Stock Trading for Beginners

Stock Market Trading for Beginners

2010-02-21T09:13:00.000-08:00

Stock Market Trading for Beginners

There are certain things that beginners need to know before trading stocks and shares either online or over the phone. The stock market and consequently stock prices are driven by the professionals. As a beginner you cannot hope to have any influence on stock prices, therefore you must follow what the professional traders do.

As a beginner to stock trading, in order to be able to follow what professional stock market traders are doing then you obviously need to understand why they make the decisions they do.

It is important therefore to realize that professional stock traders use stock charts in stock trading. They look at the chart of a particular stock or index and, with the help of their expertise and certain indicators they decide whether it is heading up, down or sideways.

So, as a stock market beginner, where do you start ? The most basic thing you need to learn to be a stock trader is what the stock charts are telling you. There is no need to learn about company fundamentals, such as what the company makes or sells, what their profits are etc... and whether you can believe a word they say. Stock charts don't lie, they are purely mathematical.

It is also said that the "news comes out in the charts first" i.e. if there is bad news on the way then it will be reflected in the stock chart first, the stock price will start heading down. This is clearly not always true as sometimes a company will surprise everybody and out of the blue announce something totally unexpected which sends the share price soaring or spiralling down. But generally speaking, if a share price is heading up or down it is for a reason. That reason may just be that people are buying (or selling) the shares. But people will be buying the shares usually because they are looking at the stock chart and taking a decision based on their interpretation of it.

So as a beginner to the stock market and stock market charts what should you be looking for? First of all you need to understand moving averages. Moving averages show the average price of a stock over a given time period. One particularly important moving average to consider is the 200-day moving average. If you look at a stock using stock charting software or a stock site then you need to insert the 200 day moving average (this is done automatically if you click on the right button). If the stock price is below the 200 day moving average then this is not a good sign and you would do well not to buy that particular stock but to look for something else.

If you look at the charts of some of the famous banks over the last few years and put in the 200 day moving average, you will see when the stock price crossed below it and what happened next.

This is only applicable to short or medium term traders, long-term traders such as Warren Buffett generally don't bother too much with looking at stock charts to time their buys.

Another very basic comcept to understand if you are a beginner to stock investing is that of support and resistance. Quite often stocks trade in 'price channels' i.e. they will rise to a certain level then fall back down to a certain level then start to rise again. This is known as trending and traders will often just buy at the bottom of the trend, then sell when the stock reaches the top of the trend and wait for it to fall back to the bottom then start all over again.

The bottom of the trend is known as support and the top of the trend is known as resistance. Some traders say that that is all they use. They prefer to keep it simple. Look at a stock price, identify the trend and the channel and use a bit of common sense to buy low and sell high.

Sometimes of course a stock price will fall back to its support line and just keep on falling. This is where stop losses come in. You need to decide your stop loss before you place your trade. A stop loss is a price at which you automatically close your trade for a loss. Usually a stock trader will decide on a stop loss of around 4% or 5%,. So once they have lost 4 or 5% on a trade they close it, chalk it down to experience and move on to the next trade. The reason is that if you don't, your 5% loss may turn into a 45% loss very easily.

The stock market is not about being right all the time, that is impossible. It is about managing your risk - reward ratio. On a short to medium term trade a 'swing trader' will hope to make around 10% profit so he sets his stop loss around 4% thus making sure his potential loss is smaller than his potential gain.

Another basic rule that swing traders often apply is never to buy a share if the 5-day moving average is heading down. So make sure you take a look at this moving average at least before buying or selling any stocks.

Finally you need also to look at volume. Check out the volume of traders and see if is it higher than normal for the particular stock you are looking at. Generally speaking you want the stock price to be going up on high volume and falling back down on low volume. If the volume is high when the stock price is rising that is usually a positive sign.

These are just the most basic concepts of stock chart analysis but it is important to realize that professional stock traders are using their expensive software packages to analyze charts and you should consider learning the basics about technical analysis so that at least you have a hope of competing on a level playing field.

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Beginners Stock Trading Strategies

2010-02-16T11:23:00.000-08:00

Online Stock Trading for Beginners - First Decide your Online Trading Strategy

Swing Trading

If you are a beginner to stock trading you will need to decide what sort of trader you want to be - a day trader, a swing trader or a long-term buy-and-hold value investor. A day trader, as the name implies, opens and closes positions within the same day, often more than once and sometimes holding a position for just a few minutes. They base their decisions on very rapid chart and price movements - often they will decide the night before what they will trade the follwing day and when the stocks or indices hit the price they have been expecting then they will buy or sell in line with their plan. Day trading takes a lot of knowledge and skill and is not recommended for beginners to stock trading.

Long-term buy-and-hold means just that. You buy a stock because you think it is cheap or undervalued by the market and then you hold it for a long time (years usually). Warren Buffett, the greatest modern exponent of long-term investing says the best length of time to hold a stock is "forever". He has got very rich by doing just that, but it does require that you be able to understand (and believe) company accounts and that you are willing to invest the time needed to dig out gems that you are confident will rise over time. You can also of course just follow what Warren Buffet does - see Warren Buffett - this is known as coattail investing and is a good idea if you are prepared to wait at least 5 years to see a meaningful return on your money.

The third stock trading strategy you can adopt, which is in fact followed by a lot of people is known as swing trading. In swing trading you buy (or sell) a stock for a few days or weeks, although generally 2 to 5 days, when it is at the bottom of a channel, in the expectation that it will turn around and move up to the top of the channel, at which point you sell and take your profit and look for another trading opportunity. It is similar to day trading except for the time-scale. You don't need to understand the funamentals of the company or even when they sell.

An Uptrend

In swing trading, you still have to decide which stocks to trade, so rules have been devised that help swing traders spot good trading opportunities.

First, you need to find a stock (or an index, or whatever it is that you wish to trade) that is in a trend. A 'trend' means that the stock has been heading higher or lower recently, you do not want a stock that is going sideways. In swing trading you need a minimum of volatility at least. You also need to find repeating and predictable patterns in a stock's chart. If a stock is acting in a predictable manner then you have a chance of predicting what it is going to do next. What you are looking for is a stock (or index etc...) that is likely to move between 5% and 10% up or down. Once you have found such a stock then you need to assess the risk/reward ratio. You are looking for something where the reward outweighs the risk. If the risk is high but potential rewards are low or average then you look for something else.

Swing traders generally apply a number of criteria to the stocks they are considering trading.
1 - the stock price needs to be over $10.
2 - the daily volume should be higher than 500K shares.
The reason for these criteria is that market makers find like to manipulate prices to separate traders from their money and they find it easier to manipulate the prices of low volume, low cost penny stocks. So trying to apply swing trading to penny stocks is not recommended, they are too unpredictable.

To help you find a potentially good trade, you also need to understand how to analyze basic stock charts. Most stock traders these days use so-called "candlestick charts", these are analyzed using the stock price plus the 5-day, 10-day, 20-day and 50-day moving averages (although some swing traders like to mix and match their moving averages like using the 10-day simple moving average with the 30 day exponential moving average - but as a beginner it is probably better to learn the basics first). Any basic investing site will automatically give you a chart of the stock price you are interested in along with any moving averages you care to include. A moving average is simply the average price of a stock over a given period of time, but it is important to use them as they are what everyone else uses and as a small trader you need to follow the crowd, not get trampled to death trying to go the other way.

So you are looking for a stock that is in a trend. In addition to this the closing price needs to be above the 10-day and the 20-day "simple moving average" (s.m.a.) and the 10-day s.m.a. needs to be above the 20-day s.m.a.. and they both need to be trending upwards (see your friendly real-time stock site to get the chart for this).

One final point - if the 5 day moving average is heading down then it is not a good idea to buy that stock, look for a stock where the 5-day moving average is heading up.

As mentioned above, swing trading stocks and indices is all about the risk/reward ratio. You will never be able to make every trade a winning trade, so you need to limit your risks and maximize the rewards. To do this use a strategy such as below whenspending your money.

1. Buy in stages. If a stock gaps up as soon as the markets open 1% to 2%, then buy with just half the amount of money you intend using. Wait to see what happens. If the stock price continues to head up then you can buy more.

2. If a stock price gaps up 2% to 3% when the markets open, then only use a quarter of the money you intend using for that trade.

3. If the stock gaps up by more than 3% when the markets open, then the trade is too risky and the potential reward is too low so look for something else.

The profit aim in swing trading is around 5% to 10 %. The reason for this small profit margin is that once a stock has moved up 5 or 10% then it will probably hit 'resistance' and turn around and come back down. So the aim is to you close your trade for around 7% profit, wait for the stock price to fall back again and then do it all over again!

If, despite your best chart reading efforts, the stock price does not move up after you have bought it then close the position anyway, you probably got it wrong.

Stop losses.

What are stop losses? Stop losses are designed to ensure that your losses are limited. A stop loss is a decision to sell the stock if it falls back by a certain amount, no matter what. Too many people hang on to a stock they have bought when it goes down, in the hope that it will come back up and they can get their money back. This is a very bad strategy (personal experience can confirm this!). With a stop loss you limit your losses and live to fight another day. You are bound to make losses but the aim in swing trading is to ensure that your gains are greater than your losses.

You must therefore set your stop loss at the same time as you place your trade (or before if possible). Then if the trade goes wrong, the software on the trading site you are using should automatically get you out of your position. The actual percentage of your stop loss may vary, but if your profit objective is between 5% and 10% then your stop loss needs to be around 4%, meaning you are only willing to risk 4% of your money on that trade.

In addition to the the stock price and the moving averages there are other patterns swing traders look for such as candlestick patterns - the main bullish patterns you need to be able to recognize are the Hammer, the Engulfing pattern, the Piercing, the Harami, and the Doji.

One final piece of basic advice for all stock traders is "don't buy a stock that is below its 200-day moving average" - look at what happened to some of the major banks recently when they fell below their 200-day moving average ! It wasn't pretty.

Stock Charts -Support & Resistance

2010-02-02T06:30:00.000-08:00

Online Stock Trading for Beginners - Understanding Support and Resistance on the Charts

Stock Charts for Beginners

When trying to analyze stock charts the two most basic concepts to understand are those of 'support' and 'resistance' of a stock price or a stock market index.

Support is defined as the price level which has supported a stock in the past i.e. which a stock has found it difficult to fall below. The reason it doesn't fall below this price is because a lot of buyers are willing to buy the stock at this price.

When a stock price drops down towards its support level it will either be reconfirmed as support or ignored. If a lot of buyers move in the stock price will move back up thus confirming the support level, if there are not enough buyers the stock price will continue to fall and the support level is not confirmed. Typically if a support level is broken through, the stock price will continue falling for a while then eventually turn back up and the old support level now become a 'resistance' level.

Resistance is defined as the price level which a stock rises to before it meets 'resistance' (i.e. more sellers than buyers) and has to fall back.

Often a stock price will bounce around between a support level and a resistance level like a horizontal zig-zag line. This is known as a sideways trend and traders will often trade it by buying at the bottom of the trend and selling at the top of the trend. This by the way is the opposite of what Warren Buffet does, he is a long-term trader who buys a stock at what he considers to be a fair price and then holds it for years or even decades.

Online Stock Trading for Beginners
Although support and resistance are very basic concepts in stock trading chart analysis, they are nonetheless very important, as traders base anywhere between 80% and 90% of their trades on these simple concepts of support and resistance i.e. buying at the bottom of a trend (sometimes called a channel) and selling at the top.

This of course explains why charts work, because traders tend to sell at certain levels and buy back at certain levels, thus creating patterns which then become self-fulfilling prophecies !

The following video by the guys at TJMacTrading on support and resistance in stock charts should make things clearer.

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Stock Charts and Moving Averages
Buying Stocks Online

Charts & Moving Averages for Beginners

2010-01-29T12:01:00.000-08:00

Online Stock Trading for Beginners - Stock Charts and Moving Averages

What is a Moving Average?

If you are a beginner to stock trading it is very important to understand the basic notions of stock charts and moving averages and to have a basic grasp at least of what ia referred to as technical analysis. Why is it important ? Because the professionals use technical analysis and often make decisions based on what the stock charts are telling them. The large numbers of professionals involved means that markets are driven up or down based on the decisions they take. It is therefore important for beginners to online trading to have a basic idea of what chart factors influence their decisions.

One of the most basic technical factors is the moving average. A moving average is just the average price of a stock over a given period of time. A particularly important moving average is the 200 day moving average. It is not a good idea for example to buy a stock whose stock price is below its 200 day moving average.

The stock chart above is a 10-year chart of Bank of America with its 200 day moving average in green, notice that during the recent crash the BoA stock price remained below its 200 day moving average until March 2009 and it is now perilously close to it again and may well fall back through it.
For a more in-depth explanation of the 200 day moving average and also why buying stocks when one moving average crosses over another one is sometimes a good idea.

This was just a very quick introduction to the notion of stock charts for beginners and moving averages. There are many other indicators that can be taken into account when studying a stock's price charts but moving averages are probably among the most important along with support and resistance levels.

For more information on why technical analysis of stock market charts is important for beginners to stock trading to understand see - stock trading for beginners

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Stock Market Report Friday

2010-01-22T19:33:00.000-08:00

Online Stock Trading for Beginners - Stock Market Report

Stocks fell on Friday for the third day in a row, this is the first time the stock market has fallen so far since March 2009. The ostensible reason for the fall is President Obama's plans to get taxpayer money back from the banks, but in fact the market was due a correction anyway. Beginners to stock market trading may be confused by the gyrations in stock prices, but rest assured it is all part of a great plan by the wealthy of this world to make sure that they stay wealthy, so there is nothing to fear (except a second stock market crash of course - see below)..

The DOW fell 217 points and all the major indices fell over 2%.

Major companies are reporting good earnings but are disappointing by taking a cautious stance on the U.S. economy.

Next week will bring more uncertainty with earnings reports and the possibility that Fed Chairman Ben Bernanke will not be reappointed. Some people hold Bernanke responsible for a lot of the economy's problems.

The Nasdaq composite fell 62.18, or 2.7% to 2,203.52, after Google's earnings, and an analysts' downgrade of chip makers - Google fell 5.9%.

Capital One - the Credit card issuer - fell over 10% after reporting an increase in the percentage of loans it expects to not be repaid.

Other credit card issuers fell after Fitch said delinquent credit card balances hit a record high. American Express Co. fell almost 9% to $38.50.

Decliners beat risers by two to one.

The Russell 2000 fell 2% to 616.07.

According to Robert Prechter and the Elliott Wave Financial Forecast we are due a fall im markets and things could hardly be worse : "2010 is the year when the bear market in stocks returns in full force." The current situation they say resembles the brief rebound in the stock market back in 1929. A "a meaningful close" below 10,489 (the DOW is now at 10,172) should lead to new bear market lows ! That means the DOW needs to lose all of its gains since March 2009 and then some ! Sounds unpleasant but unfrtunately Mr Prechter has a reputation for getting things right.

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Information for stock market beginners on How to Trade Stocks Online

Directors' Stock Trading Tracking

2009-12-18T10:41:00.000-08:00

Online Stock Trading for Beginners - Does it Pay to Follow Directors' Stock Buys?

Among investors looking to get an edge in their stock trading and share dealing it has long been thought that Directors know when is the best time to buy shares in their own company. It does, after all, seem logical that they would. They have all the inside information on what they are doing and what they are likely to be doing in the near future and how their company is performing and how it is likely to perform and how this will affect the company share price. As a result, many investors or stock traders consider directors buying their own shares to be a good sign that they should also be buying that company's shares.

Well, it seems that this is more than just a nice stockmarket theory or wishful stock trader thinking. Research has just recently been published by Professors Alan Gregory, Rajesh Tharyan and Ian Tonks of the University of Exeter into just how good a gauge directors' share dealings are in the UK.

On the Exeter University website there is a link to the 30 page pdf of their research into directors' share dealing, unfortunately that link doesn't work, so I did some research of my own and discovered the link that does work ! So strange as it may seem you will not find the pdf on the page where it is said to be on the Exeter University site, but you will find it if you click here ---} Insider Trading !

You may, however, not wish to wade through the pdf and just want to know the conclusions.

Does buying shares when directors buy shares in their own company actually work ?

The good professors conclusions are :-

UK directors trade as contrarians
There is on average an excess performance of about 10% per annum over 2 years following a directors buy in value stocks
Their share buys generate long-term abnormal returns "over and above a simple value-glamour trading rule for value portfolios. These abnormal returns increase monotonically as we move along the glamour-value continuum". (It's English Jim but not as we know it!)
Directors' share buys in small-value firms generate significant abnormal returns, which persist for over 2 years after the initial directors's share trade.
Directors' share trades in large value stocks also generate abnormal returns over and above a simple value-glamour trading rule.
Insiders who buy stocks know what they are doing.
Directors' trading signals clearly generate significant positive abnormal returns on the buy side and small but insignificant returns on the sell side.
Larger abnormal returns are concentrated in smaller value stocks in particular.

Please note I have significantly summarized the conclusions because to be frank after about 5 seconds my brain glazed over - after reading stuff like this - "The OLS-t is a heteroskedasticity corrected (using white's procedure) t-statistic. "

Hats off to the professors, but I suspect even FT readers will be hard-pressed to understand the report !

So how much did the directors make by buying their own shares ? Well as said above it seem to be an annual outperformance of around 10% but I got that information from the video below not the report ! You may have better luck, just click on the pdf link above. All I can say is that the returns were "significant positive and abnormal".

Another problem of course is that directors buy their company stocks at a better price than you will ever get, because usually once it has been published that directors have been buying shares in their own company, the price goes up and you are unlikely to see the price they got again, and if you do then the chances are that that particular company share price will not rise.

A recent unscientific study by the Motley Fool showed that, on average, directors made a gain of 56% over a year on shares they bought in their own company, but ordinary Joe Bloggs stock traders trying to follow the directors made an average return of 29%, not bad but the average return for the FTSE over the same period was 20%.

So the final conclusion on whether it is a good strategy to buy shares in companies that the directors have just bought shares in, is yes it is worth following directors buying generally but only if you can get your shares at something very close to what the directors paid for theirs.

The Small Investor: A Beginner's Guide to Stocks, Bonds, and Mututal Funds
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Privacy Policy

2009-12-18T09:18:00.001-08:00

Online Stock Trading for Beginners

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Trade Stocks Online Part 2

2009-10-19T09:10:00.000-07:00

Online Stock Trading for Beginners - Strategies for How to Trade Stocks Online

As a beginner to stock trading you need to decide on a strategy to help you choose which stocks to buy. Most people go down one of two routes (or a mixture of both) - fundamental analysis or technical analysis.

Fundamental analysis involves analyzing the fundamentals of a company such as its accounts, its trading reports, the quality of the management and the stock price compared to what you believe the company is actually worth. If you believe the stocks are undervalued then you can buy them in the expectation that eventually the stock market as a whole will see that the company is making good profits and that the share price should be higher. This is the stratgegy adopted by Warren Buffett and others and it works very well if you know what you are doing, or if you copy what Warren Buffett does. This strategy does take a lot of knowledge and also a certain amount of faith in company reports and company accounts, it is also generally a long-term strategy and you may have to wait a number of years for the benefits to make themselves felt.

The other strategy adopted when trading stocks is technical analysis, which involves studying stock charts and ignoring the fundamentals of a company. Technical analysts believe that the charts tell you everything you need to know, for the simple reason that the people who really know what is happening inside a company will have an influence on the share price before anyone else finds out. This leads to the belief that everything is in the charts first.

To be able to understand technical analysis you do of course need to know what the various chart patterns are telling you, but this knowledge can be acquired relatively easily compared to fundamental analysis.

Technical analysis and analyzing stock charts and patterns relies on the following assumptions - supply and demand determine prices, supply and demand is a result of rational and also irrational behavior, stock prices move in trends which are usually long-lasting, any changes in supply and demand can be discovered by analyzing stock price behavior.

Technical analysis is more of a short to medium-term strategy than fundamental analysis. It requires less in-depth knowledge than fundamental analysis. It does not rely on company accounts, which may be manipulated by companies, if properly understood it can give you clear buy and sell signals.

Finally, and most importantly, technical analysis is a way of analyzing the behavior of crowds. When trading stocks using technical analysis you do not fight the crowd, you go with the flow, although it is better to go before the flow starts. Because stock market charts reflect what the majority of investors did, these charts are also self-fulfilling prophecies. They work because people expect them to work, then after they have been proved correct it becomes clear that the charts were correct.

For example, people know at what time a football match is going to end, therefore some people position themselves to be near the exit when the match ends so that they can be the first to the car park and the first out of the car park, before the rush starts. The same thing can happen with stocks and shares.

If you expect something to happen when a certain signal is given, then you will react in a particular way when you spot that signal. If enough people analyze the situation in the same way then the expected result is achieved and the analysis is proved correct i.e. it becomes a self-fulfilling prophecy. If enough people expect a stock price to go up then when they buy it, the stock price does indeed go up, this confirms that they were correct to buy the stock in the first place. The whole art of technical analysis is therefore knowing what people are going to do, before they actually do it.

The reason that technical analysis works is because there are many thousands of expert analysts basing their investing decisions on the same stock market patterns. Because there are so many of them doing this they actually influence prices by their reaction to the same signals.

Online Stock Trading for Beginners
As a beginner of course it is difficult to know which signals to react to. One of the most basic signals is the moving average. Any stock market chart, such as those available at Yahoo, will work out the moving average for you and place a line on the chart. A moving average is merely the average price of a stock over a specific number of days. One of the most important of these moving averages is the 200 day.

5 Year Chart of the DOW with the 200 day moving average in green
It is important to realize when learning how to trade stocks online that if a stock falls below its 200 day m.a. this is considered by most technical analysts to be a very bad sign and in fact a signal to sell the stock. It is not therefore a good idea to buy a stock which is below its 200 day moving average. On the other hand however, if a stock moves above its 200 day m.a. this is seen as a good sign.

From a wider point of view if 80% of stocks are above their 200-day moving averages, the market is said to be overbought and so people tend to sell. If less than 20% of stocks are above their 200-day m.a., the opposite is true and it is seen as a signal to buy.

This was just a basic introduction to technical analysis and why it is important to know some of the most basic ideas at least to avoid jumping in to a stock just when everybody else is jumping out.

For more information on stock charts and moving averages and a video explaining the significance of the 200 day moving average see - stock trading for beginners

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How to Trade Stocks Online

2009-10-18T17:57:00.000-07:00

Online Stock Trading for Beginners - How to Trade Stocks Online?

The idea of sitting at home trading stocks and shares online and making vast amounts of money is very appealing! It certainly counts as one of the more satisfying ways of making money online. But unfortunately it can also be one of the more exasperating ways of losing money online.

If you are considering trading on the stock market therefore, there are certain basics you need to know. First and foremost you obviously need to open an account with an online stock broker, probably an execution-only stock broker i.e. a stock broker that does not give you any advice, they just take your order and buy or sell what you decide. This transaction to buy or sell stocks is nowadays usually done via your computer screen by you clicking on a button. It can also be done over the phone but most people prefer the speed and convenience of online trading. If you want advice you need a full broker, but they will probably want a minimum deposit of $100,000. To see a list of online brokers click here - best online stock brokers

An execution-only broker will provide all the information you need to trade stocks online, such as live real-time stock quotes, real-time online orders, all the latest up-to-date news, stock market charts etc... but they won't advise you which stocks and shares to buy or sell. You will need to decide that for yourself.

Once you have signed up with a broker you will need to study the markets to decide which stocks to buy. If you have never traded stocks before it is important not to jump in and just trade for the sake of trading. It is a good idea in fact to just 'paper trade' for a few months to see what would have happened if you had traded with real money.

It is also important to only trade with money you can afford to lose and finally it is important, if you are day trading or swing trading (trades that last a few days), to set up a stop-loss order. A stop-loss order is an order to sell a stock if it falls below a certain level (generally 4 - 5% below the purchase price). This means that the maximum amount you can lose is 5%. This is important as there is a tendency, when a stock falls in price, to hang on to the stock in the belief that it will recover. It is possible of course that it will recover but experience tells that there is more risk that it won't and stock trading is all about limiting risk. You cannot expect that all you trades will be winners, but it is important to make more money on the winners than you lose on the losers.

If you wait for a stock to recover you run the risk of losing 50% or more of your capital on one trade (believe me it happens!). One thing you must not do when trading stocks and shares is to run down your capital.

There therefore are the absolute basics of online stock trading for beginners. The next step is to put in place a strategy for trading stocks. You need to decide whether you are going to be a day trader (all your orders are opened and closed on the same trading day), a swing trader (trades last a few days or weeks) or a long-term trader (trades last a few months or even years). The best-known and most successful long-term investor is of course Warren Buffett aka the Oracle of Omaha, the second richest man in the world, so there is a lot to be said for long-term investing, but it does take a lot of knowledge and skill. If you think you may do well at long-term investing then I recommend you read up on Warren Buffett and the books he recommends.

For beginners, day trading is not recommended, unless you intend taking a specific paid course aimed at day trading and teaching you the necessary skills and knowledge. But bear in mind that most day traders lose money.

If you intend to concentrate on swing trading then there are also certain basics you need to understand about when is the right time to buy. Basically you need to buy when you expect a stock price to move up around 10% or so, then sell once the stock has moved up. To decide when is the right time to buy and not only how to trade stocks online but when, then you need to understand technical analysis and stock market charting for beginners at least, which will be the subject of our next post.

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