It’s always the dream of many to make a lot money trading stocks. What they forget is that money doesn’t always start flowing on the first day. Instead you have to learn how to find support and resistance, candlestick patterns and how to control your emotions. You have to be patient and start learning slowly before you can start seeing great results. However, this doesn’t mean that it is not an achievable goal, and this is why this piece will highlight significant points on how to make money stock trading.
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How to Make Money Trading Stocks Daily
If you want to make a lot of money trading stocks every day, the first thing to do is set your expectations. Can you expect to make a lot of money every day? Maybe not. Can you make money trading stocks daily? Absolutely. You need to figure out your trading style. Are you a day trader of stocks vs options or futures? What technical strategy do you like? Once you figure out your style, practice it like crazy!
Where Do I Start?
To start as a new stock trader, you need to follow specific steps that will guide you throughout the process. First and foremost, this includes researching market trends. Research is a vital aspect in this field, something that even the most established traders understand.
Learning about the market trends and the reputable sources that can aid you to stay up to date on breaking news is, therefore, a must. As a matter of fact, the Economist, Kiplinger, and Bloomberg are some of the most reliable stock trading magazines that you should add to your reading list.
Open A Trading Account
Once you feel that you have done enough research to start you up, you can now create a trading account through a brokerage firm. Some of the common sites include E*Trade, Fidelity and TD Ameritrade.
Going through the reviews of other users and the BBB ratings will help in confirming if the website is reputable. If you want to save some time, check out our blog here on the best brokerages out there.
One piece to keep in mind is their fees; many firms differ in what they charge, so take your time choosing based on your financial situation. Practice does in fact make perfect.
Trading stocks goes beyond research. If you wish to become better and enjoy good returns, you have to practice. Before making any moves with your money, I suggest downloading a platform such as ThinkorSwim to practice in.
Their simulator allows beginners to practice stock trading without using real money trading stocks. Through this practice, you get to equip yourself with better techniques before investing with real money.
How to Make Lots of Money Trading Penny Stocks
When it comes to making a lot money trading stocks, we usually think of penny stocks. You want to make sure you find the best penny stocks to buy. Pennies are notorious for pumping and dumping. As a result, you want to make sure you’re not on the end of the dump. Which happens to a lot of new traders. They see the promise of riches and jump in; more often than not, to their detriment. Don’t get caught up in gapping stocks that are trending on Twitter…stick to the technicals, or you’ll pay the price.
Picking the Right Stocks
Once you have decided on your trading strategy, the next step is picking the right stocks to make money trading. At this point, many questions generally arise.
However, the underlying truth is that the right stock does not exist. It only exists so far as that it fits your trading plan. Day traders, swing traders, and investors all have different criteria that make their stock the right “pick” for them.
How an Investor Picks Stocks
For an investor, the profitability of a company is one of your primary concerns. Your intention is to buy stocks that will increase in value. This means you need to evaluate the financial reports of a selected company. Most of the documents are usually available online, especially for companies that are traded publicly.
The ability of the company to become profitable with time is also a concern that you need to keep in mind. Some companies are worth investing in, even if their annual report for the previous year did not show any profits.
However, you need to check their yearly expenses, leadership, and debt. Reviewing the balance sheets of such a firm will also help you have a clear picture if you can expect future profitability or not.
How a Day Trader Picks Stocks
On the otherhand, a day trader is not that interested in the financial reports of a company. Add to that the fact they are not in it for the long haul, the fundamentals don’t really matter. What matters is the technicals. Is it moving on high volume?
Is it a false breakout? Where is price action with respect to VWAP? These are just some of the questions day traders as themselves before entering a trade. So, summed up, the differences between fundamental and technical analysis are many.
Fundamental analysis looks typically at the leadership, future goals, reputation, and profit history of a company, whereas technical analysis looks at price movement, charts, trends, and trading volume.
You want to stick to what you know when making money trading stocks. As a beginner, I suggest you stick with companies that are well known. Why? A few reasons. These companies have lots of available data about their trading histories, profitability and leadership. Take our day trading course to learn more about what to look for when trading any picks.
Is Trading Stocks a Good Way to Make Money?
With COVID-19 hitting everyone hard, people looking to make money trading stocks were on the rise. It’s a great way to make money at home. Or low key making money while working. So the question is, it trading a good way to make money?
It is if you’re willing to put in the time and effort to learn. If you’re looking to make a fast buck, nine times out of ten, you’re going to be unsuccessful. Instead, you have to be willing to study, practice and take time.
How to Be Successful
As a new trader, you need to keep in mind that some tips can aid you in having a successful experience. Now, this includes looking at different strategies, analysis methods, and market types. Basic analysis approaches are technical and fundamental. They’re both used in predicting the price changes, which helps in determining which stocks to buy and when. A good tool with unique analysis is Atom Finance. Give them a look before you go spending an arm and a leg for a research tool/
I’d be remiss not to mention the importance of a written money management plan. One rule of thumb to remember: Never invest 100% of your money into any one security and never have 100% of your money invested.
Secondly, never ever enter a trade without knowing when and where you are going to get out. Never let a loss on a trade get greater than your risk tolerance (i.e. 2%) and always take your loss and walk away. Pleases don’t lose more than you need to and don’t be afraid to take the loss. Remember, it never hurts to take a profit!