how to trade stocks for beginners.

5 06 2010
Trading stocks, options, and forex is a big big very big world. There is a lot to learn and if you are a complete beginner than I advise you to please research the hell out of it all. You can lose money if you are not careful.
This blog is in its infancy so to begin I just want you to have a few tips on understanding what kind of trading you really want to accomplish. Once you picked a strategy, research it and make sure its a strategy you want to stick with.

  1. Day trading. Day trading is the trading strategy that consists of waking up every morning, (sometimes at the crack of dawn) grabbing your cup of coffee, reading the latest trends, and start trading. You see day traders perform multiple trades throughout the day, sometimes 3 trades a minute, Maybe more, maybe less. The key here is they purchase multiple stocks and trade them on the short term. They won’t hold their position very long and sell as soon as they reached a desired profit. The reason they buy so many stocks is to reduce the chance of losers and let the winners ride an up trend. A little tip about when to exit, when you see one stock reach close to a 25% gain, take profit and leave. Here’s a tip for your losing stock, if your stock falls below 10% of the starting price, exit and take the loss. That is the beauty of day trading, it is a very stressful strategy, but can yield incredible results. It is not uncommon for a day trader to make over $500 a day…and that is an easy day. On the flip side of that, it is not hard to lose that much a day if you’re not careful and patient. The key to this is to not be greedy.
  2. Swing traders. Swing traders usually hold their positions for a few days. It is like day trading, but on a longer scale. Here you are looking for more of a trend that will develop in days not minutes. It is easier to use technical analysis with this trading strategy. Look for stocks that you think may rise in the next few days. There is a ton of information on how to identify stocks that will rise. The information is too great for me to go into detail in a short amount of time.

3.  Long term investors. These are the people that are in it for the long haul. They are not persuaded by simple daily fluctuations. They watch the news regularly to see what is going to happen. If you plan on making good profits with this strategy, you need to invest a good amount of money into blue chip stocks (big companies like apple, ibm, etc) The profit increases on these companies don’t rise very much, sometimes only a few dollars a stock a day, if you are lucky that is.

so that’s the gist of the basics. There’s a lot to cover though, and I plan on covering more every day in this blog.