The stock market can be an intimidating environment for the novice stock trader. Sure, there are many books on investing the benefits of buy and hold strategies, but for those who are looking to actively trade, they should consider learning about specific short term trading strategies that will help guide them through the process.
A novice Investor will normally understand the concept of buying a stock when the price is low and selling it when it moves higher. However, novice traders are often subject to quickly letting their emotions sway their decisions and quickly find that stock trading is a lot harder than they initially believed. A novice traders who does not fully develop a basic strategy will find themselves stopping out of trades when the market moves against them and attempting to jump back in when a stock price rebounds. Before attempting to actively trade stocks, novice investors should find a reputable day trading course.
Where to Start
Your level of experience with stocks will help with a starting point. For those who have never traded or invested before, understanding what a stock is, and what stock ownership will bring is a helpful step in starting to trade stocks. You should learn how to obtain and read basic quotes using a ticker symbol. Learning about the major indices such as the S&P 500, the Dow Industrial Average and the, Nasdaq composite are a good starting point. For those who have had experience with basic investing, learning how to trade requires some understanding of what moves the markets.
The basics of trading stocks comes down to your understand of fundamental and technical analysis, which are the backbones of developing a robust trading strategy. There are a number of good courses available, which will help break down the differences between investment theory and practice. It is one thing to be able to come up with a basic idea, and completely another to implement concepts into a trading strategy.
After you have mastered some of the basics on how to open a trading account and how to place a trade, you should next become familiar with the types of analysis that can be used to help develop a sound trading strategy. Most investors use a combination of fundamental and technical analysis to assist in strategy development.
Fundamental Analysis use specific information such as earnings reports, cash flow or share buy backs to determine if the value of a stock is attractive. Analysts will pour over price to earnings, a company's debt as well as its growth potential to determine an accurate valuation for a stock price. For a beginner, it is key to develop your own understanding of what many of these metrics mean, but it is not necessary to perform the analysis yourself.
Technical analysis uses historical price action to determine the future price of a stock. There are a number of technical analysis tools you can use to help gauge the future price movements of a stock. A beginner should experiment with these tools and find the ones that they are most comfortable using. Finding a robust course that will help you gauge the right tools, can help mitigate wasteful time and get you on your way to developing a successful trading strategy.