Where to Start Trading Stocks
Stock Trading can be a very complex and challenging career choice. A new trader needs to start on the right foot. Without proper guidance and education, it is straightforward to get in a hole quick. The better the education you receive right from the get-go, the faster you will see results. The goal of a Stock Trader is to make money consistently, with their gains larger than their drawdowns. Let’s talk about where to start your Stock Trading journey.
First Things First
The first thing everyone needs to begin with Stock Trading is capital. It is very easy to see other people’s success and think it is easier than it is. When you are funding your trading account or simply just trying to save money, you should never use your life savings. The risk is always there to lose money. If you are funding your trading account, you need to invest with money you aren’t going to rely on to live. It takes time to make money when you are starting.
The next step is to find a broker that is right for your Stock Trading Style. Individual brokers are better than others, depending on how you want to trade. There are different brokers that you can get away with certain things that you aren’t with others. For instance, a Day Trade is entering and exiting a stock position on the same day.
For the most part, all brokers are adapted their platforms to be Day Traders friendly. Day Trading popularity has grown so much that most brokers such as TD Ameritrade, E*Trade, etc. have adapted to Day Trading styles.
Some Brokers can be better than others when it comes to short selling stocks. Short selling is a reverse chronological order of going long. Instead of buying low and selling high you are selling high, taking a contrary position, then buying back at a lower price. One of the brokers good for this in Interactive Brokers.
Along with Day Trading, most brokers have adapted to the growing popularity of Options Trading as well. Options, in a nutshell, are contracts that you can buy on a stock to have the ability to purchase the stock at a later date at a specific price. The reason for the growing popularity of trading options is the ability to make more with a smaller amount of upfront capital. TD Ameritrade, E*Trade, Charles Schwab, Fidelity, etc. are all decent brokers for trading options
The contract for difference, or CFD, trading is an agreement between the trader and the broker. In this contract, both parties agree to exchange a financial asset during the time frame between when the trade is opened and closed. This type of agreement doesn’t require that the trader actually purchase the asset—it merely allows them to profit or incur losses based on that asset’s movement. The leading CFD trading brokers in Singapore are IG Markets, Phillip CFD (PhillipCapital), CMC Markets, Oanda, Saxo Markets, and CityIndex.
For example, if an asset is in a strong uptrend, a trader may wish to buy 50 shares of that asset at $20 a share. Rather than paying the full amount to purchase the asset in question (in this case, $1,000), a CFD agreement allows them to pay just 5 percent of the asset’s value to open the contract. In this example, 5 percent of $20 is $1, so the trader would pay a total of $50 for 50 shares.
Stock Trading Education
I believe the most important thing new traders can do is invest in their education before investing in the market. I have seen time and time again when new traders come in thinking they know what is happening and what to do to see their account slowly draw down to zero. Or even worse, see their account go negative.
Where to Start Trading Stocks
Stock Trading can be a long process to gain consistency and growth. But with the proper tools and education, anyone can make their journey faster and easier.