Suggesting a Course of Action for the Beginning Trader

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The way to succeed in stock market trading is to be able to choose winning stocks and to know how to trade them in order to gain a profit, preferably a maximum profit, and to do so with an acceptable level of risk that is commensurate with the potential rewards and the preservation of working capital.

Learning how to trade in the stock market takes a serious commitment to study and research and will take a lot of effort and diligence in addition to reading the content of websites such as this one, and that is what I want to address now. This website will point you in the right direction and bring to your attention many important facts, situations, and aspects of stock market trading.

The importance of this website is that it provides a range of information that introduces the reader to some necessary trading related topics that they might otherwise not be aware of — and I believe that is information of genuine value, it helps to know what must be learned, from suggestions about books to read to specific rules to follow when making certain types of trades. For an outline of such topics, check out this link to Stock Market 101.

With my comments here today, I will suggest some simple steps that I believe will help the beginning trader understand some of the facets of the market and what might be done to avoid some of the costly mistakes that almost everyone makes in their early days, at least those who jump into trading without knowing some of the stock market basics that subsequent experience teaches to those who have the ability to learn.

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It takes knowledge, judgment, and experience.

  • The first requirement is to accumulate a sufficient body of appropriate knowledge.
  • A second requirement is the development of the good judgment that leads to making profitable decisions. It is debatable whether this can be learned, but a good substitute is to establish a set of rules that can guide decision-making — and those rules CAN be learned.
  • Experience is obviously acquired over time and only after a sufficient number of market actions have been taken. The outcomes from actions taken in the past should provide some insight about what typically can happen as a result of a specific action taken in a particular circumstance.

Most traders have gained the essential knowledge through experience and trial and error at considerable expense and time.

How to obtain stock market knowledge
I do believe that the way to obtain the essential knowledge of stock market trading is through two main sources. They can be pursued one after the other or simultaneously and they will cost money, although there are some internet sources that provide a substantial amount of free information and I will be researching these in the near future.

  1. Subscribe to a course of stock trading education that provides the essential grounding in how to trade stocks. I will research some of these and report back on what they have to offer, what topics are covered, and approximately what they cost. For their clients, many stockbrokers provide free training courses or training on various aspects of trading and trading strategies.
  2. Start by trading  “on paper” using a free virtual trading account either through a stockbroker or through an independent internet service. Newly learned trading routines can be initiated without using real money and all the support services for quotes and charting are usually available as are all the follow up recording of the simulated transactions and their results. The virtual trading account enables a familiarization with what is required to actually make a stock transaction and how to track it through the stockbroker’s services.
  3. Subscribe to a reliable and competent service that supplies both a reliable series of stock selections that can be traded and instruction on ways to trade them. The service should also provide explanations of why the selected stocks are trading candidates and any logical reasons leading to their selection. The performance record of the service must be available and verifiable and there should preferably be a trial subscription period. It is essential to the learning process that the reasons for any trade that is recommended by the service is completely understood and that the trading recommendations are not just followed blindly without making a personal assessment and interpretation of the reasons given.

I will also check out some of these trading services and report back. I am aware of a few that do meet the required performance levels.

I have made reference elsewhere on this website to some of the above matters in other articles that might be worth checking out, you can find a couple here: Stock Market Courses and Learning and also Stock Market Training.

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