5 Basic Steps to Start Stock Trading

Millions of newbies try their hand at stock marketing each year, as these days, stock trading has become more accessible. With just an internet connection and laptop, you could start trading in any market, as there are so many choices - over 3,000 tradable markets. With so many choices out there, it’s quite daunting to figure out where to start and how to start. One who hasn’t mastered the basic skills needed to trade a stock could fail in the first few attempts.

So, before starting trading – be it active trading or long-term -- there are certain things you need to know, such as what to expect, what tools you might need for trading and so on, so that you can prepare your entry into stock trading as smoothly as possible.

Here are 5 basic steps that a newbie has to know when they start trading stocks:

1. Familiarize Yourself with the Stock Market & Set your Trading Objectives: The first and foremost step when beginning trading stocks is that you should familiarize yourself with the stock market and decide if you are capable of investing at the moment.

Stocks (equities) are small pieces of a company or security that represents the ownership of a fraction of a corporation and a share or stock price- that is determined by traders and investors- is the value of the company and its outlook. However, you should know that a share doesn’t have a set price, they continually fluctuate, every second of a day.

One should also know when the stock trading happens. Stock trading – buying and selling of stocks - happens mostly during 9:30 a.m. to 4:00 p.m. Eastern time on an exchange such as the New York Stocks Exchange (NYSE). Sometimes, trading occurs outside these hours, which are called pre-market and after-hours trading.

When starting to trade stocks, you must have enough money to invest in stocks. Important considerations include:

• Whether you have any debts to pay back or outstanding balance from loans you have taken
• Whether you have sufficient savings to pay for your maintenance needs for three months
• Whether your monthly income at present is more than what you spend in a month

If your answer is" NO" to at least one of these questions, then you must rethink your decision to dive into the stock market. The best time to invest is when you have total financial freedom and security.

Set your trading objectives, once you have attained optimum financial state, as it will give you a better idea of your actual expected earnings. Make a list of all the things that you need or want to acquire now or in the future. While setting trading objectives, ask yourself the following questions:

• What is your objective in trading stocks? Is it to get some extra cash or are you planning to start a growing fund for the future?
• How do you plan to invest the money you earn trading stocks?
• What revenue do you expect to earn?
• Do you want immediate returns or hope for a slow and consistent way to increase your savings?

Once you have gathered all this information, sort them according to importance or urgency.

2. Learn Everything You Can about the Stock Market: After familiarizing with the stock market details and setting your objectives, get a proper education on investing and the markets, because a small mistake can prove very costly.

Gain basic knowledge and the essential components that drive stock trading, which include

a. Learn about the stock exchanges

b. Stock market terminologies

c. Stock valuation

d. Types of securities to invest in: Stocks, Mutual funds, Bonds, ETFs, Options, and so on.

Make sure to have a firm grasp of these concepts first to get involved in stock valuation. According to riskrewardreturn.com, the better you are at valuing investments, the better your portfolio.

To learn all these concepts, get your hands on financial articles, stock market books, website tutorials and so on. There's a lot of information out there, which will enlighten you about how to trade through an online broker. Some must-read books for every new trader include:

e. Stock Market Wizards by Jack D. Schwager

f. Trading for a Living by Dr. Alexander Elder

g. Technical Analysis of the Financial Markets by John Murphy

h. Winning on Wall Street by Martin Zweig

i. The Nature of Risk by Justin Mamus

If you are not a book lover, then consider Morningstar’s Investing Classroom or one of the investing courses on Udemy.com.

Also, most stock brokers offer their own educational centers and also the service of a staff of former traders or investment advisors to guide you through this. Some online stock brokers, such as TradeZero, offer services to their clients to find out the best investment strategy that will meet their goals, and trade effectively utilizing advanced direct access trading platforms.

However, while educating yourself, don’t focus too intently on a single aspect of the trading game. Study everything market-wise, ideas and concepts, even if they are not particularly relevant at the time.

3. Stock valuation: The next step is to analyze or stock valuation, which is the most important part of stock market learning.

Learn the basics of technical analysis and look at price charts, in all time frames. Some might think that fundamental analysis offers a better path to profits – seeing its track growth curves and revenue streams - but traders live and die by price action that diverges sharply from underlying fundamentals.

Do not stop reading company spreadsheets, because they offer a trading edge over those who ignore them.

4. Choose a reliable online stock broker: Select an online broker with the perfect tools and support that will match your goals.

Generally, beginner traders should prioritize customer support, educational resources, and account and trade minimums. Additionally, considering the online broker's stock trading software is also a great step. Newbies in stock trading would need a platform that is streamlined, easy to navigate, and incorporates how-to advice and a trader community of peers to help answer questions.

5. Stick to a plan chosen: It’s very important to plan on certain things such as how much you want to invest and at what price, and determine how far you’re willing to let a stock fall before you get out and so on. This is because it might be your first trading and investing can be emotional. Most importantly - for a newbie or an expert - losing money doesn’t feel good.

Therefore, make a plan and stick to it. Use the right type of trade order so that it can help you stay on plan and avoid emotional responses. For instance, stop-loss orders trigger a sale if a stock drops to a certain price, which can minimize risk and losses.

For a successful trading career, follow these trading tips. By doing so, you would have a far better chance of knowing how to trade with confidence, purpose and success.

Get in touch with TradeZero, where they offer many features to help you get started, at 1 954-944-3885 or email us at support@tradezero.co.

TradeZero provides commission free stock trading and direct market access to the US stock and options exchanges. Multiple stock trading software platforms allow trading from any device.