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It is important to have basic knowledge and experience before you start a full-fledged career in trading. You need both hard work and luck to become a successful trader. Though it is impossible to time the market or to predict market forces, but proper knowledge and training in this field can go a long way to avoid losing your hard-earned wealth in stocks.
Though there is no special professional degree for stock trading, specialized knowledge about mathematics, finance, risk, and money management, as well as economics is an added advantage. You can also obtain a job or be an intern at a trading/ securities/ brokerage firm to gain hands-on experience in trading.
Become a Successful Trader
To start trading one needs to open a trading account. Start with a small amount to get hands-on experience. There are different approaches to stock trading like fundamental and technical analysis. It is recommended to use a mix of to get beneficial results. Never listen to investment gurus or follow trends blindly but start with a good stock screener depending upon your stock preferences and do proper fundamental research about stocks along with both quantitative and qualitative tools. Providers like easyMarkets, purvey enough learning materials to start with.
There are a lot of rich resources available both online and offline to educate oneself on trading, offering training across a spectrum of trading styles and asset classes. Many websites offer free resources including academic trading courses, free trading guides, live webinars, and trading research to educate beginners in this field.
Verse yourself with the company's financials, important terms, ratios, and charts that offer valuable insight into a company. You should learn how to pick a broker, trading strategies, price studies, technical, and indicators, strategy development, and trading psychology.
Who is the Successful Trader?
You can also take inspiration from the lives and experiences of famous investors like Warren Buffet, Benjamin Graham, Peter Lynch, and more. There are many live webinars and events that cover trading strategies and tips, key economic developments around the world, and previews of the upcoming week to stay abreast with market trends. You can follow such events/ experts to beat the market.
One can work in different markets – stocks, debt, derivatives, commodities, and forex and specialize in one type of investment or asset class.
Once you start understanding the basics, you can move to learn complex technical tools. These techniques have proven to be useful for navigating the constantly changing financial markets and for processing the data and information available to you. They include chart reading and other technical indicators like time frame analysis and sentiment analysis that can assist with buy/sell decisions.
With regular practice and trend analysis, you will be able to see through the market movement and identify trading opportunities by analyzing trends, techniques, and events. Try to shift your focus from short-term to long-term so that you do not miss a prospective opportunity or good stock.
The stock market is a fascinating world and people are often smitten by it. But don't be fooled by the glamour as one often oversees the hard work and efforts behind making it big here. A good trading education will help to navigate a range of market conditions and trading styles. It is also important to stay updated about global markets, economy, growth, and inflation trends. The global Online Trading Platform market is projected to grow at 4.9% CAGR during 2021-2026 to $19,740 million by 2026. Technological advancements and integrated trading platforms will act as strong tailwinds for this growth trend.
Tips to Keep in Mind
Power Is In Knowledge
In addition to understanding basic trading procedures, day traders need to stay informed about breaking news on the stock market, such as interest rate changes by the Federal Reserve and the outlook for the economy.
Therefore, do your homework. Keep yourself informed about the selected companies and general markets by creating a wish list of stocks you'd like to trade. Follow reliable financial websites and read business news.
Starting small is the key
Beginners should concentrate on one or two stocks at a time. It is easier to track and find opportunities with just a few stocks. The ability to trade fractional shares has become common in recent years, allowing you to specify a specific dollar amount for investment.
Penny stocks should be avoided
Look for low prices instead of penny stocks if you're looking for deals. It's rare to win a big prize with these stocks since they're often illiquid.
Over-the-counter trading is a popular alternative for stocks trading below $5 a share. Most stocks trading under this price are delisted from major exchanges. Stay away from these unless you've done your research and see a real opportunity.
Timing Those Trades
In the morning, many orders are executed by investors and traders. This increases price volatility. Experienced players probably understand patterns and can pick appropriately to achieve profits. The first 15 to 20 minutes of trading for newbies may be best spent reading the market without making any moves.
There is typically less volatility during the middle hours, but toward the end of the trading day, it picks up again. Despite the rush hours offer opportunities, beginners should avoid them at first.
Profits Must Be Realistic
It is not necessary to win every time for a strategy to be profitable. The majority of traders only win about 50% of the time. They make more money from winners than they do from losers, however. Assign a specific percent of the account to each trade and define and describe the entry and exit methods.
Stock markets can be nerve-racking at times. Day traders must learn to control hope, fear, and greed. Logic should guide their decisions, not emotion.
Follow the plan
Successful traders must move quickly, but they do not have to think quickly. Why is that? Due to their preparation and discipline in sticking to their trading strategy. Rather than trying to chase profits, follow the formula closely. Do not be swayed by your emotions and abandon your strategy. “Plan your trade and trade your plan” is a mantra among day traders.
Thank you for reading!