This post will cover the basics of getting started to swing or day trade stocks. If you’re completely new and have no clue about the stock market, that’s ok. Following the steps below will help no matter what skill level you’re at. I also recommend that stock trading wannabes go through and read through my blog posts. They cover many different scenario’s that I’ve experienced that could help you avoid some costly mistakes down the road. It’s extremely easy to become overwhelmed by all the information available on trading stocks so I want to keep it as simple as possible.
1. Learn how to Read Candlestick Charts. Become a master at reading charts and you will be ahead of many other traders who have been in the game for years. Traders use candlesticks through technical analysis that reveal different patterns that give us an edge so that we can better manage our risk. To learn how to read and understand candlestick charts look no further than the person who created them, Steve Nison. He has an extensive library of material online and available on DVD’s and in books. Let this be your first step in learning how to trade! All of Steve’s material can be found at www.candlecharts.com.
2. Don’t move on from step 1 until you have mastered reading charts.
3. Decide what kind of trader you want to be. This will determine what kind of hardware is required. Part time, full time, swing or day trader? Swing trading can be done with the bare bones of a computer or smartphone. Keep in mind you do need a way to read charts so you can determine your entries and exits. Once you have those you can easily buy and sell through your brokers mobile app if they offer one. Other than that not much would be required. I am set up for swing and day trading. Day trading is more advanced, and requires a faster computer, multiple screens and high speed internet. For more info on my set up, check it out here in more detail.
4. Choose a broker. Their are tons of brokers to choose from. The most popular ones are E*Trade, Interactive Brokers, SpeedTrader and SureTrader. Each have their pro’s and con’s. All of them work fine for swing trading, but for day trading I would recommend SpeedTrader for super fast executions and low commissions, and if you don’t have 25k to meet the PDT rule, then check out SureTrader(They offer 6:1 buying power and only $500 min to day trade).
5. If you’re going to be a part-time trader – You could stop where you are and subscribe to a stock alert service that sends alerts to you phone by text or email. Many people do this in addition to their full time job as a way to make extra money. Let the guru’s do the work for you, send you stocks that they buy and sell and mirror their portfolio. This has pro’s and con’s which I offer in my Truth About Stock Newsletters post. I’m currently subscribed to two newsletters Jasonbondpicks.com and pennypro.com. Both do as I describe above only they deal with different priced stocks. I offer full reviews on those newsletters.
6. If you’re going to be a full-time trader – you can still use the services above to trade and get intraday ideas. They both offer chat rooms with lots of ways to make money. They both offer watch lists in the morning that you can go over and find your own entries and exits which you’ll have no problem doing since you’ve mastered Step 1 above.
7. Subscribe to the services below;
- Join Twitter and start following other traders. It’s a free and easy way to check news on stocks and to find out what stocks are hot. Search for any stock by placing a $ in front of the stock ticker. For example; $AAPL or $TWTR
- Finviz.com, my favorite way to find the perfect chart setups. They have tons of filters so that you can search for any chart setup you can imagine.
- Trade Ideas, An absolute must for day traders, trade idea’s scanners are the best in the business and used by just about every retail trader. Tons of very customizable scanners so you can be alerted of any setup, i.e. volume alerts, breakouts, pre-market, etc.
- BenzingaPro.com, a must have news source. Breaking news is how traders make their money, and the faster you know it the more money you can potentially make. They offer a live broadcaster that reads you any breaking stock market news. Make sure you get at least the Mach III subscription to take part of the live news alerts. Otherwise just sign up for a free account through Financialjuice.com if you’re not worried about getting the news so quickly.
8. Finally, document all of your trades on an excel spreadsheet or in a notebook. Learn where your strengths and weaknesses are over time. This will also help you stay disciplined and stick to your goals.
I hope this gives many of you a simpler picture of what steps to take to get started trading stocks.
Next topic: Risk Management