Most people begin trading without the benefit of preparation.
They neglect to educate themselves before investing their hard-earned money.
Basic lessons in trading should not be overlooked.
Trading is hard and preparation is the key to doing it well.
Only a small percentage of people know how to trade profitably.
Unfortunately, this means that the chances of finding someone that knows what they are doing are equally as small.
Educating yourself is the best hope for success, not the advice of brokers or fund managers.
To make a profit on stocks, trading should only be done with the purpose of making money from capital gains.
This means...
buy low, sell high.
How many times have you heard that line? This is where it applies.
When trading, you must remember that price is only a perception.
It is the market's perception of what they believe the value of the share price is.
When people believe that a share will go up in price, they are generally willing to pay more for it.
This action, by itself drives up the price.
When people believe that the price will go down, they are looking to get out from under the shares, willing to give them up for less than they originally paid to keep from losing a larger amount.
This is where the drop in price comes in.
The traders that are making the money are the ones that are moving in the opposite direction of the crowd.
They react to the psychology of the market.
Developing your own trading system, one that is suited to you personally is the only way to work towards succeeding in the market.
Learn how to use the tools and acquire the skills that are needed to be a trader.
There are no shortcuts to the trading system.
Charts and graphs are some of the tools that are used to analyze the market.
Learn how to read and follow them.
Read! Read market reports, read books that have been written by those with a "name" in trading.
Start small As a novice trader, you should keep your trades small, small enough that it is almost a waste of your time.
Assume that the next trade is going to be the first of thousands that you are going to be making.
This will keep your profits smaller, but your losses will be smaller too.
There is no need to rush.
You have a lifetime to get rich; don't worry about doing it too quickly.
There are many programs and indicators to choose from when doing your market analysis.
Until you have settled on the system that makes the best sense for you, trade carefully.
Jumping into the larger trades will not only leave you broke, you may also find that you are disillusioned and lose interest in learning to trade profitably.
Working slowly, trading using small position sizes and learning the ropes will allow you to build up enthusiasm as you go along.
This will help fuel your desire to learn, making it easier for you to accomplish.