Wednesday, 6 March 2019

How To Become A Stock Trader

I'm writing this article for anyone that's looking to get started in trading and has no idea where to start. So I'm going to go through a few steps with you and explain how to get over the learning curve. You've probably heard that stocks are very very complicated they're very hard but in reality, they're really not, it's just like anything else, it looks hard at first but once you kind of get into it, it becomes easier within time but you have to put in the time and effort to actually get to that comfortability. Now these are the steps you should take to become a confident and successful trader

1. Educate Yourself

You have to properly educate yourselves to know the topic very well. You have to understand things such as 

  • Technical indicators, 
  • Price action 
  • Moving Averages
  • Chart Patterns
  • Exponential Moving Averages
  • Candle Stick Patterns
  • Volume 
  • MACD
  • RSI
  • Support and Resistance
  • Trendline
  • Fibonacci Retracements

You can search out these topics and look them up, the great way to learn about these topics, you can read books, you can actually research these topics, go online, going Investopedia and multiple websites and actually learn about these topics

2. Paper Trading Account

After learning about these topics, the second step you can do is go and open up something called a paper trading account. A paper trading account is an account where you trade the real markets with fake money, now the great thing about a paper trading account is you get to get a feel of the markets without investing real money, without investing money where you're risking on losing money at this point because you have no idea what to do. That's the great benefit of a paper trading account, you're dabbling in the stock market you're not risking any money and you're learning at the same time, so that's a great thing about having a paper trading account. One great platform for a paper trading account is thinkorswim by TD Ameritrade, go to

You can play with the platform and once you're done with paper trading you can actually convert over to a real account as well. Something to keep in mind when you are paper trading when you paper trade with thinkorswim I know thinkorswim they start you off with $200,000 account. Make sure your account is the same size as you would start with real money, because if you start off with $200,000 account and then you switch over to opening up a real account with $5,000 or $2,000. Guess what, there is a huge difference in risk management, there's a huge difference of strategies, a huge difference in the stocks you're touching, you want to make sure when you open up the paper trading account, your account is actually to the same amount of you are going to invest

Take the $200,000 that thinkorswim get you and change it to $200,000, $300,000 or whatever you're going to start off with, just so you're kind of playing with the same numbers and you're comparing apples to apples when you do start with the real account. Once you do have the paper trading account going on I personally recommend that you start practicing for at least one to two months, get comfortable with price movements, get comfortable with stocks, get comfortable and see how the market moving, etc

3. Trading Plan

A trading plan is very very crucial in you becoming a successful trader, this is a huge thing and a high way many traders actually fail. They don't do well if they don't have a trading plan

In your trading plan, the first thing you should have is 

  • Risk Management
  • Position Sizing
  • Entry/Exit points for each day

Once you start trading more you are going to see what I mean, you have to have a solid risk management strategy, I'm going to write a risk management article as well with position sizing but that's something you can look up and try to understand it, I would create an article on that soon

4. Open Up A Real Account

Once you open up a real account how much money should one start with? Me personally I recommend starting with if you're opening up with TD Ameritrade, for example, start off with $2,500 or $3,000. When you first start out my personal advice is to start out small, put in maybe $1000 to $2000 into the market, and work with that. You're not going to make a lot of money if you start out with $1000 to $2000 you're not going to turn that into million or 100k or 200k. When you start small, the purpose at this point is for you to educate yourself with real money because when you paper trade it's completely different than real money, the reason for that is when you have real money in the market there's more emotionally involved and I'm very sure you have heard trading is 80% psychology and 20% technical indicators and skillsets

With that being said the only way you're going to learn these psychological aspects, the only way you're going to learn how you get emotional, fearful is by you having real money. when you have a paper trading account you're not going to feel any of that, you're not going to get any emotion, you're not going to really care about getting up in the morning seeing if your stock is up and down because it's not real money. When you start out with real money, do not start with a lot of money, that is where a lot of people messed up they start out with so much money. If you start with $1000 to $2000 and you're not putting all your money into one trade you're putting $100, $200 to $600 into one trade

  • You are still in the learning process, once you get to that stage and you are profitable for let's say a month or two, that's when you should add more money, now how much money should you add, that's on you depending on your finances and how much money you can actually put into the market and not really worry about. If you are putting money into the market it should be money you don't really worry about if you're putting in money and you have to pay rent next month do not do that, make sure it's money you're not really worried about and you can actually put it into the market and everything else is covered. A very important thing that I want to mention to everyone, trading is something that takes a lot of time you are not going to start and make a huge amount of money right away, it's going to take a lot of time

When you're starting out have the mindset understand that this is going to take time this is not going to happen overnight, it's a game of constant learning and improving as you start out, put yourself in that situation of, you're constantly learning and improving, don't think about money for the next six months. Even if you make money don't check it out, for six months just focus on working on your trading, you can't quit after a month of not seeing the result or 12 weeks.

That is it folk, hopefully, you fully understand how the stock market works

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