Stock Trading – Top 10 Tips
Stock trading beginners should have access to numerous sources of information when looking to learn the basics of investing. The desire to press on combined with trial and error will chart the way to success, just like riding a bike.
The fact that the investing game lasts a lifetime is considered to be one of the main advantages of stock trading. When it comes to honing and developing their skills, seasoned investors have years of experience. Today, we still find strategies developed two decades ago useful. The stock investing game is always in full throttle.
For investors asking themselves, “How do I get started?” I have compiled a list of ten of the best answers.
1. Register An Account With A Stock Broker
Open an account with your preferred online stock broker. Take the opportunity to practice using the free research and trading tools limited to clients, on top of familiarizing yourself with the layout. You can even practice trading with the fake money in the virtual trading resources offered by some brokers. Visit StockBrokers.com if you are interested in a great tool for comparing online brokers.
2. Study Some Books
Compared to the cost of educational DVDs sold online, seminars, and classes, study books are an informative option that is more affordable.
3. Go Through Some Articles
When it comes to education, articles are a great choice. More than a hundred unique articles on investment are broken down into different categories. StockTrader.com, Google Search, and Investopedia.com are our recommended investment education websites.
4. Get Yourself A Mentor
Any person who has a basic understanding of how the stock market operates can be your mentor, be it a friend, family member, colleague, current or past professor etc. some of the characteristics of a good mentor include willingness to offer assistance, ability to offer solutions to your questions, offer encouragement when the market is tough and even recommend worthwhile resources. During their early stock trading days all successful investors, present and past, had mentors.
Another great resource for questions and answers is forums. Trade2Win and Elite Trader are highly recommended. Just be sure to take your advice from the right members. Let alone being profitable, most contributing members aren’t professional traders. Never follow trade recommendations under any circumstances from forums, and use extreme caution when taking any advise offered from anyone you don’t know.
5. Learn From the Legends
To appreciate, get inspired and gain perspective on stock trading, learn from some of the greatest stock traders from the past. Peter Lynch, Jesse Livermore, John Templeton, George Soros, Pual Tudor Jones, Benjamin Graham and Warren Buffet among others are some of the best names to read up on.
6. Follow and Read Up On The Stock Market
Some of the best resources beginners can use to follow the markets include news websites such as Google Finance. You should look no further than Bloomberg and the Wall Street Journal for detailed coverage. Traders can learn about economic concepts, third party analysis, general business and trends by simply reading headline stories and following the markets on a daily basis. Another great source of exposure for new investors to consider involves fundamental data observation and puling quotes.
With CNBC being the most popular channel, TV is another way to follow the market on a daily basis. Traders can widen their knowledge by watching CNBC for as little as 15 minutes daily. All you need to do is watch and allow the discussions, interviews and comments to soak in, while ensuring that the style of reporting or language used do not become a distraction. With time however, you will learn that most of the stock trading TV shows are composed of worthless recommendations and are more of a distraction, beware. You are not alone as this is part of the natural course of evolution.
7. Check Out Paid Subscriptions
It might be useful and educational for you to pay for research and analysis. Instead of trying to use newly learned concepts on their own, some traders may find observing and watching market experts to be more advantageous. Here, the secret is to find the right paid subscription(s) as per your needs, from the variety of available websites. A collection of the services I use is available for your perusal. Morningstar and Investors.com are two of the most reputable services.
8. Attend Class And Seminars
When it comes to shedding light into certain types of investments and the market at large, seminar can be an invaluable option. In most cases, while looking at one side of the stock market, seminars look at how the speaker has found success through utilization of their own strategies in the past. Mark Minervini and Dan Zanger are two good examples. It’s worth mentioning that attendees are not required to pay at all seminars. It’s best to be wary of the sales pitch that’s always slated at the end, even though some seminars are free to attend, and can provide for an enriching experience.
9. Practice Trading On A Simulator Or Using The First Batch Of Stocks You Buy
The best way to kick start your stock trading journey is to simply dive in, having registered your online stock broker account. You can get in the game with one, ten or twenty shares, so don’t be afraid of starting small.
You can look into virtual trading on a stock trading simulator if trading with real capital is just not possible at the beginning. For practice purposes, most online brokers offer paper or virtual trading to their members. Paper trading is great practicing technique described in the video below.
Trying to score big by going all in with a full stock portfolio right from the start is one of the most common mistakes made by beginners. Many new traders suffer huge losses at the initial stages as a direct result of making this painful misstep.
10. Learn From Warren Buffet, and Passive Index
Trades will end up in a losing position for most. Instead of trying to get one over the market on their own, the greatest investor in history, Warren Buffet encourages individual investors to passive index.