A formal stock trading education is recommended for all those aspiring to earn profits through online trading. Stock trading online is never easy, but a stock market trading education can make this task appear relatively easy.
The primary objective of any stock market trader is to earn money on a consistent basis. Online stock trading education reemphasizes this objective, teaching the strategies to adopt and what signals to watch for. The importance of stock trade education will reveal itself as we consider the following aspects and trading strategies.
Basic Stock Trading Strategies
1. Observe the stock price movements carefully. Stock price movements that you must always take not of are Open (the first opening price of the stock when the market opens in the morning), High (the highest level of the stock price reached in a day), Low (the lowest level of the stock price reached in a day), and Close (the final price of the stock when the market closes for the day or the stock price at which it remains).
2. Another important factor to watch out for are the stock price fluctuations. Stock price fluctuations means by how many cents or dollars is the stock moving up or down. This should give you an indication on what price to buy and at what price to sell (or to first sell and then buy). This strategy is particularly useful for day trading stock.
3. Closely monitor the Supply and Demand. Supply and Demand means how many buyers are willing to buy and at what price (this indicates the demand) and how many sellers are willing to sell and at what price (this indicates the supply). It should always be kept in mind that the stock price movement depends on supply and demand. A simple concept to remember (that is universally applicable to most business segments and limited to not only stock market or day trading) is that more demand and less supply means the price is going to move up, and more supply and less demand means the price is going to come down.
Stock Market Tips
1. Never invest all your money in same sector – this method is known as diversification of shares. This will protect your investments from downtrends of any particular sector as you can make money from other sectors with your diversified portfolio.
2. Prepare your online trading plan well in advance and be prepared for any eventualities.
3. Strictly maintain a stop loss for all your positions. This calls for accepting and limiting your losses.
4. Control your emotions and don’t let them rule your trading decisions. This is easier said than done. Become a detached trader and trade only by the merits of a particular stock and the overall environment.
5. Don’t be greedy (try to realize huge profits in single trade). Profits will only accrue over time based on sound trading strategies.
6. Check out the overall volumes in a stock before investing or trading. This will help you avoid getting stuck with illiquid stocks.
Sites for Free Stock Trading Education
There are websites that provide you both free stock trading software and tutorials. The Stock-Trading.TradingAcademy.com advertises free stock trading classes. Many stock brokers, such as Scottrade and ETrade will provide stock trading software with their trading platforms, and have helpful resources and tools on their websites providing free education and software.
Best Stock Trading Education
Here are five of the best stock trading education websites:
- BigTrends.com – This is a great site for swing trading and short-term traders. The site provides free stock trading and option trading lessons and tips, many based on the founder’s proprietary indicators you can’t find anywhere else.
- Investopedia.com – This site is owned by Forbes and contains hundreds of original articles for traders.
- TradingMarkets.com – You can find great trading lessons, trading ideas and articles that apply to real-world scenarios.
- AfraidToTrade.com – These lessons are provided via a blog from Cory Rosenbloom and a newsletter. Although there is a subscription available, most of the stock trading education is freely accessible and focused on traders controlling their emotions during trading.
- MrSwing.com – All articles have an educational slant to them and will take the trader from novice beginnings to a complete trading plan.