Stock Market Basics For Beginners

I love online trading. Most of my income comes from it. But,

to be honest with you, it's hard to make a living exclusively through stock trading unless you have a lot more capital than I do.

That's why I combine it with other types of online work.

In my home office, at the desk where I work, I have two monitors hooked up to my computer with a splitter. This enables me to keep an eye on my open positions on one while I transcribe or work on this website on the other.

Two monitors also come in handy for day trading as you can put your order page on one screen and place buy and sell orders without having to ever lose sight of the price action!

Stock Market Basics - Rule One

I'm a specialist. I trade equities and ETFs. That's it. No options. No forex. Just stocks and exchange traded funds.

I'm a long. I've never shorted a stock in my life. I like to keep my trades simple. I make bigger gains and take smaller losses when I stick to what I know best.

I suggest you become a specialist too. For the same reason.

You don't have to trade stocks from the long side. There's plenty of money to be made shorting them, but I can't advise you on that. Taking long positions seems easier to me. That's why I don't short anything.

You don't have to trade equities. You could trade options, futures, commodities, bonds or currency. But again, as I don't trade any of those, I won't be much help with that either.

Capital Requirements

Most trading books I've read seem to be talking to someone who has a lot more money than I do. Maybe this is because it takes so much capital to make a living this way.

You don't have to be wealthy to trade, though I'm sure it would help! Many online brokerage accounts have no minimum deposit requirement. The ones that do aren't very high. Usually about $1,500. But realistically, you'll need much more than this to even learn the ropes.

In my opinion $5,000 is the bare minimum.

And it can't just be any $5,000 you happen to be able to get your hands on. It needs to be $5,000 you can spare.

If $5,000 is all you have in savings then no, you cannot use that money to learn to trade. Because, in all likelihood, you are going to lose most or all of it in the learning process.

What if I have more than $5,000 I can spare?

As a beginner, you are going to make mistakes. Mistakes you make in the stock market are costly. Money that isn't in your trading account can't be lost.

Stock Market Basics - Rule Two

Successful trading has more to do with your personality than your intellect.

I can teach you what to do. But no one can really teach you to trade. There has to be a trader inside you. It's either there or it isn't. Learning to trade is the process by which you find out if you're a trader.

Stock Market Basics - Rule Three

Nobody enjoys losing money. But loses are part of the game. They're unavoidable. So you have to figure out how much you can lose before it starts to really upset you.

The amount varies from person to person. Some people can't bear to lose any money at all. If this is you, you'll know it before you lose very much. It's nothing to be ashamed of. Stock trading is not for everyone. Put your money in a government insured account and sleep well.

Stock Market Basics - Rule Four

Go To Stock Market For Beginers - The Basics Pt. 2

Stock market basics rules 5-8 including the most important of all trading rules: trade the trend.

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