Learn the basic – trading is not a get rich quick scheme.
There are two basic ways exchanges execute a trade:
On the exchange floor
Trading on the floor of the New York Stock Exchange (NYSE)
Anyone who wanted to invest in the stock market needed to retain the services of a broker – something that still exists today, regardless of the fact of whether or not you are trading online.
As an established profession, brokers in the real world (as opposed to brokers in the virtual world online) were able to charge their customers fairly large commissions on any trade done.
The electronic markets use vast computer networks to match buyers and sellers, rather than human brokers.
While this system lacks the romantic and exciting images of the NYSE floor, it is efficient and fast.
Many large institutional traders, such as pension funds, mutual funds, and so forth, prefer this method of trading.
A trading psychology, based upon how well you know yourself and are able to profit from your strong points, as well as control you weak ones, has a lot to do with how successful of a trader you will be.
If you do not have a professional psychology then you will make the wrong decisions and lose money on a consistent basis.
Here are the keywords, and concepts that you need for developing a professional trading psychology:
Examine all of the facts carefully before you make a trade.
A good trader understands that there are times when it’s better to be in an all cash position and watching the market from the sidelines.
Don’t fall in love (or hate) with your stocks. The stocks don’t care that you own them, and they are not your friends. Your only friend is your trading psychology
Expect the unexpected
Things happen. Unexpected things, both good and bad. Understand these events, be prepared for them, and take the appropriate actions.
Limit your losses
Establish and honor stop-losses to protect your money. Avoid holding on to a losing position because you “hope” that things will turn around. Falling stocks will usually continue to fall until something positive happens to arrest the decline.
Stock trading strategies are a particular “game plan” that outlines how you are going to participate in the stock market
Four main investment objectives cover how you accomplish most financial goals.
Capital appreciation is concerned with long-term growth. This strategy is most familiar in retirement plans where investments work for many years inside a qualified plan
However, investing for capital appreciation is not limited to qualified retirement accounts. If this is your objective, you are planning to hold the stocks for many years.
If your objective is current income, you are most likely interested in stocks that pay a consistent and high dividend. You may also
include some top-quality real estate investment trusts (REITs) and highly-rated bonds.
Capital preservation is a strategy you often associate with elderly people who want to make sure they don’t outlive their money.
Retired on nearly retired people often use this strategy to hold on the detention has
The speculator is not a true investor, but a trader who enjoys jumping into and out of stocks as if they were bad shoes.
Speculators or traders are interested in quick profits and used advanced trading techniques like shorting stocks, trading on the margin, options and other special equipment.
If you want to try your hand, make sure you are using money you can afford to lose. It’s easy to get addicted, so make sure you understand the real possibilities of losing your investment.
Trading system is a set of rules that tell you when to initiate or exit a trade.
A good system will be multifaceted and will address entry and exit conditions, risk control, and cash management.
No matter how complex the system is, it must be easy to implement and execute.
Trading systems should ideally eliminate a lot of the guesswork that goes into finding good stocks that are ready to take off. It should also help you determine stop loss and exit strategies.
In theory, if you find the right system, your gains will outweigh
your losses and the net result will be a steadily growing profit in your stock account.
The biggest enemies of any trader are fear and greed. Gamblers call fear “playing with scared money” and that’s a good phrase for the investor to keep in mind as well. If you are playing with scared money, that means that you cannot afford to lose that money and you are going to make knee-jerk decisions based upon that fear. That’s a surefire recipe for failure.
Trading system automatically eliminates these two emotions. Once you pick a system, and stick to it, all emotions are eliminated. All you have to do is follow it and do what you are supposed to do when they tells you to do it.
Selecting a Good Trading Software
There are so many different stock market software packages on the market that you could try a different one, every day of the year, and never run the same one twice.
In general, stock market trading software can help you in the following areas:
– Identify Channel Breakouts ;
– Generate high probability mechanical buy/sell signals ;
– Control your dollar risk
– Forecast new tops and bottoms with great accuracy ;
– Reveal trading trends for any time frame ;
– Curb your tendencies toward Fear and Greed
Software has no emotions. It doesn’t love or hate the stock that you own and it doesn’t want to get rich. It simply crunches numbers and tells you what it “thinks” about when to buy, sell, or hold.
And while it is not flawless, it’s a lot smarter than most of us are.
Before selecting a software package, download and try it out first. If the program that you are considering doesn’t have a free trial, or a 100% money-back guarantee, then pass and look for another.
Although there are software packages that specialize in one particular function, such as providing real-time stock quotes, for example, you would be better off to select an all-in-one package that provides everything you need to make informed decisions.