Have a clear understand of why you want to trade a stock
one of the most important steps in getting started is to understnd why you want to trade stock . Naturally , we all want to trade stock to make money , but let's dig just bit deeper.
If you want to trade stock to make 3percent per year on your investment then you may want to rethink stock trading . The reason being is that the objective of stock trading is to get a higher returns than you would normally get . The 3 percent return in our example is less than the annualized return of the S&P from 1993 to 2013 . Those looking for a modest return such as 3percent per year may be better of buying a good mutual fun
Now if you are interested in double digit returns and possibly higher , stock trading can be the vehicle to help you achieve your goals
How is stock trading different than stock investing ?
There are a number of ways that stock investing stock trading are different .
The most obvious difference is in the length of time you stay in a stock transaction investors typically buy a stock and hold onto that stock for years. Stock traders , on the other hand can be in trades for months weeks days minutes , or even seconds . The trader look to take advantages of the many profit opportunities that present themselves as a stock prices changes
Make sure you have realistic expectations :
On of the most important things that you can do when you are starting out in stock trading is to have realistic expectations .
An example of unrealistic expectation is to expect to earn 100 % per month on your money.
Another example of an unrealistic expectation is to expect to trade without having a losing trade.
Naturally those are both over blown exaggerated examples for the purpose of illustration . The important point here is that unrealistic expectations can have a negative effect on your stock trading .
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