At present, more and more people are trading stocks for a living. The World Wide Web has made it much easier for novice investors to look for information about the stock market and individual stocks in their entirety. In addition, DVDs and books present many methods on how to become a day trader efficiently.
One of the reasons that resulted to the increase in the interest on stock trading for a living is the opportunity to do trading at home with just a desktop and internet connection. There is no doubt that trading is another approach to generate money without an office, employees, clients, and even a job.
Becoming a Stock Trader
The following are some information that you should keep handy to fulfill your goal of becoming a full time trader:
- Get educated. In reality, the only strategy you can use to make a living out of trading stocks is to become educated as much as you can about stocks and the stock market. Take advantage of free financial and investment publications that can provide you in-depth information about the market movements. Visit websites featuring stock news and articles. There are also websites that can provide stock earning history and other constructive information about various stocks. Take tutorials and courses regarding financial analysis so you can identify with profit and loss statement and earnings report. Don’t stop learning and improving your stock trading know-how.
- Play trading games. It would be beneficial to begin trading on paper and playing stock trading games online. Once you acquire fundamental understanding about stock trading, you must then trade using “fake or virtual accounts” to assess your knowledge, boost your confidence, and enhance your skills. Games about stock trading will permit you to choose stocks and win or lose virtual money. The software monitors all trades as well as price changes. And there are some games that grant reward to top traders.
- Establish a trading strategy. There are several methods to trade stocks. Some investors employ day trading methods, which attempt to make money from short-term market movements of individual stocks. On the other hand, trend trading tracks the current stock movements, supposing that such trend will carry on for awhile. Technical analysis is a method used in swing trading to benefit from immediate price movements of individual stocks. While some traders utilize a few trading techniques, others stick to one. It’s most advantageous to begin with one strategy and become skilled with it before you move on or incorporate another technique.
- Build a trading system. It’s crucial for any trader to build a lucrative stock trading system. This is the most effective way to understand how traders make money. Identify which stock you prefer to trade, the most appropriate time to purchase, and when to sell or when you’ll enter or exit the market. If you make the right decisions prior to trading and you stay disciplined in your venture, you’ll surely become successful. Many investors experience financial loss when they permit their emotions to obscure their judgments and trading decisions.
- Select individual stocks with good value. Always look for companies with potential for growth to be able to trade stocks for a living. Evaluate industries that you are proverbial with. Consider housing your funds in companies with products or services that you like and use, to include clothing, food, prescription drugs, or computers. Search for companies with stable revenues over the past 10 years. If the profits have increased recently that is a good indicator. Other segments to weigh up are steady dividends, price/earning ratio, and debt status. Also check for good cash flow.
- Get a broker. Your broker will carry out your trades. You can choose from full-service brokers, premium brokers, and standard discount brokers that work depending on your trading needs. At times, they also act as stock market mentor.
- Trade money you can afford to give up. Only trade stocks with funds that you don’t need for household expenditures or living expenses. Many financial planners recommend that you maintain about 6 to 8 months of living expenses in your savings account.
- Begin humbly. Trading stocks for a living should be started small. At the outset, only work with one or two stocks to understand what you really like. Remember that it takes experience, familiarity, and discipline to be successful in stock trading.