Today we’ll dig into the 5 first steps to start trading on the stock market. Stock markets attract millions of novice investors annually, but only a selected few taste true success. The common factor between those that fail in their endeavor is they have not got their basics clear of trading in the market. The stock market has speculative investors that deal in securities without having a deep understanding of why the prices fluctuate. From following so-called market expert’s advice to following tips they buy and sell without much foreknowledge and understanding. The prudent option is first to learn the basics about trading before venturing into this volatile environment.
The 5 first steps to start trading on the stock market are:
1) Set up a Trading Account.
Consult a top-rated online stock broker and set up an account. Keep your trading account separate from your current or savings account. Familiarize yourself with the account and its workings and make use of research and free trading online tools some brokers also offer clients virtual trading so make the most of it.
2) Read up on all market-related material.
From online stock tutorials to everything related to the stock market take a crash course in it all and read as much as possible. Rather than concentrate on a specific area of trading conduct a study of the complete market. Having a thorough knowledge of the market workings will stand you in good stead in the long term.
Some of the top books for every new investor that are a must-read are:
- The Essays of Warren Buffett by Warren Buffet
- Think and Grow Rich by Napoleon Hill
- Rich Dad Poor Dad by Robert Kiyosaki
- Winning on Wall Street by Martin Zweig
Follow the market religiously and catch up first thing in the mornings about the stock indices in foreign markets. Some of the top sites to check include Bloomberg, CBS Money Watch, The Wall Street Journal, Yahoo Finance and Investopedia etc.
3) Make an analysis (or a few!).
While spreadsheets of companies are important, make it a point to technically analyze price charts in varying time frames. Revenue streams and growth curves matter, price action is also vital. Apart from technical analysis and charts, price prediction is also important. While securities are limited to a short sale or long trade subject to moving higher or lower, it is pricing that impact sellers and buyers tremendously. The time horizon is another area to study carefully including all the trends as these time intervals is when trading happens. The charts to study include weekly, daily and 60-minute time frames.
4) Start trading as a practice.
One of the best ways to learn the ropes about trading is to op for virtual trading. In this, you keep an eye on the real term market and decide to buy or sell. Generally, it uses a simulator of a stock market that looks and feels like the real thing. Trade freely making use of various strategies and check the areas where you went wrong. Of course, real trading is a different ball game but you can learn the ropes to quite an extent with virtual trading.
5) Be open for continuous learning.
Experience matters and experience you will gain with time. After you’ve started, do not make the mistake of thinking you know everything. The world keeps on spinning and the stock market continues to further develop and change. Therefor, don’t skip an opportunity to get additional education about trading. Online classes are available catering to all levels from pros to novices. You can join online seminars as well, conducted by seasoned professional traders that cover specific investment tips. Workshops are another way by which to increase your knowledge base. Taking paid classes for research & analysis along with following veteran market professionals is beneficial in the long term. So is subscribing to well-known investor platforms such as for example Investors.com.
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