Typically a trader started his or her career after hearing about how much freedom a trader has or how much money that can be made trading the financial market. Whatever reason lies behind the decision to become a trader does not change what comes after that; the stock market education. Don't just rely on trading tips to make an income from the markets! It will end in tears we are 100% sure of that!
As the freedom and the money are so good, why aren't more people traders? Simply because they don't have the time or patience to learn to trade successfully. Some reasons people don't succeed are that they lack the self discipline to work and study hard, it's not always easy being your own boss, there are many subject that needs to be covered in the learning process and there are many new terms to learn not to mention learning to analyze a market, stock or future! In the beginning it can seem overwhelming and people don't know where to start. This means that many traders give up before they even start.
But the truth is that with the right approach, learning to trade can be relatively easy. Structure your education by dividing it up in sections but before really diving into the trading arena the trader should ask themselves some questions in order to save time on the education. By knowing what the trader's goal is they can study the correct the subject and avoid getting in the process. Seeking information on trading can be like putting out your thirst in a fire hydrant; less is more!
We at stock market strategy have made a free article helping the trader ask the right questions so they know exactly what to study and in which order.
Technical or Fundamental Analysis:
The first thing the trader needs to figure out is whether they are looking to trade using technical analysis or fundamental analysis or perhaps even a combination of both. By making a choice the trader can then focus on the right area. If the trader decides to trade using technical analysis there is no reason to spend countless hours on learning about fundamental analysis and vice versa. Both subjects are big enough in themselves.
If the trader decides on technical analysis they will have to study many different subjects in order to pick the tools that suit them and then write a trading plan based on those tools.
The tools could be indicators such as, Bollinger Bands, Stochastic and RSI. Other tools could be chart patterns such as Double Bottom and Double Top. Volume and Candle Sticks are also important areas that the trader should not overlook.
If the trader decides to trade based on Fundamental Analysis they will still have to study many subjects but very different to the ones above. Fundamental Analysis regarding stocks can be, earnings, product launch, mergers, takeovers and so on. In Forex it can be interest rate, GDP announcements and so on. Just like with Technical Analysis the trader should write a plan which clearly states what the trader should focus on before making a decision on whether to trade that particular instrument or not.
Stocks, Futures or Forex:
After deciding whether the trader wants to use Technical or Fundamental Analysis for entering trades they should then decide what instrument to trade. This is an important process as the instruments are not traded the same way. So before going further with the education they need to decide in order to save time. For example if the trader decides to trade Forex then there is no reason to learn about volume (as there is no volume in Forex) or learn to analyze a company's earnings release.
Just like the instruments are different from each other the time frames are too. So in order for the trader to get the full education he/she needs to decide on time frame. For example trading a lower time frame such as 15 min the trader needs to know that the volume in market drops significantly during lunch time.
If the trader makes a decision early on regarding the above mentioned subject he/she can save time and money on the trading education. Anything that shortens the time to learn to trade successfully is well worth it.
DescriptionA great book that touches all bases in trading such as Mind, Method and Money. Alexander Elder teaches you all the important things in trading including strategies/indicators. Recommended for beginners but the book does also provide great value to more experienced traders.
Discipline Needed to Trade The Stock Market
Without discipline you will lose all your money trading the stock market