Stock Market for beginners
Trading in the stock market is not easy. It takes time and patience for a stock beginner to learn how to trade stocks and make money. Here are a few tips for stock market beginners.
Stock market books to read for beginner
1. Swing Trading Guide – this is the first book that a stock market beginner should read. It teaches you the 5 Immutable Laws of Trading and how you can make money in the stock market using the trading system that the author reveals in this ebook. This book covers common trading methods, chart reading skills, money management, profit taking methods, as well as managing portfolios for your stocks. Click here to visit the book website for more information.
2. Trading For A Living – This books teaches you on how technical analysis works and how you can trade stocks profitably using technical analysis. Technical Analysis is a way for traders to predict the stock market price base on past performance and there are traders who make millions a year using technical analysis to trade stocks.
How does the stock market work?
The stock market opens at 9:30am to 4:00pm from Monday to Friday except for market holidays. There are three major stock exchanges that stocks are traded. They are New York Stock Exchange (NYSE), NASDAQ and American Stock Exchange (AMEX). NYSE is the oldest exchange where companies like JPMorgan Chase, McDonald’s Corporation, and Wal-Mart Stores, Inc. are traded. NASDAQ is the largest stock exchange where most of the technology companies like International Business Machines Corp (IBM), Apple Inc. and Microsoft (MSFT) are traded. You won’t be buying shares from the stock exchanges directly. Instead, you will need to open an online stock broker account and buy and sell stocks from there. You will need to pay a commission to your stock broker each time you buy and sell a stock. The price is different for each stock broker, some charge over $10, some charge $7 with OptionHouse being the cheapest with a commission of only $3.95.
What do you need to know about a stock?
The price for a stock will change everyday due to short term market volatility and news. The most important information that you need to know about a stock is the price and the volume of a stock. You should not buy any stock under $2 without any trading experience as those are what we called the penny stocks and are extremely risky. They can go up or down by as much as fifty percent in one day. You don’t want to lose half of your portfolio before you learn how to trade profitably. In addition, stock beginners should only buy stocks that are highly liquidity meaning you should only buy stocks with a trading volume of one million or higher. The problem with low volume stock is that it is harder to find a buyer when you want to sell your stock, or find a seller when you want to buy a stock. This results in higher slippage fees that you need to pay.
In addition to the stock price and volume, there are four pieces of other information you need to know. They are open, close, high and low. Open is the open price for a stock when it begins trading at 8:30am, close is the close price when the market ends at 4:30pm, high is the highest trading price of the day and low is the lowest trading price of the day.
Types of Traders or Investors
There are three different types of traders or investors, day trader, swing traders and long term investors. The main difference between a trader and an investor is the time frame that they traded and the methods they use. Day traders usually buy and sell a stock within a few seconds, minutes, hours or a day. Swing traders usually hold their stocks anywhere between 1 day to 1 month whereas long term investor hold their stocks for years. Day traders and swing traders utilize technical analysis and chart reading skills to make profit getting in and out of stocks quickly whereas long term investors utilize fundamental analysis to find valuable companies to invest and profit when the companies make money and their stock go up. Day traders and swing traders can find tons of stock to trade within minutes whereas it takes much more time for long term investors to do research and find a valuable stock to buy.
Stock Market Softwares
There are many stock market software out there that a stock beginner can use to learn how to trade and find profitable stocks. Here are the ones that I like the best and I’ve found many stock winners from these softwares.
1. Dojispace Stock Screener – It screens the stock market and find stocks base on technical indicators. You can find a lot of profitable setups in a matter of minutes whereas you will have to spend days trying to find these stocks manually.
2. MarketClub – It automatically screens the stock market and recommend to you on what stocks to buy and sell base on their trade triangle technology. It rate each stock on a score of -100 to +100 with -100 being the worst stock to buy and +100 being the best stocks to own.
