A Beginner's Guide On Learning How To Trade



Stock trading can be a rewarding skill to acquire, offering insights into financial markets and potential opportunities for personal economic growth. For beginners, the journey into stock trading requires a solid foundation of knowledge and understanding. This article provides a starting point by highlighting various resources beneficial for learning stock trading.

Ask Experienced Traders For Advice

One of the best ways of learning how to trade is by approaching experts in the area and asking intelligent questions. Successful traders may be reserved about the methods they use to trade, of course. However, if you ask them what they think and feel in particular situations; and how they deal with their emotions when trading, you may receive many life-changing tips. In fact, we can almost assure you they’d love to do it. Everyone likes to be a mentor if the mentored person is truly interested, after all, if he is a trader, he is most likely passionate about it.

Learn by Reading and Researching

Suppose you don’t have the opportunity to learn directly from an expert trader, probably because you don't know any. In that case, there are other ways you can acquire knowledge on trading: reading and researching. In the stock market, an incredible variety of books are written on the subject. However, for beginners, it is vital to know about the specific strategies and methods of analysis traders and the way they think. The Internet is crowded with information, finding some for ourselves to learn is as simple as googling what we want to know and identifying reliable sources. Then read 10 articles about it and draw your own conclusions.

 A good starting point is reading all the articles on this site under "Stock Market Education". For those who don't have the time to read all the articles here, a few great starting points from this website would be learning about Japanese candlesticks, as well as a breakdown of technical indicators and how useful they really are.


Great Trading Books

Let’s recommend a quick book trading checklist that I’m sure will help you in the process of becoming a successful trader. Here is a handful of useful and valuable books:
  • Henri Lefevre’s book Reminiscences of a Stock Operator (1923), written in honor of Jesse Lauriston Livermore, is well-known as Wall Street’s "Great Bear" and "Boy Plunger", is a really practical book. At the beginning of the 19th century, Livermore was one of the main traders in the Wall Street stock market. Through the book, Lefevre illustrates very neatly Livermore’s way of thinking, strategies, and concepts regarding trading. 
  • Jack Schwager’s The Market Wizards and The New Market Wizards are really useful and enlightening pairs of books created from the basis of conversations with the best traders coming from markets of diverse nature. By reading these books, you will have the golden opportunity to get familiar with the habits that top traders have to be successful. 
  • Michael Covel’s The Complete Turtle Trader portrays a trial whose origin was a discussion between a pair of traders. Led by a trading expert, the training process of some specifically chosen people, as well as what comes out of it, is shown in the book. 
You can also head over to my list of the best Must-Read Stock Trading Books to help you become a winner.

Internet, Research, and Trade

There are countless online resources to learn how to trade. You can research specific topics related to trade on specialized websites. Additionally, you can try different stock trading platforms using demo accounts and see which one fits you most. In these, you will quickly see how possible and even easy it is to find a great deal of valid, useful information.

What you can do to learn:
  • Learn from other traders through the interaction between them in discussion forums. 
  • Use the technical indicators provided by your stock trading platform or broker. These will lead you to acquire experience and knowledge on analysis and technical indicators. I personally recommend TrendSpider charting software. They have the latest in cutting-edge indicators, as well as a great price (use code CL25 to sign up for 25% off). Additionally, they have one of the most extensive YouTube libraries explaining how to use all these indicators and features on their site. It comes with a 7-day free trial so you have nothing to lose.
  • Internet and online trading also allow more accessibility to trade, you can open a Stock account with a very little amount of money and test yourself on the business, especially with the Robin Hood era as now the cost to trade is essentially free. However, I recommend one of the bigger brokers like E*Trade or Ameritrade, as Robinhood and other budget trading platforms are not reliable when the market becomes very volatile.

New Era of Learning - Artificial Intelligence

Utilizing AI bots for stock trading is an increasingly popular method among traders. Platforms like ChatGPT offer a fresh perspective on market analysis and trading strategies. These tools are in their early stages, often compared to the 'Wild West' due to their novel and untested approaches, yet they hold potential for both educational and financial benefits in the stock market. As AI technology continues to evolve, these bots are rapidly improving, providing more sophisticated market insights. It's important, however, to use them with an awareness of their limitations and the inherent risks involved. For those interested in using AI bots in trading, my article is a helpful resource. It outlines effective ways to utilize tools like ChatGPT for stock trading, serving as a good starting point for anyone looking to integrate AI into their trading strategy. You can read it here: Top Stock Trading Prompts for ChatGPT.

Conclusion

To summarize, becoming skilled in stock trading involves various learning methods and resources. It's crucial for beginners to seek advice from experienced traders and to engage in extensive research and reading. Starting with basic concepts such as Japanese candlesticks and technical indicators is highly recommended. Reading the established trading books mentioned above can be a great starting point.

The AI revolution now adds additional learning opportunities through online resources, interactive platforms, and new tools like AI trading bots, which can provide different perspectives and trading simulations. However, these tools should be used with caution due to their novelty. Online trading platforms can also provide valuable hands-on experience, crucial for understanding market dynamics especially those who allow accounts for "paper" trading (trading without real money).

Remember, practice makes perfect, but it's important to acknowledge that many people struggle to become profitable in stock trading. You might be one of the few who succeed. Finally, I strongly advise avoiding options and flashy traders on social media, as they are often involved in scams.