Stock trading refers to buying, holding, and selling a company’s shares to make money. The good thing about stock trading is that you can start at any age.
The things you learn and the skills you develop today will help you for as long as you stay in the game, and the game itself lasts a lifetime. But how to learn stock trading?
In this article, we will discuss the best options one can choose to learn stock trading. We will also tell you how and what to learn to help you move in the right direction.
So, read this article carefully until the end to start your stock trading journey the right way.
How to Learn Stock Trading
Open a brokerage account
Traders need a brokerage account to trade stocks, and every broker is different. Your broker will connect you with the exchanges where stocks are available to be traded (bought and sold). You will find many options to choose from, and in your learning phase, it can be a good option to try multiple trading platforms.
Even if you watch hundreds of videos, you can’t be good at driving if you have never seen a car or been in the driving seat. The same is the case with stock trading.
So, before reading any books or stock market guides, you should open a brokerage account to see how things work in the market. You should observe how stock prices change and check out the tools different platforms offer.
After carefully checking out a few platforms, you can gather information (tips, tricks, and strategies). This way, you will know what different terms mean, and it will be easy for you to get started.
Read books
Learn stock trading in one day! Become a stock market millionaire in seven days! Books and authors making such claims are usually unreliable, and you should never trust the information they provide.
However, there are many good books about stock trading that might help you in your learning phase. As a matter of fact, good books were there even when there were no YouTube videos to watch.
Many traders with years of experience have written books and shared their personal experiences. You can learn what strategies and trading styles worked best for them and the mistakes they made. Good books will provide you with a wealth of information and will likely be more cost-effective than courses and seminars.
Technical Analysis of the Financial Markets by John Murphy and A Random Walk Down Wall Street By Burton G. Malkiel are two of the best books for stock market enthusiasts.
However, you should feel free to look for more options. You should choose a book based on your specific requirements, budget, and other personal preferences.
Read financial articles
If you don’t have the time to read a book or don’t want to spend money, you can read financial articles to gain knowledge. You can learn the best trading styles, strategies, tips, and other important things. This approach is good for people with a tight schedule, as reading articles doesn’t take much time.
You can find many interesting, informative, and useful articles. They are easy to read and understand, and they can help you learn a lot of new stuff.
Watch YouTube videos
Not everyone is fond of reading, and if you aren’t a text-based learner, you can watch YouTube videos to learn the basics. There are countless videos that can help you, but just like books and articles, misleading videos are also available. You should choose only reliable content creators who have the required trading experience to guide others.
Learning from videos is a much more engaging option than reading books, and you can also watch interviews on some channels. Since YouTube videos are free to watch, you won’t have to worry about your budget.
Follow successful traders and investors
You can follow successful stock traders and investors on social media. Twitter is a great place, as many experienced players are active on the platform. They often share the latest news, trends, and tips with their followers.
You can also subscribe to free email newsletters to gain more knowledge and stay up to date. Many investors share the latest data with their subscribers every week, and the information can get delivered directly to your inbox. They may not be dedicated to beginners, but you can learn a lot of new stuff by reading them.
Make full use of demo accounts
Many platforms offer a demo account to new users, and you should make full use of them to learn the basics. They can teach you a lot of stuff that no piece of text or video can teach.
You may get thousands of dollars in your virtual account, which you can use to build your virtual portfolio.
You can learn how to buy and sell stocks and how the market reacts to news and other factors without risking your own money. Some platforms even turn it into a game and let individuals compete with each other.
Learn from your mistakes
Even if you digest all the information available, you will likely make a mistake while trading. The mistakes you make at the beginning can help you in the long run.
If you start slow, an error in the execution part won’t prove too costly, but it will teach you a valuable lesson that you will carry with you throughout your life. Every trader makes mistakes, but the ones who learn from them become successful.
So, these are the options you can choose to learn stock trading. Some of them may suit you better than others depending on your personal preferences and needs, so you should pick an option accordingly.
You can also try them all, but make sure to pick only reliable resources to avoid issues. You should also go for seminars, online courses, and live classes.
Now that you know how to learn stock trading, you can start your learning phase. But from where should one start?
Since there are countless sources of information out there, beginners often get overwhelmed. Don’t worry; we are here to help you. In the following section, we will share some important tips you should follow.
Important Tips: How and What to Learn
Start with general trading and investing information
Whenever you start learning something new, you should start with the basics, and the same is the case here. You should understand the stock market basics before going into details.
You should know what the stock market is, what traders do, how they make profits, what the involved risks are, how they do risk management, and more. Once you know the basics, you can move to the next step.
Find answers to your specific questions
You will likely have many questions in mind after conducting research. You should look for answers to those questions in books, articles, or videos. Once you get clarity on all your doubts, you should start familiarizing yourself with the important terms.
Learn the important terms
Traders have to consider many important factors while buying, holding, and selling stocks. If you don’t know what the important terms mean or why they matter, it will be challenging for you to create and execute an effective plan.
So, to avoid problems, you should learn the importance of volatility, liquidity, volume, stop loss, candlesticks, resistance, support, pullbacks, reversals, trends, and other terms in trading.
Learn how to read charts
Individuals who prefer short-term trading styles, such as day trading and swing trading, give more importance to short-term trends than a company’s fundamentals and long-term performance. To capitalize on the trends, you should know how to read charts.
You should also learn how to identify support and resistance levels. They play an important role, especially for traders. You will get good at it as you gain experience, but you should be clear about the basics when you start trading.
Patience is key
You won’t learn everything in a day or two, so you should have patience during your learning phase. There is no need to rush into anything, as you will risk your hard-earned money when you start trading. You should pay attention to every little detail while conducting research and start trading only when you feel confident.
If you follow these tips, everything will likely go smoothly during your learning phase. However, knowing how to learn stock trading isn’t enough, as you will have to start trading to make profits. In the following section, we will discuss how to start stock trading.
How to Start Stock Trading
Build your trading fund and manage it wisely
The first step for beginners is to build their trading fund. Based on your risk tolerance, your trading fund should only have the money you can afford to lose. Simply put, your day-to-day life shouldn’t get disturbed due to the price movements in the stock market.
You should be able to pay your electricity, medical, grocery, and other bills on time, even if a couple of trades don’t go your way. Ideally, your trading fund should have less than 5% of your monthly income/savings at the beginning, and you can add more money to it as you gain experience.
Building your trading fund isn’t enough, as you will also have to manage it wisely to stay on the right track. You shouldn’t use 100% of your trading funds in a single trade to avoid significant losses. You should use only 2%-5% of your trading funds per trade.
This approach will help you make a comeback if you lose money, as you will have money in your account to open a new position.
Choose a suitable platform for trading
Opening a live trading account is easy today, but finding the right platform is important. As a trader, you should be concerned about trading fees, user interface (ease of opening and closing positions), customer support, deposit/withdrawal time, and other personal preferences.
Once you find a platform that suits all your needs, you can open a trading account, deposit money, and start trading.
Choose a trading style
As a beginner, you will have many trading styles to choose from, and you can also try multiple styles that complement each other. Day trading, swing trading, scalping, noise trading, and position trading are some of the most popular trading styles; however, you can choose other options too.
Create a solid strategy
Based on your trading style, skills, market conditions, and personal preferences, you should create a solid strategy. Pullback trading, support, resistance trading, channel trading, breakout trading, 10-day and 20-day SMA trading, news trading, and 50-day moving average trading are popular, effective, and commonly-used trading strategies.
Choose the right stocks to buy
Based on your trading style and strategy, you will need to find the right stocks to buy. On a given day, a particular stock’s price may rise even in bad market conditions, which means traders can find many entry points throughout the economic cycle.
When comparing and choosing stocks, liquidity, volume, chart patterns, and volatility should be on your priority list.
Choose the right entry point and a reasonable target price
You should never buy a stock without an exit strategy. When you find the right entry point, you should open a position and choose a reasonable target price to exit the trade. Once the stock price hits your target, you should close your position. If you get carried away and keep the position open, a pullback or reversal may wipe off your profits.
Do proper risk management
Risk management is an important part of trading, and you should do this part the right way. You should make good use of ‘Stop-Loss’ and other risk-management tools to limit the risk.
So, this is how you can start stock trading the right way. You should stick to your short-term and long-term goals without getting carried away. Also, you should start slow and focus more on the learning and practicing parts at the beginning.
Is Stock Trading Profitable?
Yes, stock trading can be profitable. Many people start trading every year, and many become full-time traders for a reason. However, not everyone makes a profit in the market, and many traders lose their hard-earned money.
As a trader, you should always be clear about your risk tolerance and do proper risk management to avoid significant losses. You should also follow a good trading strategy and execute it correctly to make profits. If you plan your every move carefully and stay consistent, you may accumulate wealth in the long run.
Once you jump into the stock market, you might want to explore different options. Options trading is also a popular choice, but if you are a beginner, you may need a helping hand to trade options the right way.
For instance, an options-picking service can make things easier for you, especially in the beginning. If you are looking for such a service, Foolproof Options can be an amazing option, as it does an outstanding job in every field.
More about Foolproof Options
Foolproof is known for offering quality services at reasonable rates, and you can get its monthly plan without worrying about budget issues.
After signing up for the service, you will start receiving at least three trade alerts per week on Telegram from their experts who have 25+ years of trading experience.
You will get a full trade plan that will include a ticker symbol, trade type, price target, stop loss, suggested trade idea, and estimated time for the trade to pan out. With such information, it’s easy to stay on the right side of the market.
If you still have second thoughts about Foolproof, you can start a 14-day free trial and see how it works. You will also get a 200% refund guarantee, which makes the deal even more impressive.
Conclusion
We hope you liked this article and understood how to learn stock trading. Fortunately, beginners can find information online and learn everything at home. But misleading information is also available online, and you should choose your sources wisely.
It’s important to know that one can’t learn stock trading in one day or even a week. It takes time and effort to master trading, and one has to go through many ups and downs during the process. Even after gaining years of experience, you aren’t guaranteed to make a profit in every trade.
If you don’t have any experience in the field, you can choose the options we have covered to learn how things work. But before spending your hard-earned money on an online course, book, seminar, or paid tutorial, you should ensure its contents are useful.
You can start trading once you understand the basics, but as mentioned above, you should start slowly. No book or video is better than in-field experience; you will learn much as you gain trading experience.