Beginners who are taking their first steps towards learning the basics of stock trading should have access to several sources of quality education. Just like riding a bicycle, trial and error, coupled with the ability to move forward, will ultimately lead to success. In this article we will learn about Great Ways to Learn Stock Trading in 2020
A great advantage of stock trading is that the game itself lasts a lifetime. Investors have years to develop and improve their skills. Strategies that were used twenty years ago are still being used today.
When I made my first stock trade and bought shares, I was only 14 years old. Over 1,000 stock trades later, I am now 33 years old and still learning new lessons.
“What is stock trading?”
Let’s start by quickly defining stock trading. Stock trading is the buying and selling of stocks in listed companies. Popular stocks that most Americans know are Apple (AAPL), Facebook (FB), Disney (DIS), Microsoft (MSFT), Amazon (AMZN), Google (togetL), Netflix (NFLX) and newer publicly traded companies such as Uber ( UBER) and Pinterest (PINS).
On the stock exchange there is a seller for every buyer. If you buy 100 shares, someone will sell you 100 shares. If you sell your shares, someone must buy them. If there are more buyers than sellers (demand), the share price goes up. Conversely, if there are more sellers than buyers (too much supply), the price goes down.
10 great ways to learn stock trading as a beginner
For beginners who want to learn how to trade stocks, here are ten good answers to the simple question: “How do I start?
Open a stockbroker account
It is one of the Great Ways to Learn Stock Trading in 2020. Find a good online stockbroker and open an account. Familiarize yourself with the layout and use the free trading tools and research offered to clients only. Some brokers offer virtual trading, which is beneficial because you can practice trading stocks with fake money (see #9 below).
Books offer a wealth of information and are inexpensive compared to the cost of courses, seminars and teaching DVDs sold over the Internet. Check out my list of 20 great stock trading books to get started. One of my personal favorites is “How to make money with stocks” by William O’Neil (see picture below), the founder of CANSLIM trading.
Articles are a fantastic resource for education. My most popular articles are listed on my Stock Education page. The most popular website for investment education is investopedia.com. I also highly recommend reading the memos of billionaire Howard Marks (Oaktree Capital), which are absolutely great. Of course, Google search is another great way to find educational material to read.
Find a mentor or friend to learn with
A mentor can be a family member, a friend, an employee, a former or current professor or a person who has a basic understanding of the stock market. A good mentor is willing to answer questions, provide help, recommend useful resources and keep the spirits up when the market gets tough. All successful investors past and present have had mentors in their early days.
Although this is “old school”, online forums are still used today and can be a great place to answer questions. Two recommendations are Elite Trader and Trade2Win. Just be careful who you listen to. The vast majority of participants are not professional traders, let alone profitable traders. Follow the advice of forums with a high dose of salt and under no circumstances follow the trading recommendations.
Study successful investors
Learning about great investors from the past provides perspective, inspiration and appreciation for the game of the stock market. Among the greats are Warren Buffett (below), Jesse Livermore, George Soros, Benjamin Graham, Peter Lynch, John Templeton and Paul Tudor Jones. One of my favourite book series is the Market Wizards by Jack Schwager.
Read the stock market and casually follow it
News sites like CNBC and MarketWatch are a great resource for beginners. You can find detailed coverage in the Wall Street Journal and Bloomberg. By casually checking into the stock market every day and reading headlines, you expose yourself to economic trends, third-party analysis and general investment language.
Retrieving stock quotes from Yahoo Finance to display a stock chart, view headlines and review basic data can also serve as another quality source of exposure.
Watching television is another way to expose yourself to the stock market. There is no question, CNBC is the most popular channel. Even if you turn on CNBC 15 minutes a day, your knowledge base will grow. Don’t be intimidated by the jargon or style of the news, just watch and let the commentators, interviews and discussions take effect. Keep in mind, however, that over time, many of the investing shows on television may become more of a distraction and source of excitement than actually being useful. Recommendations rarely lead to profitable trades.
Consider paid subscriptions carefully
Paying for research and commercial ideas can be instructive. Some investors may find it more beneficial to watch or observe market professionals than to try to apply new insights themselves. There are many paid subscription websites on the Internet. The key is to find the right one for you. Here is a list of services that I use myself. Two of the most respected subscription services are Investors.com and Morningstar.
CAUTION – Be careful. Many paid subscriptions marketed online, especially in social media, come from retailers who claim to offer fantastic returns and can teach you how to be successful. 99.99% of them are a really bad investment and have higher prices of 99-149 USD per month or more. However, the worst damage is done when you try to do what they do, invest far too much in a stock spike, and burn yourself if it doesn’t work.
Carefully explore seminars, online courses or live classes
Seminars offer valuable insights into the overall market and specific investment types. Most seminars focus on a specific aspect of the market and how the speaker has succeeded with his or her own strategies over the years. Examples of this are Dan Zanger and Mark Minervini, whom I have visited and thoroughly reviewed here on the website. Also, not all seminars have to be paid for. Some seminars are offered for free, which can be a beneficial experience. However, be very aware of the sales talk that will almost always take place at the end. Whatever is offered, just say no!
When it comes to courses and seminars, they are usually expensive, but like seminars, they can also be beneficial. Will O’Neil workshops, Warrior Trading, Bulls On Wall Street and Online Trading Academy offer a variety of courses on investing and trading.
CAUTION – As with paid subscriptions, be very careful with courses and classes. Most cost easily over $1,000 and are sold with the promise of acquiring valuable knowledge. Their fantastic sales funnels will attract you, take your money, inspire you during the course, and then leave you with a strategy that was profitable five or ten years ago but is no longer relevant today. That, or you just don’t have the expertise to succeed and get the strategy right.
buy your first shares or practice trading on a simulator
When setting up your online brokerage account, the next step is to simply take the plunge and place your first stock trade (instructions below!). Don’t be afraid to start small, even 1, 10 or 20 shares will do the trick.
If the thought of trading shares with your hard-earned money is nerve-racking, you should use a stock simulator for virtual trading. The online brokers TD Ameritrade and E * TRADE both offer virtual trading to practice buying and selling shares.
CAUTION – One of the most common mistakes new investors make is to buy too many shares for their first stock trade. this is a mistake. If you are a beginner who is just starting out, taking too much risk is likely to result in unnecessary losses. Instead, start trading small position sizes and then work your way slowly to buy more shares per trade on average.
Follow the advice of Warren Buffett, buy and hold the market
For the majority, online trading (especially day trading) will be no better than buying the whole market like the S & P 500 and keeping it for many years.
Warren Buffett, the greatest investor of all time, recommends that individual investors simply invest passively (buy and hold) rather than trying to beat the market trading stocks themselves.
What is the stock market?
The stock market is based on the simple concept of connecting buyers and sellers who want to trade shares of listed companies. It is a marketplace.
Every listed company quotes its shares on a stock exchange. The two largest stock exchanges in the world are the New York Stock Exchange (NYSE) and the NASDAQ. Both are based in the USA (Wikipedia). It is certainly not easy to try to understand how big the NYSE and the NASDAQ are. The NYSE has a market capitalization of almost $31 trillion and the NASDAQ has a market capitalization of almost $11 trillion. And yes, that is not a typo, I said “trillions”.
Take Apple (AAPL), for example, which is listed on the NASDAQ stock exchange. Apple currently has 4.6 billion shares outstanding, of which 4.35 billion are available for trading (also known as “float”). At today’s closing price of USD 201.75 (July 11, 2019), Apple has a market capitalization of USD 937.44 billion. This is a big company! (By the way, market capitalization is a simple way to measure the value of a company. If you’ve bought every available share, market capitalization indicates how much it would cost you to buy the entire company).
More recently, in May 2019, Uber (UBER) went public and listed its shares on the NYSE. At the close of trading today, UBER shares are trading at $43.99 per share and the company has a market capitalization of $74.59 billion. I hope you like the Great Ways to Learn Stock Trading