Trading in stocks is one of the few ways where you can not only double your money, or lose a fortune and you can do it all in the same day. Every stock trader loses money on some trades but what you want is more winning trades than losers. Becoming a successful trader means making more money than you are losing. It also requires some rules that keep you on the winning side of a trade. Here are 5 tips for successfully trading stocks and winning.
The first thing you need to do before you start trading is to educate yourself. No you don’t need a finance degree but you do need to understand how the stock market works. You should understand things like what moves the market, different trading strategies and the risks involved in trading.
Build a Strategy
You need to set your emotions aside and make decisions based on logic if you want to trade profitably. Decide what price you’re willing to pay to buy a stock and how much of it you will buy. That is your entry position. You need to decide at which point you will sell the stock and take your money. That is your exit. Finally you need to decide at which point you will cut your losses and that is the escape plan. You also need the right amount of discipline to stick to your plan. Don’t get caught up in winning or losing streaks, this is about making money.
Learn How to go Long and Short
Most people think of buy low and sell high when it comes to the stock market, but that is not the only way to make money. No market or stock will continue to climb forever eventually they will correct. You need to know how to short stocks, here is a quick tutorial on how to do that.
Learn the Technical Indicators
Successful traders watch technical indicators to find the right time to buy and sell a stock. You should learn how to spot support and resistance levels and when stocks are expected to rise or fall.
Ignore the Hype
Most of the enthusiasm you see surrounding a stock is mostly hype and you need to learn to ignore that. Go back to step one and stick to your plan, that’s how you make money with the stock market.
Making money on the stock market doesn’t require a degree in finance but you will need to educate yourself and stay disciplined to reach your goals.