Before Jumping in the Markets, You Need to Find Out What Kind of Trader You Are
If you are looking to get into the markets, you have to really educate yourself prior to actually risking any money.
The lure for people to invest in the markets is usually started by learning of others successes rather than failures.
People are not apt to share in the major disasters they have had, and often exaggerate the profits and underestimate the losses when speaking about what they have done.
It is human nature to avoid pain, even in casual conversation with others.
Once you have decided you wish to participate in the markets, you need to really focus on what you are looking to accomplish In order to start down your path, you will need to recognize the three methods to get involved with the markets: short term (minutes to days), swing trade (days to weeks) and long term investing (weeks to years).
Just identifying which one is appropriate for you can seem easy, but in reality it is probably one of the most important decisions you will make.
To make the most of it, you will need to match up the trading style with your level of risk and type of personality you have Short term trading is also know as day trading and can strictly be intra-day only or it can entail holding positions overnight as well.
Day trading is probably the riskiest type of trading for most people, and really requires almost a full time effort.
If you have a full time job when the markets are open, this is probably not for you, or only in small batches.
Some people who engage in day trading use a day trading robot to help them find ideas during the day.
As opposed to trying to learn short term trading, swing trading is a great alternative for most people.
With swing trading the amount of time and concentration required is far less than with day trading, but it will still require you to monitor your positions each evening, and if something is close to a price target or stop area, monitor during the day as well.
Swing trading tries to capture a bigger move in a stock, such as a 5% or 10% or more move in a single direction with limited risk.
Because you are holding for bigger gains and a longer period of time to reach those gains, the amount of actual trading activity is far less than with day trading.
Anyone looking to swing trade should keep in mind that its far less risky than day trading, but still entails betting on the short term direction in the price of a stock.
Long term investing is what most people are familiar with - buy and hold.
The only thing that has changed in recent years is the economic climate has changed so that you no longer can just hold something indefinitely and figure you have very little risk.
Countless people have made this mistake only to have stocks with significant gains turn into a major loss.
One thing every investor must do is to have a cut off point even on a long term position where they are out no matter what.
The key to starting with the markets is to identify if you want to be a short term, intermediate, or long term investor.
From there its all about educating yourself and sticking to a game plan.
The lure for people to invest in the markets is usually started by learning of others successes rather than failures.
People are not apt to share in the major disasters they have had, and often exaggerate the profits and underestimate the losses when speaking about what they have done.
It is human nature to avoid pain, even in casual conversation with others.
Once you have decided you wish to participate in the markets, you need to really focus on what you are looking to accomplish In order to start down your path, you will need to recognize the three methods to get involved with the markets: short term (minutes to days), swing trade (days to weeks) and long term investing (weeks to years).
Just identifying which one is appropriate for you can seem easy, but in reality it is probably one of the most important decisions you will make.
To make the most of it, you will need to match up the trading style with your level of risk and type of personality you have Short term trading is also know as day trading and can strictly be intra-day only or it can entail holding positions overnight as well.
Day trading is probably the riskiest type of trading for most people, and really requires almost a full time effort.
If you have a full time job when the markets are open, this is probably not for you, or only in small batches.
Some people who engage in day trading use a day trading robot to help them find ideas during the day.
As opposed to trying to learn short term trading, swing trading is a great alternative for most people.
With swing trading the amount of time and concentration required is far less than with day trading, but it will still require you to monitor your positions each evening, and if something is close to a price target or stop area, monitor during the day as well.
Swing trading tries to capture a bigger move in a stock, such as a 5% or 10% or more move in a single direction with limited risk.
Because you are holding for bigger gains and a longer period of time to reach those gains, the amount of actual trading activity is far less than with day trading.
Anyone looking to swing trade should keep in mind that its far less risky than day trading, but still entails betting on the short term direction in the price of a stock.
Long term investing is what most people are familiar with - buy and hold.
The only thing that has changed in recent years is the economic climate has changed so that you no longer can just hold something indefinitely and figure you have very little risk.
Countless people have made this mistake only to have stocks with significant gains turn into a major loss.
One thing every investor must do is to have a cut off point even on a long term position where they are out no matter what.
The key to starting with the markets is to identify if you want to be a short term, intermediate, or long term investor.
From there its all about educating yourself and sticking to a game plan.
Source...