 shares, the commission per share is $0.99. This means the first 0.033% of gains is lost to commission.

I understand you are basically trading for free on these holdings, but it's a bad habit to develop and you also cold have used the $50 in free trades to help offset losses or simply made a little bit more.

Every investor is different and there is no right or wrong, simply profitable or not. I personally make lots of small trades and commissions make a huge difference to my profits.


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## webber22 (Mar 6, 2011)

You really only need the first 4 etf's, there's a lot of overlap with the rest. I would sell the ones with a gain and wait for the others to recover. 

You didn't mention what your goal / time-lines were


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## clovis8 (Dec 7, 2010)

levelzero said:


> Diversity is good, but you have to keep an eye on commissions unless you plan to hold all of your positions for 5-10 years.
> 
> Take you CCO position as an example. $4.95 to buy and $4.95 to sell for a total commission of $9.90. With only 10 shares, the commission per share is $0.99. This means the first 0.033% of gains is lost to commission.
> 
> ...


I agree 100%. My plan is now that I have my portfolio pretty much set up I will buy $1000/ month of these same equities. That will put my fees at $10/month or 0.01% which seems reasonable. 

I will then balance once per year which will obviously mean some additional fees.


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## larry81 (Nov 22, 2010)

With ~8k, you would be better to simply invest in TD e-series or ING direct mutual funds...


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## clovis8 (Dec 7, 2010)

webber22 said:


> You really only need the first 4 etf's, there's a lot of overlap with the rest. I would sell the ones with a gain and wait for the others to recover.
> 
> You didn't mention what your goal / time-lines were


Unless I am missing something I don't have much overlap at all. Coke and Suncor are in the etfs but that is it. 


I have a 30 year time frame.


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## clovis8 (Dec 7, 2010)

larry81 said:


> With ~8k, you would be better to simply invest in TD e-series or ING direct mutual funds...


If there is one thing that the dozens of books and articles I have read in the last 6 months agree on it is that mutual funds are scams.


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## webber22 (Mar 6, 2011)

It's great that your saving so much each month, and taking control of your finances  - something not everyone chooses to do. Your banks low cost etfs would have been a good idea to get started. But it's too late now.

BTW, CM, Riocan, Cameco also overlap with XIC


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## clovis8 (Dec 7, 2010)

webber22 said:


> It's great that your saving so much each month, and taking control of your finances  - something not everyone chooses to do. Your banks low cost etfs would have been a good idea to get started. But it's too late now.
> 
> BTW, CM, Riocan, Cameco also overlap with XIC


Ah yes they do. Good point. I'll have take that into account when I balance the first time. Thanks.


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## larry81 (Nov 22, 2010)

clovis8 said:


> If there is one thing that the dozens of books and articles I have read in the last 6 months agree on it is that mutual funds are scams.


And yes, the vast majority of mutuals funds are scam since most of them charge excessive MER, dont beat their index and enslave you with DSC.

TD e-series don't have any of theses. As others pointed, with a 8k portfolio you will get killed by brokerage trading fees

also:

http://canadiancouchpotato.com/2010/06/25/should-you-use-index-funds-or-etfs/

Good luck !


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## clovis8 (Dec 7, 2010)

larry81 said:


> And yes, the vast majority of mutuals funds are scam since most of them charge excessive MER, dont beat their index and enslave you with DSC.
> 
> TD e-series don't have any of theses. As others pointed, with a 8k portfolio you will get killed by brokerage trading fees
> 
> ...


I see your point about the e-series. 

Everyone keeps saying I am going to get killed with trading fees. I cant see what I am missing? I have paid almost no fees so far ($10 total) and am planning on about 0.01%/month ongoing. 

Is my math wrong? 

Thanks for all the help and advice on this everyone.


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## peterk (May 16, 2010)

No you're math is fine. And awesome on getting the 10 free trades! Wish I had that. Many people can be of the opinion that such a small portfolio is not worth your time to manage individual stocks because of the fees, or is "not properly diversified" I say you're doing great. Especially if you're young and just starting to learn (like me)

Just keep in mind going into the future that you keep your costs down. Set a target percent you're willing to pay per trade. I personally try and not make a transaction that's less than $1000. Which will keep my buy commission at 0.5%

Here's my own portfolio: XOM, MFC, BAC, TEF, SBS, WMT. Extremely not diversified. But with such small amounts, (I'm also playing with 7-8k) it's not so much about the money as it is about learning, and getting a feel for your investment comfort level.

Good luck!


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## Causalien (Apr 4, 2009)

Keep total transaction cost to under 1% after 1 buy and 1 sell. So increase your lot size to $2000 per trade if your commission is $10

The other reason for less diversified holdings is so that you don't have to expand as much time and mental power to keep track of them. For example. Listening in on 5 earnings call vs listening in on 10 is a big difference since they all last about 2 hours.

Verify your stock correlations. A simple way to do this is to compare it on google finance and see if they diverge by much percentage wise. You might be buying two different stocks and don't think they move together, but you are statistically doing it without knowing. For example. Holding gold and silver, thinking that they are different metals. But when deflation hit, they both fall. This has more to do with money management and the % allocation of your capital at risk.


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## KaeJS (Sep 28, 2010)

Here's my take:

All of your "Big" companies need to be added to. Example, 6 shares of Coke is not a good idea. 50-100 Shares of Coke is more reasonable.

You are extremely diversified. Don't worry too much about being diversified with only 8k.

My portfolio is only worth 11.1k and I own only 6 securities.

As long as you are not putting 7k in one stock, and 1k in another, then don't worry so much about diversifying.

I would leave your current positions the way they are. Keep what you've got.

But, for instance, I would take the next $2000 and increase your 28 shares of Riocan to 100 shares. I would take the next couple thousand again and increased your Suncor holdings to 50. You know what I mean?

Take your bigger names, and dividend paying securities and beef them up.

I'm not a big fan of ETFs. I held XIU for a little while, and I was happy with it. But, right now there's just a lot more opportunities. I would keep the ETF's you have, but I would not add to them until you increase holdings in your other securities.

The market is a learning process. Everytime I make a mistake, I check it off as a learning experience. When I started in the market I didnt know what I was doing and lost $3000 in less than a month. But, I have since gained it all back and a lot more. You will learn with time, so don't worry about it.

I would not buy anymore securities at this point.

And try not to listen to "rules". Do not rebalance once a year. Rebalance when you feel you should. Do what you "feel" the market is feeling. Watch the market. Pay attention to it. You will know which stocks need to go, and which ones you need to keep or add to.


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## Plugging Along (Jan 3, 2011)

Do you get 10 free trades every month or was it 10 free trades total? Sorry, I'm a little confused.

If it's 10 trade every month, I could see what you're doing, but if you're paying every trade now, I agree with the others, you have too many funds.

As you rebalance and add/subtract, then this will eat into your profits.

I have 4 in my diy portfolio of over $170K... it's a little sparse, but I hate paying for the trading fees.


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## KaeJS (Sep 28, 2010)

He has 10 Trades total, not 10 free trades per month.

And 170k spread between 4 securities is batsh!t crazy, IMO.


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## Sampson (Apr 3, 2009)

clovis8 said:


> percentage-wise it works out like this;
> 
> XIC (14.5%)
> ZQQ (12%)
> ...


What is your desired breakdown/allocation? 

I'm in the camp that thinks this is far too many holdings for such a small portfolio. You may have only paid $10 up to this point, but going forward, you will have to trade often to keep your % in check. If you add $1000 into one security, that represents >12% of your entire portfolio, so one trade will put your %'s completely out of wack, this means you will have to trade more to keep them within a range you want, hence more fees. This doesn't even include changes in the relative values of the holdings which will also change your % breakdowns.

Also, your calculation of fees is incorrect, it is 1%, not 0.01%.

Since you only have stocks in your portfolio, you also aren't diversified among classic, non-correlated assets. If you want to maintain this, at least have better diversification among economic sectors, so that cyclical events will not have as magnified of an effect.


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## Taxsaver (Jun 7, 2009)

How did you select those stocks? Technical analysis? Fundamental analysis? A friend's tip? I checked three of them, and everyone is down since December.


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## Toronto.gal (Jan 8, 2010)

Though diversification is critical, you're *over-diversified* for a portfolio of $8K & this can hurt you too!

KaeJS has a valid point, some of your investments are too small, that even if those did well, your returns would be marginal at best [unless they were AAPL/GOOG stocks]. I would rather have 30 shares of CM for example, than 6, 9 & 15 of KO, CM & SU respectively. 

As an example: 

i) If you had 30 shares of CM and the price increased by $3, that would = $90 profit + annual div. of $103.50,
ii) if you only had 6 shares, your increase would be $18 + annual div. of $20.70,
iii) your commission fee would drop from 3x to 1x,
iv) if you needed/wanted to sell, you could under i), but would not be worth your while under ii),
v) I would not buy 6 shares of anything; you should buy at minimum 20/30 to make your costs reasonable. 

Conversely, if the price decreased by $3, your portfolio would decrease more, but so long as the stocks were solid/dividend payers and you were holding long term, you would be fine. Keep in mind also, that if a stock were to decrease, upon recovery, if you had a decent number of shares, you would likely come out ahead than in the 6/9/15 split scenario. 

Last, but not least, don't forget that once you have accumulated enough shares, you can also start dripping, ie: buying shares [for free] at a discount to boot! [for most stocks].


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## Plugging Along (Jan 3, 2011)

KaeJS said:


> He has 10 Trades total, not 10 free trades per month.
> 
> And 170k spread between 4 securities is batsh!t crazy, IMO.


With only 10 free trades total, then he will get his profit eaten up in fees.

Yeah, I know my 'strategies' (more gambles) can be a little crazy, and are not for the faint of heart. Hence, while I have a more conservative FA for my retirement funds. Overall, I am diversified, just in my DIY, it's pretty risky, hence why I said I'm not totatlly relying on my own DIY. So far, it's paid off.


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## clovis8 (Dec 7, 2010)

Toronto.gal said:


> Though diversification is critical, you're *over-diversified* for a portfolio of $8K & this can hurt you too!
> 
> KaeJS has a valid point, some of your investments are too small, that even if those did well, your returns would be marginal at best [unless they were AAPL/GOOG stocks]. I would rather have 30 shares of CM for example, than 6, 9 & 15 of KO, CM & SU respectively.
> 
> ...


Ah ok I see the problem now. Thanks. 

While I have paid little in fees to this point it will cost me in the future. It seems like I have two choices at this point;

1) selling some and buying more of others to reduce my diversity. That will just increase my fees correct? 

2) Do what Causalien suggested and buy additional stocks in $2000 blocks which will obviously throw my balance out for a while.

It seems like option 2 is best, no?



Plugging Along said:


> Do you get 10 free trades every month or was it 10 free trades total? Sorry, I'm a little confused.


I got 20 free trades, 10 for my TFSA and 10 for my RRSP.



Sampson said:


> What is your desired breakdown/allocation?


I was trying for 50% broad-based ETFs and 25% large cap and 25% smaller cap and more3 gambling type stocks which is basically how it is broken down now. 




Taxsaver said:


> How did you select those stocks? Technical analysis? Fundamental analysis? A friend's tip? I checked three of them, and everyone is down since December.



I picked most based on fundamental analysis. Technical analysis is a bunch of rubbish in my opinion. 

A couple of my stocks are bigger gambles and I know this (FLL, PNP and ZAGG). 

FLL is a casino company that is pretty highly rated and I know this industry and the places it runs well.

PNP is another industry I know pretty well. This is my purest gamble.

ZAGG is one I bought because they have a new technology coming out that I am convinced is going to be huge. 

As you will see these gambles only represent 15% of my total portfolio.


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## Taxsaver (Jun 7, 2009)

clovis8 said:


> I picked most based on fundamental analysis. Technical analysis is a bunch of rubbish in my opinion.
> 
> A couple of my stocks are bigger gambles and I know this (FLL, PNP and ZAGG).
> 
> ...


Great. I should be able to take the plunge in the stock market in August. Your documented experience will certainly be helpful to me. I am studying technical analysis right now. Some books seem to be written for advanced traders. It's sometimes very hard to understand what they explain. I prefer to borrow them from the public library. If I like them, then I buy them.


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## peterk (May 16, 2010)

I wouldn't worry about keeping precicely balanced to your % allocation. Who cares if you buy in $2000 chunks. As long as you don't get yourself overly (using your definition of overly) invested in speculative small caps.

P.S. I've looked into Zagg, seems like a very interesting promising company with a huge market. However my suspicion is that in the next 5-10 years we'll be seeing great advances in damage resistent glass. It'll take a while for consumers to "trust" this and not protect their products with covers, but eventually the need for them will be greatly dimished. IMO


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## clovis8 (Dec 7, 2010)

peterk said:


> I wouldn't worry about keeping precicely balanced to your % allocation. Who cares if you buy in $2000 chunks. As long as you don't get yourself overly (using your definition of overly) invested in speculative small caps.
> 
> P.S. I've looked into Zagg, seems like a very interesting promising company with a huge market. However my suspicion is that in the next 5-10 years we'll be seeing great advances in damage resistent glass. It'll take a while for consumers to "trust" this and not protect their products with covers, but eventually the need for them will be greatly dimished. IMO


This is the technology Zagg is bringing out. I can't see how it does not revolutionize the whole gadget industry.

http://http://m.gadgetell.com/tech_mobile/comment/waterproof-gadgets-on-the-way-invisibleshield-maker-zagg-gets-some-waterpro/


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## daddybigbucks (Jan 30, 2011)

clovis8 said:


> If there is one thing that the dozens of books and articles I have read in the last 6 months agree on it is that mutual funds are scams.
> 
> 
> 
> ...


I think you have a bit of chip on your shoulder, which is fine. The market will show you who is boss.

I would not discredit any analysis until you have consistently beat the market in a few years. Every way has its merits and you have to find what works for you.

If you not that afraid of risk, I would say to put your whole portfolio into 2 stocks. If i was you and those are your picks, I would say CCO and instead of CIBC, i would go with TD.

Then every time you get another $2-4K into the account buy another company. Watch for downturns like CCO and buy those.

Do that for a couple years and you have some winners and some losers, then you'll know the cycle of some companies and you'll be on your way.

Then you can smirk when someone comes on here with a chip on their shoulder. 

Good luck.


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## clovis8 (Dec 7, 2010)

daddybigbucks said:


> I think you have a bit of chip on your shoulder, which is fine. The market will show you who is boss.
> 
> I would not discredit any analysis until you have consistently beat the market in a few years. Every way has its merits and you have to find what works for you.
> 
> ...


I dont have a chip on my shoulder at all. I just believe in science and all the research seems to make it pretty clear that technical analysis does not work and Mutual funds do no better than the average market but charge massive fees for the privilege. 

No need to derail this thread with that discussion though.


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## peterk (May 16, 2010)

clovis8 said:


> This is the technology Zagg is bringing out. I can't see how it does not revolutionize the whole gadget industry.
> 
> http://http://m.gadgetell.com/tech_mobile/comment/waterproof-gadgets-on-the-way-invisibleshield-maker-zagg-gets-some-waterpro/


Very cool technology. The following questions come to mind about it.

How big of a desire is there for waterproofing? There have been waterproof digital cameras on the market now for many years, and they aren't exactly flying off the shelves compared to their regular counterparts.
Who is going to pay $50+ to send their device in for waterproofing?
Will Zagg be able to successfully license this technology to the big manufacturers?
Depending on the proprietarity (a word?) of this tech. I see 3 scenarios that could play out. They license to big produces for big $$$, they get bought out by Apple etc., they get their technology reverse engineered/copied/stolen by apple, rim, HP and the likes - and driven out of business.
Hard to say at this point how that'll all pan out. Certainly a risky holding as I'm sure you know. Big potential of course


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## KaeJS (Sep 28, 2010)

Do not sell anything. You will just lose money. Only add to your current positions. You are 37. not 60. You have a lot of time to add to those little stragglers you never got around to. Add to your bigger names like I mentioned before such as Suncor, Coke, Riocan, etc.

Then you can worry more about adding to your other stocks you havent touched for a while. You may be suprised that if you leave them for a year you might actually be able to cover your trading costs on only a few shares. This is what you want to do. No point paying $5 to sell 10 shares that have only made you $1.

And as for your "science" and no technical analyis...

The market relies heavily on technical analysis. You do not own the market, the market owns you. You do what the market wants, you will make money. Only skilled professionals can _sometimes_ make money by going against the grain. For example: The Market does not like stocks right now such as RIM, Kinross Gold, Uranium holdings, but the market currently likes Financials like TD Bank and Royal Bank, it also likes Energy companies and Precious Metals. This will all change in time, though.

I think you are taking a speculation on Zagg, which is fine. I would not sell your shares at all, but I don't think its going to impress you quite as much as you might think...

You are on the right track. However, I think you are underestimating the market a little bit. Everyone thinks differently, which allows markets to work. Just keep in mind that markets are also largely based on psychology. You must always look at seller's and buyer's point of view before acting.

If you're interested in learning a bit more about Technical Analysis, look up something called the MACD Line (Moving Average Convergence-Divergence). You will start to see a trend. You will also quickly see how people make money (some of the time, but not all of the time) by following a simple MACD.

However, I know you want to keep your thread on track as well, so lets not steer away from your original post.


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## clovis8 (Dec 7, 2010)

Thanks for all the help and advice. As one poster stated, at least by posting all my mistakes I might help someone else avoid them.


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## kcowan (Jul 1, 2010)

I think the only mistake you made was betting on a risky company that went TU. But if you keep such bets to a small part of your portfolio, it is a reasonable strategy.

By watching your currrent holdings and adding big blocks to the ones you like, you will evolve into a nice portfolio.


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## gibor365 (Apr 1, 2011)

I don't think you have to sell anything right now, just add to existing shares. And better start adding to big ETF first, like XIC. Do not worry too much that some of your ETFs and stock are overlapping


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## gibor365 (Apr 1, 2011)

also, buy something in amount not less than $3000, or you spend too much on commisiions... I pay 6.95 for trade, you think it's small, but check how much you spend for long time


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## OptsyEagle (Nov 29, 2009)

A Barron's article on Chinese reverse mergers and some guy that shorts them. I like this quote:

"_In general, the problems would be fewer. Maybe far fewer. There is a pretty strong disincentive that we don't have in the U.S.: capital punishment for financial crimes. If you are listed in China or you are scamming Chinese investors, if you are Chinese, there is a much higher degree of risk then if you are scamming U.S. investors." _

I think that could go a long way to improving management ethics within public companies.


http://online.barrons.com/article/S...493298380726.html#articleTabs_panel_article=1


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## Causalien (Apr 4, 2009)

clovis8 said:


> I dont have a chip on my shoulder at all. I just believe in science and all the research seems to make it pretty clear that technical analysis does not work and Mutual funds do no better than the average market but charge massive fees for the privilege.
> 
> No need to derail this thread with that discussion though.


It depends on which parts of the TA you use. Candle stick IMO don't work, but it has worked for traders of the old days. I lump all tradings based on mathematical numbers under the umbrella of TA. Most algo trading are done with TA and don't tell me that GS is not making tons of money off of that.


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## ArmchairHero (Apr 4, 2011)

clovis8 said:


> Thanks for all the help and advice. As one poster stated, at least by posting all my mistakes I might help someone else avoid them.


Yea thanks for this too, lots of nice info on here for a new investor like me... hopefully I might be one of those someones. 

I'm going to start building my portfolio around $7-10k to start and see where it ends up. 

I might have made a mistake already by signing up with Questrade, just saw the thread warning about it.


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