Every so often you hear about someone making money in the Stock market. This is usually when stocks are going up in a bull market but stock traders can also make money during a stock market crash such as in 2008 or the dot com crash a few years earlier. If you want to get in on the profits how can you start trading stocks? There are two basic issues; picking stocks and trading them.

What Stocks Do You Trade?

Picking stocks to trade can be as important as how you trade them. After all it is in volatile stocks that traders commonly find their profits. In our article about picking stocks to trade we looked at three examples; volatile stock markets, volatile stocks based on currency fluctuations and picking stocks based on the prevailing interest rate.

The stock market seems poised for a downturn. Volatile markets are often profitable markets but picking stocks to trade is essential to success. The stock market has had a six year bull run following the crash of 2008 and the Great Recession. Now the prospects of a stronger dollar, higher interest rates and global economic malaise have spooked the market into a downturn. But not all stocks are going to fall and picking stocks to trade is the key to success. As an example CNBC suggests that European stocks may surge as much as seventy percent by the end of next year.

The European economy may appear mired in low growth and low-flation, but shares there are poised to surge as much as 70 percent by the end of 2016, Citigroup said.
“European equities offer investors a historic yield pick-up over both corporate and government bonds,” the bank said in a note last week, adding that the region’s stocks haven’t been this cheap compared with credit for over 50 years.

According to this opinion, if you are looking for stocks that are set to rise you may want to consider ADRs of European stocks. If you looking for stocks to short you may want to look at virtually any US stock that has a large presence overseas.

Read the entire article for the full story. The point is that there are various factors that drive stock prices. Picking the right stocks to trade starts with knowing that is about to change and how that factor will affect stock prices.

Technical Analysis

Beside fundamental analysis of factors that drive stock prices successful traders learn technical analysis.

Studies of the stock market show that on days where there are large market moves timing and nature of news from the press do not correlate with the market direction or volume. 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.

Day traders use computer software that does second by second technical analysis of the market at a whole or the individual stock that you are trading. Part of how you can start trading stocks is to learn how to use this kind of software using market data stored on your computer. Once you have learned how to apply technical analysis in simulation trading you can start applying it to real world trades with the stocks that you have picked.