Are you trying to get a start in the world of stock trading? If you are, then learning the basics is the best place to start...
Here at StockExchangeSecrets, we don't pretend to be the world's greatest technical analysts or traders, we invest more often by using fundamentals. However, to be a good investor, it is important to understand other aspects of 'the game'. As such your author's have read widely on topics which involve stock trading.
So we might not be the best people to try and learn from if you are already an experienced trader. But, if you are just starting out, we can certainly offer you some help and point you in the right direction so that your stock trading education goes well. If nothing else, this will hopefully save you both time and money because you have avoided some back alleys and potentially expensive mistakes.
As you may already realise, being a trader is hard work - there is much to learn and much to do. You will need some equipment, plenty of knowledge, funds with which to start and lots of motivation to keep learning and studying.
Without a doubt, stock trading can be very rewarding. There are few
things that offer a rush of emotions in quite the same way. Perhaps a
winning poker hand or horse race might be similar. There are also very
few things that offer quite the same potential for financial returns.
Watch These Free Videos And Learn To Trade The Stock Market
Successul trades can often make double digit percentage returns in just a few days or weeks. There are also few areas with as much scope for study if you like the analytical element - how many world markets, currencies, stocks, bonds and commodities are there?
For someone with a curious mind and a need for continuous learning, trading in the financial markets ought to be a wonderful occupation, pastime and perhaps, obsession. If you happen to be good with numbers then even better! Frankly, people that have slightly obsessive characters, are great at maths and love to learn and work make up a very significant proportion of all hedge fund managers - and they earn a lot!
If you plan to become an expert in something, almost anything in fact, you can bet that there is a market in a similar or related field that can be traded for profit - if you want.
In reality, there are probably too many different approaches and techniques for any one individual to master them all. Your author, for example, has read a frightening amount about Elliott Wave analysis and yet I would never consider myself to be an expert. In fact, I am still barely able to make analysis myself. If the same amount of effort were applied to other analysis methods - it would take me decades!
The trick, as I can see it, is to get a brief overview of a number of analysis systems and a good working knowledge of the one you plan to use most often.
Don't slip up
Having the background knowledge will help to understand predictions and analysis from newsletter writers and tipsters, et al, but will stop you from trying to trade on that knowledge yourself.
Often, the real benefit of a good and broad stock trading education comes not in the trades you make, but the trades that you avoid. Being able to spot potential banana-skins and avoid losing money is almost as good as making money - in fact, it might even be better! At least money not 'in play' should be earning interest in a bank account rather than losing ground in the market.
Time is money
There are many ways to improve an education. For some, going to seminars and meeting people is a favoured approach. For others, like myself, reading excellent books on the topic is effective. The downside for me is that reading a good analysis book can be like studying for an exam and can be very time consuming. With a job, newspaper column to write, trades to make and a website to run - time is important!
The one real issue with improving your stock trading education is that it is resource intensive. By that, I mean that it costs both time and money. Sometimes a lot of money! However, there can be little doubt that improving your own knowledge is a valuable long term asset and should be encouraged.
So we wish you luck in your stock trading career. We hope that the following pages prove to be a good starting point for you and that you have years of fun and profits to come!
All about you
It is actually quite easy - though not always recommended - to be an investor who buys and forgets. It would be quite easy to purchase stock in a global giant, never look at the price and simply keep banking the dividends. This is not the wisest of choices, but it is easy to imagine that many people do exactly this.
In contrast, when stock market trading, there has to be much more focus and action. A purchase is made only when it is believed that a profit can be made - and an acceptable profit at that - in a relatively short time period. This might mean that the target is to buy, make money and sell all within a few weeks, possibly within an even shorter time frame.
Since your authors are longer term investors by nature, the idea of 'day trading' is one that fills us with horror! Trying to decide what to buy, at what price to buy, when and at what price to sell at, calculating potential tax liabilities and fees - and doing this every day - seems to us to be a little like having attention deficit disorder for investors. We would not wish to deal with the stress of such a lifestyle.
But lots of people do this and enjoy the freedom it offers. At least it is freedom from a boss or employer, if not from the pc and trading software.
This means that the very first decision about stock market trading has to come from within you. What are your goals and tolerances? Could you handle the pressure and stress of day trading? Or would you rather take a little more time over your decisions?
How much capital do you have to start with? Are you hoping that trading will become your full time profession, or just an intellectually stimulating and hopefully profitable hobby?
Then of course, there are many other questions to answer. Do you have specific knowledge that can help your trading? Are you an expert (or do you want to be) in an area of the stock market?
There is no right or wrong answer here - it can only be answered by the individual - YOU.
Perhaps a better way to make money work harder would be to follow a mechanical system. Such a method would use technical analysis to flag buy and sell points automatically. This would enable a trader or investor to remove the main risk to their money - themselves!
As long as the trader can do as he or she is told, "Buy XYZ Inc at as close to this price as possible" or "Sell ABC Corp at that price today", they could make money.
To learn more about the basics of stock trading, please visit the following pages: