First of all, let’s set the record straight. You need thousands of dollars set aside in order to trade stocks. And you also need to be financially stable. Each individual’s budget and finances are unique, but that’s a general rule of thumb that applies. It will help you be a successful and thorough trader. That being said, here is your guide to trading stocks in 2018.
You can’t pay attention to the chart for a stock without knowing the company. And you can’t pay attention to a company’s stock without knowing the chart if you’re going to be a trader. You are going to have to pay attention to the technicals. Does that mean you need some expensive software? Not necessarily, unless you plan on looking at the really minute details in order to be a day trader.
Stock trading is much more difficult than swing trading. Not every investor is going to make his or her way to day trading. It’s not a marker for success. It is more of personal taste. Yet if you are going to become a day trader, you have to know the market really well. That means you are going to need to be able to analyze data for companies and know all the stock market terminology.
If you aspire to be a day trader, you’re going to have to start small, and not necessarily with trading stocks daily. You will need to learn the market, and you’re going to have to learn those companies. You might want to put off day trading for a few years. Why? The more market knowledge you gain, the better off you’re going to be.
One thing I’ve learned over the past two decades is that getting to know the companies helps you out over and over again. The market is always changing, but that company knowledge and having some investment experience behind you really helps. You are going to want to know those companies inside and out.
You still aren’t going to know everything. Yet you want to be trading stocks with confidence. No one knows if the market overall is going to go up or down. No one knows if an individual company’s stock is going to go up or down. You’re going to be making those decisions based on what you feel about a company, but you don’t want to invest based on just a couple of metrics or basic information.
It is much more simple to buy and hold blue-chip stocks, but even then, you’re going to have to do your due diligence. That type of research can help you to later become a successful day trader. Think about trading stocks in terms of a profession. Compare it to say investing in real estate.
Let’s say that you’re going to start a real estate investment business. You’re not going to buy the skyscraper right off the bat. You’re going to start small. Start small by dipping your toes in the stock market, too. If you want to trade stocks, make that your goal. But don’t bite off more than you can chew all at once.