Surviving the stock trading world is not an easy feat. After all, roughly 80% of beginner day traders fail at trading and quit it, entirely, after the first year. What does this mean?
Well, for one, it means that most of them don’t know how to begin trading and do so aimlessly – but that happens for a reason. Given the attention that trading is receiving lately, and how it is mostly advertised as a quick way to get rich, it’s clear why people dive in headfirst.
On the other hand, crypto and Forex traders, with little trading experience overall, might also get into the world of stock trading thinking that it’s as easy as the first two. Naturally, it’s not, as each type of trading comes with its own peculiarities.
Let’s see how one should tackle the world of stock trading!
What is Stock Trading?
Stock trading is a type of short-term trading that people use to make a profit. When we say short-term, we refer to trades lasting minutes, hours, days, or even months. However, stock trading, in general, is not meant as a long-term investment (unless you invest in the right companies).
This type of trading can be either active or done daily. Active stock traders engage in more than 10 trades a month and rely heavily on a market strategy. Day traders, on the other hand, enter and exit a trade on the same day, regardless of whether profit was made or not.
How to Begin Stock Trading?
First of all, you have to open an account with a reputable brokerage. For example, this review of RoboForex will teach you that even though most brokers are called forex brokers nowadays, they still come with stock trading options.
As a result, finding the ideal and most reputable broker for you is an easy task.
Then, after opening your account, you have to establish a budget that you’ll use solely for stock trading. Overall, it is recommended to start with as little as 10% of your total savings. Never think that you’ll win big if you invest more.
How to Survive Stock Trading?
As mentioned, it’s difficult to survive the world of stock trading. However, we do have some tricks up our sleeves that everyone can rely on:
- Learn and Practice with a Demo/Virtual Account – Demo accounts let you use virtual, fictional currency in trades that mimic real-life conditions. Obviously, this is the best way to teach yourself how to trade stocks. However, be aware of the fact that most brokers are known to rig these demo accounts and let you win more than you would in real-life scenarios.
- Use Limit and Market Orders – Most beginner traders don’t take the time to learn all the types of orders that they can use while trading. In fact, the vast majority think that you don’t have any automation options at all while trading stocks. Limit and market orders are automated commands that the trading platform can use on your behalf to ensure a profitable trade.
- Learn to Compare Wins and Losses – In short, learn to notice when, despite great returns, the losses weigh in more on your total portfolio.
The Bottom Line
In the end, if you want to survive the stock market, you’d have to always think of yourself as a beginner. Namely, you must have a mindset that favors constant learning, reading, and informing yourself about the latest developments of the trading and stock market world.