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How to develop skills for market trading as a beginner


Market trading can be a complex activity until you work out the right skills and strategies. Whether you want to start trading stocks as part of a new career change or if you wish to start a side hustle to earn some extra cash, there are some things you need to be aware of before you get started. The financial markets are unforgiving, and it can be a very intimidating place for a market trading beginner, so the more research you do before you invest your hard-earned cash, the better. 

As it turns out, most people tend to turn to day market trading with a few misconceptions over what the process entails, and more importantly, the skill set required to be a success and make a profit. The reality of trading the markets for a living is a far cry from what you see in the movies and on the floor of the New York Stock Exchange, so it’s important to approach the situation with a healthy dose of realism before you get your feet wet.

Beginner strategies for market trading

These days it’s entirely possible to earn a decent living market trading as a day trader from the comfort of your own home, but only if you approach your new job with discipline, focus, and a willingness to study and hone your skills. With that in mind, here are seven tips to get you started on the right foot with your new trading career.

Get familiar with the markets

First and foremost, you need to familiarize yourself with the markets and understand how they function. If you are to make money from price fluctuations on the different stocks in the market, you need to grasp how the market moves, how much it moves, and why. Now that’s not to say you need to become an expert in economics to start trading, but a rough knowledge of the meta concepts of the stock market will set you off on the right foot for the lessons to come. 

Understand the different types of trading (and pick one)

When it comes to market trading, there is more than one way to skin a cat. To stand the best chance of success, you need to decide what type of trader you are and hone your skills in that particular area. 

The type of trader you choose to become will largely boil down to the amount of time you have to invest in your new hobby. Do you see yourself trading every day, working full-time hours each week? Or would you prefer to trade on a part-time basis, only entering trades a few times per week/month? 

In general, trading can be broken down into three main categories. These are:

  • Day trading – Entering positions over a short period (between a few seconds to a few hours). Day traders never hold open positions overnight. 
  • Swing trading – Swing trading is a short to medium-term trading approach in which traders hold positions from anywhere between a few hours to several weeks. It’s less hands-on than day trading and does not require as much focus.
  • Position trading – Otherwise known as investing, position trading is when you buy and hold a stock for a long time. 

Learn the basics of market trading

Once you’ve chosen the branch of market trading that you’re going to focus your attention on, you need to go out there and take a crash course in that particular discipline. Fortunately, these days you can find a tonne of useful information online, some free and some paid.

In general, you can get a relatively firm grasp of basic strategies by watching YouTube videos and reading articles from helpful sources. With that said, if you’re a complete beginner, it would be a good idea to take a starter course so you can get a good overview of the basics and learn the ropes before you hit the streets. 

Set aside a bankroll

Here’s the most important advice you will ever hear regarding trading the financial markets; never invest more than you can afford to lose. As a beginner, you are almost certainly going to make mistakes, so you should not have any plans to rely on your trading income until you have amassed considerable experience in the markets.

In general, the larger your trading capital, the more money you will make in the markets. With that said, you want to be comfortable with your level of exposure. The moment you start market trading with “scared money,” you will begin to make suboptimal trades. This usually leads people to cut winning trades short and letting their losers run. In other words, the polar opposite of what a winning trader would do. 

Find a broker

Your broker is the service that will facilitate all of your trades in the market. Most brokers offer a market trading platform where you can view stocks and buy them, for a fee, of course. As a trader, your main objective when looking for a broker service is finding one with low fees and a low commission structure. 

This is because you will be opening and closing many trades, so if you’re not careful, the trading fees will eat into your profit margins and make it significantly more difficult to bring in a steady income. With that said, the broker with the lowest commissions isn’t always the best place to do your business. You need to strike a balance between a broker service with low fees, high-quality support, and trustworthy enough to hold your money with.

Open a demo market trading account first

To restate the point made earlier, you will make mistakes as a beginner. In fact, all traders make mistakes regularly; it’s just a matter of making less of them as your experience grows. With that in mind, you should open up a demo market trading account first and try your hand at paper trading. This is a great way to try out your new strategies in a low-pressure environment, and any mistake you make won’t end up costing you an arm and a leg.

Most market simulators use real-time data from the markets, and they function as if you were using a real-money account. There is no better way to get first-hand experience on the markets, and after you have built up your confidence, you can slowly transition into using real money.

Buy cheap stock when learning the ropes

When you’re just starting out in market trading, it’s often a good idea to buy cheap stocks if you want to trade with small amounts. While these kinds of stocks can be more volatile, they often give you the chance to turn a small investment into a large sum of money in a short space of time. 

Granted, this can be risky, but you will also get to experience a wide variety of trading situations that will only add to your confidence and experience moving forward. To get started, consider opting to buy cheap stocks on Robinhood. It’s a commission-free stock trading platform, and they don’t charge any fees for opening an account either. This leaves more money for trading, which is never a bad thing!

Final word

Trading the stock market for a living is an exciting way to make money that gives you the freedom to work from anywhere in the world. However, the financial markets are not for the faint of heart, and if you want to churn out a consistent income from the price fluctuations, you need to work hard to develop your skillset and master your emotions. Good luck on your new journey

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