The best thing that anyone planning to get into stock trading can do is to be well-prepared. The only way to know what you’re doing will be to gather as much information as possible and spend time understanding it all. By meticulously reading whatever you can find about stock trading, by observing the market and gingerly testing things out, you will slowly and surely understand how it all works. Once you get the hang of it, things will seem much easier and your investment decisions will be wiser. In this article, you’ll discover a few methods to improve your knowledge about stock trading and how to ease yourself into this exciting world without losing the shirt off your back.
1. Read books and articles
There are many books sold in bookstores about stock trading. The internet is also littered with very useful stock trading articles. Ideally you should read the books first. If you live in the US, read books that talk about the US stock market. Different countries have different systems and you don’t want to be reading about how the German stock market works if you’re trading in the US.
Some good books to read would be:
* How I Made $2 Million in the Stock Market: The Darvas System for Stock Market Profits by Nicholas Darvas
* Trend Following: Learn to Make Millions in Up or Down Markets by Michael W. Covel
* How to Make Money in Stocks by William O’Neil
* Buffett: The Making of an American Capitalist by Roger Lowenstein.
* Reminiscences of a Stock Operator by Edwin Lefèvre
2. Get a mentor
If you can find a successful stock trader to coach or mentor you, that would be fantastic. There’s a saying that goes, “Good decisions come from experience, and experience comes from bad decisions.” A mentor will be able to guide you on the possible pitfalls that you may encounter. Their experience will be able to guide you and significantly reduce your learning curve. You’ll be able to avoid the mistakes that they made which cost them money. It may not always be easy to find a mentor… but if you can, do get one. If you have to pay for one, go for it. Just make sure that the mentor you pick is credible and walks the talk. They MUST be good at stock trading.
3. Attend seminars / classes
Another good option is to go for seminars and/or classes about stock trading. You’ll be amazed at how much you can learn. Of course, you can also mingle with the attendees and network with them and learn more.
4. Open a stock broker account
This is the first step to show that you’re serious about stock trading. Once you open a stock broker account, you can familiarize yourself with the transaction fees, etc. There are a lot of things to learn, so take your time with it.
5. Use a trading simulator
It is a great idea to use stock simulators so that you can try out virtual trading. You can start out small and get a feel for trading and just experience the emotions associated with the process. Learning can only get you so far. Sometimes you just have to do it… and trading simulators allow you to take action. Do give them a try. Use these 5 tips to boost your knowledge about stock trading so that you have an edge when you actually start trading. The research and learning you do now will benefit you greatly in the long run. “For tomorrow belongs to the people who prepare for it today.” – African Proverb
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