So Ive been doing this thing for quite a while now, and Ive decided to sit down and figure out the top things Ive learned (mostly the hard way) about trading and trying to make money in the market:
1. Recognize that you CANNOT turn $1000 into $1,000,000 overnight.
2. Find a trading strategy that fits your personality. Slaving over charts, trading options and watching CNBC all day are not for everyone.
3. Research your strategy, believe in it, and stick to it, even through the bad trades.
4. Don't be greedy! Decide on an exit strategy before you open a trade, and stay with it!
5. Someone will always make more money than you from the same strategy (or at least they say they have). Its ok. Stay with YOUR predetermined limits and goals.
6. Someone will always have a better strategy than you. Its ok.
7. Do NOT trade just for the sake of trading. Better to make nothing one day, than to lose money because you forced a trade.
8. Don't stay in a bad trade longer than you have to. Shake it off, move on. There is money to be made elsewhere
9. When starting out, trade in smaller lots (200 or 300 shares) for a while until you gain confidence, and to reduce the shock when you find yourself on the wrong side of a trade.
10. Realize that you will lose money on some days! Shake it off and trade again tomorrow. It happens to EVERYONE!
and last, but not least....
11. Only trade with money you can afford to lose!!!
:-)
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3 comments:
Amen. :-)
Great advice. I've long had a desire to trade but have been scared to do so. What would you recommend as the starting place for a novice like myself? What company or site would you recommend I use?
Hey Ana!
Though I can't give specific advice since Im not an FA and I don't know your particular situation, I can answer in general...
For general trading information, I highly recommend www.fool.com. Bloomberg and Yahoo Finance are also good places for daily market news.
For the mechanics of trading, Trading for Dummies (the book) is a great place to start. Also, you can't beat being in the trenches. I began my career by calling around to all the brokerage firms in the area and begging for an internship (even unpaid) just to get experience. This ended up being the most valuable step, so if you have time to sit down with someone and pick their brain, that would be great!
In terms of finding your own strategy, I recommend using one that makes sense to you. Personally, I dont have patience for charts and trends, etc, but to learn about these things, Trading for Dummies give s a good overview of most of these strategies. Once you find a strategy, research and paper trade it til ur comfortable.
The single best thing that you can do to alleviate some of the trepidation is really to make sure you are using money that you can reasonably afford to loose. With day trading, you are required to have at least $25,000 in the account, however, with a swing trading strategy, (such as mine) $5000 or even $3000 is ok to start off with (and though a lot of money, a little bit easier to manage in the beginning than 25k).
Additionally, I am in the process of putting together a website for newbie traders, complete with some Trading 101 stuff, market commentary, and of course, stock picks, so keep an eye out!
If you have any other questions, please feel free to ask, and good luck!
Thanks for stopping by!!
Sara
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