Commitment to Succeed
Many people realize there is opportunity in the stock market to make money. However, a great number of those people are intimidated by the negative things they have heard, i.e. someone has lost all of their investment and have no hope of recovery. These scenarios have kept people fearful of trading in the stocks and they are not totally incorrect for this caution.
I believe with some insight and study tools, you will be able to successfully trade in the stock market. Many people who have ventured into the market have done so without personal involvement. In other words, they put their trust in a broker who may not have had a true interest in their financial success.
There are some basic steps that should be taken on the way to becoming a successful trader in the stock market. My definition of an investor is one who invests their money into the stock market with the expectation this company will pay dividends or increase in stock price over a long period of time. A trader is one who analyzes the fundamentals and technical mechanics of a company to determine the best time to buy stock. Their intent is selling those stocks at a profit in a short period of time.
The language or lingo used in the financial arena is a foreign language to most of us. It is imperative to learn the dialect used in the stock market. Then, listening to the financial channels or those in the financial field begins to make sense. There are websites that provide a free glossary and can be used to gain a better understanding of the terminology (investopedia.com and stockcharts.com).
Practice trading. Several online brokerage firms provide a free practice account allowing you to trade phony money before you use your own hard earned funds. Having some experience in this venue, I would highly recommend you take advantage of this until you are comfortable trading and are reasonably sure that you will be successful. marketwatch.com, investopedia.com, and howthemarketworks.com offer these free play money practice accounts that will benefit you.
Once you are reasonably comfortable with your practice account, your next step may be trading in the real time stock market. Determine the amount of money for your initial investment. Never risk any money that is needed for meeting the needs of your personal budget. I strongly suggest you do not use any funds that would cause a hardship on you and your family if it were to be lost. In other words, don’t invest money you can’t afford to lose.
There are several online brokerage firms with good trading systems (watch lists, trading modules, etc.) Choose one that has had a long history of stability and offers a variety of resources for your research. It is also important to find one whose trading platform is user friendly.
Studying the patterns of trade on several stocks in the same sector is key to determining when to buy or sell the company of your choice. They each seem to trade in similar patterns though it may not be the same day or even the same week. This can work in your favor by giving you the advantage of insight as to the possibilities of price movement.
Choosing the right company to begin your trading adventure in can be difficult. First step is to determine what stock price range you are comfortable with. Research the fundamentals of the company you choose. You may want to choose a company within a field that is popular with traders around the world, i.e. technical, pharmaceutical, or industrial sectors. Other things to consider would include past earnings reports, expected future earnings, daily volume of shares of the stock that is being traded. I prefer there to be at least one million of shares traded daily.
When you are ready to start trading be cautioned that emotion can be your adversary. It can cause you to buy or sell shares of your chosen company before the time is right. During your time of practice trading, discover and establish patterns of trading that will give you buy and sell signals. In order for you to make the most out of your trades you should be patient and wait for those signals. There are mathematical and logical reasons based on fundamentals and technical chart analysis. These give you insight that will help you become a successful trader in the stock market.
On a final note, don’t be intimidated to start the learning process. All knowledge begins with a first step, a commitment to learn more.