Learn The Stock Market And How to Trade

Do you send your kid out on a baseball team before you ever play a game of catch with her?  Does your boy go out for the band before ever playing 3 blind mice?  Perhaps you shouldn’t stake a significant portion of your savings on your first investment ideas without a little practice stock trading first.

There is no real or right way to practice stock trading except the acceptance of doing it.  By starting with no money (or very little money if you’re already rich) you can learn discipline, the real impacts of draw downs, risk/reward over a period longer than 3 trades, and just how much you actually enjoy this since you’re considering doing stock trading with a significant portion of your time.  My very first practice was in middle school picking stocks (I loved penny stocks back then) out of the newspaper.  I would write down all of my trades, show my friends after I lied to myself for a couple of days, and then check my “account” each day when the paper came out.  While this was tedious I learned how much more I remembered the wins than the losses and eventually my account balance showed it.  I would usually only last 2 or 3 weeks because I had no plan I was just gambling.  Then girls and cars pretty much took over and I didn’t revisit this until my late teens.

The Practice Stock Trading Account

Virtually every single giant stock market site (I’m not giant yet, I’ll get there) has a stock market account simulator to practice trades.  I really have no preference for one to the next except if you already know which broker you want to use and they offer a practice account (they should) use theirs so you get used to their interface.  That should help all of the silly mistakes one tends to make with a new account (buy to close what?)(If you don’t know what that means comment below.)  If you can stomach hit I would practice for at least 6 month, maybe a year if you’re planning exotics (options, forex, etc) with high leverage.  Though I know I wouldn’t make it a year, but the money you throw in the beginning.  If you throw money in the market without a plan you’re likely to lose it, or worse, you’ll hit a home run with your starter money and think you’re invincible dumping tons of money into your non-plan. 

Practice Stock Trading Software

Sometimes I get solicitations (being a highly respected and well read financial blogger ) for various software packages.  For the most part I’d say don’t worry about them until you’ve made some money trading.  Then use these software tools to refine your strategies or back test new theories.  The software used too early will make you over analyze your first plans to something so complicated it won’t be reality.  Your first trading plans should be simple, they likely won’t make you the most money, but you’ll be able to follow them.

Related posts:

1. Practice Trading Stock in the Morning
2. Stock Market Trading Software – Johnny 5 is Alive
3. Trading Software Stock
4. Forex Trading Margin
5. Forex Online Option Trading