How To Start Trading Stocks

There are many different ways to learning about stocks & how to trade/invest in them. I’ll divide this up into the journey anyone takes to go from learning stock trading to actually trading real money on the stock market.

 Learning about stocks, it’s important you get the basic fundamentals right before you even start.

Here’s a typical journey or ‘best practices’ path for a complete newbie to take. We can go into more detail of each part.

 

If you prefer video format, you can check it out : 

 

 

When learning about stocks, the first part of the journey is to learn the basics.

The basics can be divided into 3 main components:

 

 

 

Fundamental analysis is studying the financials of a company. Knowing what to look for can be tricky and there are many moving parts to this.

But for a complete beginner, Investopedia has some beginner friendly articles on understanding fundamental analysis.

There are also many educational books out there on this topic, most popular being The Intelligent Investor by Benjamin Graham. ( a simple search on google will find a copy)

 

 

One you have the basic understanding of the important components within fundamental analysis , you can dig into their finances by visiting sec edgar.

Simply type in the ticker symbol of whatever stock you wish to learn more about and it will bring up all the filings for that company.

Here’s an example of AAPL recent filings

Some filings are more important than others, so it’s important you’re aware of them all. Starting out, focus mainly on Q-10s.

Now you have the basics of fundamental analysis down, we can move onto Technical Analysis,

Another important component of learning about stocks, technical analysis is essentially studying the price chart of a stock and using indicators/chart patterns to help make buying/selling decisions.

You will first need to know all the different technical indicators out there. You can do this for free on stock chartschool

There is also a great book ‘ Technical Analysis by John Murphy’ that will teach you in dept about all these different indicators. (you can pick up a copy on Amazon)

Once you have the basics of technical analysis down, you can start analyzing price charts of stocks for free on Tradingview.

Here’s a chart of AAPL and you simple click the area highlighted to start using technical indicators on the price chart.

The final part of the basics is Trading Psychology. It is very important as our psychology can effect how we make or lose money in stocks.

The most common(but not limited to) psychological barriers that hold us back when trading/investing in stocks are

  1. Fear
  2. Greed
  3. Hope

These can really hold us back so it’s important to start working on them from the very beginning. This can be done by books/coaches etc.

The most prominent trading psychology coaches are:

  • Dr. Van Tharp
  • Mark Douglas
  • Brett Steenbarger

(all of these have books you can check out too)

Another great tool to understand where you might be effected with your own psychological makeup is by taking a 4 minute quiz by Dr. van Tharp

You’ll understand where you may be weak and can work on it.

Great, you’ve made it this far, you now should have an understanding of the basics. Now we want to move onto Creating A Trading Business Plan.

This is essentially a plan on how you will approach buying/selling stocks and much more.

Here’s a free trading plan template you can use to follow along when starting out.

Your business plan should include:

This plan is very important to have and surprisingly very few people have ever created a plan when approaching the stock market.

Remember this simple quote:

Fail to plan, plan to fail.

The next part of the journey in learning about stocks is trading/ investing on a simulator.

This is a great way of using fake money to practice. Obviously you don’t want to be losing your hard earned money while you are learning the ropes so this is a great way of fixing this.

There are tons of sims out there to demo trade/invest on. Here are a few:

A simple google search will bring up these and you can ask their live chat for a demo account (except tradingview where it’s already built in)

Keep in mind that some might require you to have a live account in order to get access to the demo & some others have delayed price charts.

Tip: It’s best to demo with the broker you intend on trading/investing live with as the software can vary between different brokerages.

Finding a mentor is the final step of the path and it can significantly speed up the process of learning stocks and there are lots out there.

(Again, a simple search on google for one that fits your needs.)

There are different types of mentorship available so it’s best to find what’s right for you:

Congratulations, you made it this far, you are now ready to trade/invest with real money. The journey won’t be easy but it can be very fruitful if you get it right.

Keep in mind that it should be treated like any other job you would do.

College takes 3–6 years so why should trading/investing be learned in a day. Be patient and take your time to learn the processes one step at a time and you should have a chance at profitable trading/investing in the stock market.

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