How to Trade Stocks
There is a lot of misinformation out there about trading:
Many seminars will talk about trading as a zero-sum game. That is the first falsehood most traders learn. It is not a game. This is one of many misnomers. There is a lot of misinformation out there about the stock market. In the stock market, “trading” means anyone who is buying or selling stocks no matter whether they are holding the stock for many years or one day.
Trading is a broad term that is used more nowadays than investor. So, start off right with accurate, reliable information. We are the #1 stock education company. All we do is educate. We do not sell charting software, and we are NOT a broker. We are the best stock market educators in the business. We specialize in helping the new investor or beginning trader learn what they need to know to avoid costly mistakes, what they need to do first, and how to trade stocks in a way that is simple, easy, and enjoyable.
Here are some important TIPS:
- If you hear about a stock in the news or from someone, DO NOT go out and immediately buy it, chances are, the stock has already been moving up for some time and is a much higher risk entry. Remember the old adage, buy low and sell high. The video will show you how to do this.
- Day trading is extremely time-consuming, very expensive, and takes a long time to learn to do successfully. Instead, choose either swing or position trading. Position trading takes only a couple hours a week, yields much higher profits, and is significantly lower risk. If you are just starting to trade stocks, the position trading is ideal for you. If you are a busy person with a career and family, position trading is the style for you.
- Education is the key to success. Most people who lose money in the stock market didn’t learn how to trade stocks before they started buying stocks. This video will show you the steps you need to take to make sure the stock has a high probability of moving up, with low risk.
- Ask questions. We are an educational company and we are here to help you. So if you have a question, just ask. This way, you can get your answers before you make a mistake.
- The stock market has over 6,000 stocks listed currently. That is far too many stocks to study so you need an simple way to screen down that huge list to just a few that you can study to determine if they are right for your trading style (position trading is best) and the risk of the trade, as well as other factors. The video will show you how to use a stock scan to screen down thousands of stocks to just a very select few.
- Big blue-chip stocks DO NOT net the highest profit potential. Oftentimes, these stocks are exploited by the High Frequency Trader firms (HFTs) that front-run people who do not have a proper education in trading. When you learn to read a Stock Chart, you will be able to see where the HFTs are trading and avoid them. You will also learn that the giant funds are the wisest investors and you can track them via stock charts and buy when they buy well ahead of the news about the stock.
- Yes, you can make extra monthly income trading stocks; however, you must have the knowledge, skills, tools, and experience before you ever trade live in the stock market. The video above will show you examples of what you need to learn and why this training is so important.
- The Stock Market is not a game. It is not a casino, there is no “house” trading against you. The Stock Market is the Business of Businesses and deserves respect. After all, those publicly traded companies are the firms employ most of the people in this country and other countries. The Stock Market is a place where people from all over the world come to buy and sell stocks, which are an asset, an ownership in a company. A person in Britain or Australia may be selling a stock that you decide to buy. The open cry market is an auction where buyers bid and sellers ask a certain price for a stock. Computers connect the two together and the order is processed.
- Learning how to trade stocks is something everyone of any age needs to learn to do. We are becoming an investing-based economy, rather than a consumer-based economy. If the middle class is to survive, they must do what the wealthy do-invest in stocks. That is the only way the ordinary person is going to achieve the American dream or their own personal dream of financial independence. HOWEVER, there is no such thing as a get-rich-quick scheme. It will take some time, commitment, and educational expense to learn how to properly trade stocks.
- You need more than just information. Information about the stock market is everywhere on the internet. But Information is worthless until you convert it to knowledge. Knowledge comes from education that teaches you how to use and apply the information to convert it to knowledge that you understand and have the skill to use correctly. Experience is the final part of successful trading. You must hone your skills you have acquired by practicing what you have learned. You do this using a simulator trading platform, which is a simulation of trades, after you have completed your stock market education. New and Beginning traders who have a solid education, knowledge, and experience become consistently successful in the stock market.
Distractions cause mistakes, and mistakes cause trading and investing losses.
Most seminars teach you that it is OK to have a 40%–50% success rate, which means that at least half of your trades are losing trades and only about half of them make you money. They claim that the few good trades will make up for the losses. This is utter nonsense. Your trading business needs to make consistent profits-exponentially growing profits over time.
If a small store made profits on less than half of the merchandise they sold and lost money half the time, how long would they be in business? Not long. If a doctor was only accurate at diagnosis half the time, how long would his practice last? If a traffic controller was only able to land half of the planes safely, how long would he keep his job? Trading is no different than any other small business.
You must make profits on a consistent basis; therefore, most of your trades must be profitable. In order to be successful in the stock market as a short-term trader, you must have a minimum of a 75% success rate, and preferably 80%–90%. TechniTrader students achieve these success rates. Most folks learn strategies first. This is a huge mistake because without a trading style, you are setting yourself up for a low profitability percentage. A trading style is a set of rules and parameters you use every time you trade.
These rules are based on your capital base, risk tolerance, time available to trade, and experience in the market. An excellent trading style for novices and beginners is position trading. It is also the trading style that must be learned if you want to become successful trading options. Let’s apply the basic trading style profile so you can see how this works.
Trading Style: Position Trading Profile
- You have $1,000–$25,000 in your trading account to trade.
- You have a lower risk tolerance. In other words, you are uncomfortable with the idea of losing a couple hundred dollars on one trade.
- Your time available to trade is a few hours a week, after you come home from work.
- You are brand-new to trading stocks or have less than 2 years of live experience investing.
If this fits your profile, then position trading is ideal for you. It is one of the easiest trading styles to learn, with good income potential. If you want to learn how to trade options eventually, you should also learn position trading. Contrary to popular hype and misinformation, you have to learn to trade stocks before you can expect to be consistently successful trading options. Options are a secondary market, which means you must understand the primary market before you will find success in the secondary market. This is one of those facts many options seminars simply ignore.
Trading Style: Intraday Trading, aka Day Trading, Profile
Intraday trading is a glamorous trading style that lures many novices to seminars with the dream of easy money. Fact: Most traders who attempt this style of trading fail dismally.
- To be successful as an Intraday trader, you must have a capital base of at least $100,000, as you need to trade moderate-sized lots (1,000–9,000 shares per trade) in order to make sufficient profits per trade to offset the high cost of intraday trading expenses.
- You need to be able to spend a minimum of 10 hours per day working as a trader-8 hours during the time the market is open, trading, and another 2–4 hours after the market closes to study charts and find good stocks to trade.
- A high risk tolerance is required. If you can’t stomach the idea of losing several thousand dollars at one time, intraday trading is not for you.
- Most brokers now have fairly rigid requirements for the intraday trading status. They will often require that you take a test in order to determine if you have sufficient education and experience to day trade.
These are just two examples of trading styles you can select. Once you have determined the best trading style for you, you now have a set of rules to apply to every trade you make. You are trading within your capabilities, capital base, and risk tolerance. This basic step will go a long way to consistent profits and a much higher success rate. We insist that our students have a minimum of a 75% success rate before going live in the stock market. TechniTrader’s strict and disciplined approach serves our students well.
Our students practice what they have learned by paper trading on a simulator before risking any of their hard-earned money. When you first learn something new, you are excited and exhilarated by the learning experience. Learning something and applying that knowledge, though, are two different things.
If you take a weekend seminar and then rush home and trade on Monday morning, you may have a big first-time success, but more often than not, that brief success will be followed by a slew of bad trades and losses. Mistakes, emotion, and confusion settle in. You forget most of what you learned and you lose money you didn’t need to lose. Regardless of what training you choose, paper trade with a simulator until you are consistently profitable. If you are losing money on most of your trades, how can you possibly be successful? You can’t, and that’s the truth.
Stop learning how to lose money and start learning how to make consistent profits. The first step is to get an education. Choose a training program that teaches in a format that works for you and your personal trading profile. Then, practice what you have learned on a simulator. Make sure you select a trading style that works for you. Then, apply the correct strategies for that trading style. If you follow these few rules, you will be on your way to learning how NOT to lose money in the stock market.