All About Stock Trading
The first thing of stock trading basics to learn is the difference between investing and speculation. When you invest, you take whatever returns the market offers. When you speculate, you try to use your mad skills to beat the market.
This doesn’t mean that you shouldn’t speculate, but rather you should only speculate with money you can afford to lose. You don’t want all your wealth to disappear in a single bad gamble. And you certainly don’t want to play the stock market with borrowed money, unless someone else will also be paying for your losses.
You can visit a library and check if there are any guides or books on stock trading. If you do not have a library card then you may visit the library and note down the names of the books you find worth so that you can buy them from bookshops. You may take notes on the basics of stock trading and things like stock trading strategy which will enlighten you with the knowledge on where and how to invest your money.
To start with, you can search the internet to understand stock trading business. A simple search with your favorite search engine will show you thousands of articles on stock trading and on the techniques to learn stock trading. You can read the experiences of some do it yourself traders. You may refer to some financial resource websites or online stock trading courses.
Now, the best place to invest in stocks is in companies that you have a good feel for the performance of, because you work in the same industry. Notice I said “invest,” not “speculate.” When investing, the safer your money the better.
There is a lot of garbage metrics and stock trading tools out there for investors to play with while they try to guess where the next big thing will be. Some of them even look like they work, for a while. And many people have gotten rich exploiting the garbage metrics, usually by selling them to new and inexperienced investors as a “sure fire, get rich quick” scheme. Don’t fall for it. Except for a few very lucky people, everyone gets rich slowly in the stock market.
When you decide how much to speculate, use the 80/20 principle and only speculate with 1/4 as much as you invested. And know that when speculating, the riskier venture the better. You’re looking for things that other people would think you’re crazy to put money on. And you spread the money around to a bunch of different speculations. Since the buy in for each high risk bet is pretty low, you’re likely to lose very little when you lose. But if you get lucky and win, your wins can be huge.
The last thing you have to know is that it costs money to make transactions in the stock market. Broker’s fees can nickel and dime traders to death. So get in the habit of setting and forgetting your stock purchases. Especially for speculations, buy once and let it ride until either everyone begs to buy your stake or the company folds. And those are the stock trading basics.
