How To Quickly Learn The Ins And Outs Of Stock Trading

At one point in time, stock trading was meant only for people with MBA degrees from the top B schools working with institutional brokerage firms. With the advent of the internet and electronic communication networks (ECNs) in trading, the common man can also trade in stocks, bonds, and other securities as a part-time trader. If you have a degree in finance or financial management, you would be familiar with the terminologies, practices, and customs of stock trading.

On the other hand, if you are new to the business and interested in trading, you have plenty of online resources and tools at your disposal to bring yourself up to speed on how the stock market works. Apart from the sharp acumen and dedication toward trading that you need, here are some ways in which you can learn about the various other ins and outs of stock trading.

6 Ways To Upskill Yourself In Stock Trading

1. Read Books, Articles & Newspapers

The simplest way to get started on stock trading is to read every resource you can get your hands on voraciously. From the daily news segments on company turnovers to unexpected movements in the stock market and complete guidebooks on stock trading, you can find all the material online (not always free, of course).

The first thing you learn through the articles is the stock market jargon, the starting point for any beginner. You need to know terms like a bull market, candlestick graph, wash sale rule (not something you would find at a laundromat!), etc. which help you understand the working of a market. There are financial dictionaries online that breakdown the jargon in a lucid manner.

If you feel guidebooks take up too much time, you can check out some website that provides daily snippets or news articles for you to follow the market. The crucial aspect is always to keep tabs on what is going on.

2. Brush Up On Your Analytics

Today’s stock market predictions and trading methods are heavily backed by data, and there is hardly any scope for gut feeling or instinctive trading. On a typical day in the trading business, you would come across dozens of line graphs, bar charts, forecasting trends, and hundreds of other numbers and tables. While these can be overwhelming in the beginning, these numbers determine everything about the market.

If you are not familiar with data analytics, sign up for a crash course online that teaches you how to deal with such graphs and tables and make sense of the numbers. You should be familiar with at least one programming or analytics languages like Python or MATLAB, especially when dealing with stock APIs. As a practice, you can analyze historical charts and data, predict the trend, and compare how accurately you guessed it.

3. Follow Other Investors

You can easily find the success stories of investors online on websites where they describe their trading strategies and methods. In the long term, you should be in a position to develop the tactics that work for you, but in the initial stages, you can afford to follow the footsteps of investors before you. Here are some examples:

  • Ross Cameron: Find out your most productive hours of the day and trade only in that time window.
  • Andy Krieger: You should always trade in the direction the money moves (known as “price action”)
  • Timothy Sykes: Focus on accumulating small gains over time rather than hoping for a significant profit overnight.

4. Practice Makes Perfect: Paper Trading

Stock trading is a profession where you cannot excel by only reading and understanding the theoretical concepts and the jargon; you need to apply what you know in practical situations. The catch here is that, as a beginner, you would not want to risk squandering money when competing with veterans in the real market.

The ideal thing you can do is to sign up for a paper trading account on an online platform. Here, you get free stocks and virtual money to trade on a simulated platform – it is the best place to get a sense of how the stock market moves, how to execute strategies, and when to take risks without losing money. Trading in a simulated market will get you into the practice of keeping emotions at the door and focusing only on the numbers.

5. Learn From Your Mistakes

Not all learning methods are systematic or organized; sometimes, you learn based on your unique experience. From novices to exerts, every stockbroker makes errors at some point or the other, but the successful ones always make it a point to analyze their mistakes and not repeat them in the future.

A good practice you can take up as a rookie trader is to maintain a daily journal of all the trades you make, including details like the total investments and the number of shares traded, any missed opportunities, and other relevant statistical data. Today, most online trading platforms track these parameters and generate reports of your weekly or monthly performance.

6. Open A Trading Account And Start Trading

Ultimately, the best method to learn about trading is to trade! When you feel you are ready enough, create a Demat account, and start trading. First, start by investing a small amount and focus only on one or two markets until you get the hang of it.

You can manage trades initially purely by the book: following the traditional indicators to buy and sell securities and putting money only on the blue-chip “safe” stocks. As you venture into deeper waters, you can make riskier decisions, use sophisticated software tools, and engage in extended-hour trading.

Are You Ready To Trade?

The first few weeks or months of trading can be challenging, especially if you are not used to handling losses well. However, remember that to excel at stock trading, you need to invest time and energy continuously for a long enough time so that you can improve.

Learning about the stock market is not a one-time effort either. As newer technologies crop up and as you develop unique strategies, you need to keep updating yourself about the latest trends and practices in the stock market to stay on top of the game.