Stocks go up and stocks go down and those who trade effectively make money. Picking stocks to trade is the first important step. Then a trader needs to decide his general approach to trading. Last of all there are the details wherein lie profits or losses. If this interests you here are a few thoughts about how to get into Stock trading.

Picking Stocks to Trade

A year ago we wrote an article, Picking Stocks to Trade. The point of the article was choosing the right portion of the market to pay attention to. There is more profit to be made on volatile stocks. And there is more money to be made in market sectors that you understand. When interest rates go up some stocks are affected more strongly than others. When events like the Brexit occur some stocks plummet while others prosper as safe haven investments. Start trading stocks that you are familiar with.

Day or Swing Trading or Options

You may believe that a certain stock is either overpriced or under-priced. So you either short it or buy it. Or maybe you trade stock options. In this case you are certain that the stock price will change and are willing to wait a week or a couple of months for that to happen. This is how swing trading works. Pick an individual stock based on sound analysis of fundamentals and the market. Make your trade. Wait and then count your profits when the stock performs as expected. Options trading is similar and has the benefit of helping you hedge your risk in case your analysis turns out to be inaccurate or the market simply surprises you.

A more intense approach to stocks is day trading. How to start day trading is a bit more complicated than swing trading because there is a whole new skill set to learn. And you need to buy a trade station and trading software.

Day trading has become possible for many traders as electronic trading has brought the markets to the office and home. How to start day trading will require computer hardware with sufficient memory and processing capacity to handle large amounts of data very rapidly. Likewise the day trader’s internet connection will need to be secure and of sufficient band width to handle similarly large streams of data. Vendors of trade stations and software will list their capacities. The beginning day trader will want to check with the broker through whom they place their trades to make sure that their software and hardware are compatible and of sufficient capacity. All of the trading skill in the world will not let a trader take advantage of an opportunity or extricate himself from risk if his internet connection goes down.

Day trading is based on technical analysis of market movements. The fact of the matter is that market patterns repeat themselves. The gist of technical analysis is that one reads the first part of a pattern and can predict the second half. To do this effectively traders need to learn via simulation trading on their trade station before risking their own money.