The stock market is perhaps the best way to make money over the long term if you learn how to invest. And the stock market can be a profitable place to trade if you learn how to buy and sell at the right times. If you are starting from ground zero the question is how to start stock trading. First of all you will need money to trade stocks and you will need that money to be independent from your day to day needs. Good advice on how to start comes from our sister site, ProfitableInvestingTips.com. Here is what we said with trading replacing investing.

A good rule of thumb is that you should not trade what you cannot afford to lose. Thus you need to be able to pay your mortgage or your rent and make payments on your car and other expenses. Then you should have a couple of months of expenses in the bank and your credit cards paid off. That is how to start trading in the stock market.

Despite having dreams of riches from stock trading, may traders are happy with gains of ten, twenty or thirty percent a year. By paying off your credit cards you are making a respectable 18% return on your capital. And if you are swing trading a stock with lots of promise don’t find yourself having to pull out your capital before the stock pops because you need to pay bills. Put enough aside to trade independently of your daily needs. That can start with as little as $5,000 to $10,000 in a trading account. But, in the meantime what can you do?

Learning the Ropes

In the glory days of sailing ships a seaman started by learning how to tie various knots and what the various ropes on the ship attached to. While they were learning the ropes they were learning how to successfully run a ship. While you are waiting to build up enough to start stock trading you can learn about intrinsic stock value and technical analysis. Intrinsic value has to do with the fundamentals that eventually determine stock prices and is covered in an article on ProfitableInvestingTips.com.

The dictionary definition of intrinsic stock value is its fundamental value. It is obtained by adding up predicted future income of a stock and subtracting current price. It can also be seen as actual value of an equity versus its book value or market value.

The point is that in trading stocks you can determine which stocks are likely to rise or fall over time and trade accordingly.

Technical trading is the other side of the coin. Technical analysis has to do with how the market fluctuates on a daily and hourly basis.

Day traders using technical analysis rely upon the fact that investor sentiment and action tends to repeat itself. Analysis solely based on technical factors is a kind of statistical prediction. Statistics does not predict which investor will buy which stock at which price but it does often predict that a certain percentage will buy or sell certain types of stocks.

If you engage in day trading you will use a computer with a trading program. That program will contain technical analysis software. While you are waiting to amass enough money for a trading account use the simulation programs on your computer to learn technical trading.

How to Start Stock Trading PPT

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