How To Learn To Trade On The Stock Market
When you imagine stock market traders, the image that comes to mind might be men in suits and suspenders. However, that’s an outdated view that doesn’t reflect reality anymore. Stock trading is something that everyone can do, including women. You can do it part-time to earn some extra cash or you can even turn it into a full-time job. Here is how you can get started in stock market trading.
A few terms. Stock market trading is full of so much jargon that it can make getting into it a little intimidating, so here is a quick guide. Bears are traders who are pessimistic and more likely to sell. Bulls are optimistic traders and more likely to buy. CFD stands for Contract For Difference – learn CFDs to see how you could make money from them. Commodities include livestock, wheat, oil, sugar and gold, among others, and they can all be traded. Equity is another word for shares. Forex is short for foreign exchange, and it concerns the global trade of currencies. Your portfolio is your collection of investments.
Set out a plan. Your first port of call is to set out a long-term plan for what you want to achieve. What do you want to make money for, how much do you need to make and when do you want to have made it by? Perhaps you want to make money to save for a house deposit, or maybe you need it for your kids’ college course. Whatever you need it for, make sure that you know exactly how much you need to make and when.
Set aside money. Stock trading is not something you want to use money needed for rent, food or your gas bills on. There is an inherent risk when it comes to stock trading that makes it an extremely bad idea to spend money you can’t afford to lose – that is how lives end up ruined. Stock trading requires a fairly large amount of money to get started. You’ll need to spend money on setting up a trading account – brokerage platforms will have account minimums that generally start from a few thousand dollars. You will also be spending money on brokerage commissions and various trading fees. Look carefully at your trading platform of choice to see how much you will be charged.
Start with a virtual account. Many trading platforms will offer a virtual stock market for you to throw around pretend money. This is a great way for you to get your bearings on how the markets and trading work without wasting your real trading money. At this early stage, work out how you like to trade and see what you prefer trading.
Open a real account. Once you have gotten a handle on how stock trading works in a virtual setting, you can try your hand at real trading. Make sure to do serious research into whatever you want to invest in – if it is a company, then look at their annual report to see how they are performing and whether they are a good investment. Be careful not to spend too much at first, as you want to pace yourself and learn from any mistakes so that you can continue trading long-term.
Getting into stock trading may seem intimidating at first, but by doing your research and taking a measured approach, you’ll soon have a few successful trades under your belt and the confidence to continue trading.
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