As a beginner, doesn’t it suck not being able to reap the rewards of the stock market?
I know when I started out, I thought that I would make a killing straight away.
But then I started to talk to people who had been trading for a while and they told me that it wasn’t that easy and that I needed experience in order to thrive.
In hindsight it turns out they were right. In order to consistently make money in the stock market you need to know when to trade and when not to. To be able to spot a good opportunity you need to have done it for a while.
It comes down to chart work and knowing the ins and outs of the patterns that present themselves all the time.
So the first thing that you need to learn is technical analysis. If you don’t find any other introductory text on technical analysis you can do that here.
What separates a good trader from the novice is that the good trader almost always win while the novice only sometimes win.
But then you also need to put real money at stake because if you don’t do that you will never learn. A demo account is just that: A demo account.
There is nothing that beats seeing that candlestick moving up or down.
The only way to learn is to lose your hard earned cash and then come back stronger.
Once you’ve decided to put real money on line, you can begin slowly.
But don’t get too excited if you see that things are going your way.
Even if you are unexperienced, you need to expect a few gains.
One of the most important rules of trading – and one that I’ve personally have learnt the hard way – is always to use a stop-loss.
When you consider a move in the market, up or down, there is always the possibility that you will be wrong.
Therefore it is very important to set a stop for each trade where you say “The buck stops here”.
It’s far easier to get back into the game if you have been stopped out than to see yourself lose significant money day after day for weeks in a row.
To earn a living from the stock market is not for the faint of heart. You need to be mentally prepared for the ups and downs and that you may lose a significant portion of your wealth at any time. But in the end it can be a very profitable business if you apply a system where your losses will be limited.