Can You Teach Yourself to Trade?

Have you ever wondered if it’s possible to teach yourself to buy and sell securities? Well, it’s not only possible, but many wannabe traders do it every year. Some start out working alone until they master the basics and later take an online course or tutorial. Others simply use the DIY method for their entire lives with good results.
The beauty of buying and selling stocks, bonds, options, and similar assets is that there’s a ton of free information out there. Not only is there any number of excellent articles and websites packed with useful information, but there are also online simulators that let you dive in and practice without risking any of your own money. What’s the first step, and what is the wisest way to proceed after gaining a general understanding of what trading is all about? Before you jump into trading assets and start searching how to invest in Lego stock, it is imperative that you learn about the basics of investing first.

Starting Out

Find a reputable online broker and open an account. Learn about restrictions that might affect your activity, like dollar limits on trades, margin requirements, what securities you can buy and sell, which exchanges are available to you, and whether you can trade options, forex, and futures.

Paper Trading Gets the Kinks Out

Paper trading is the act of using fake money in a practice account to learn the ins and outs of the marketplace. The key advantage is that you can gain experience without risk, and do so in a relatively short period of time. The term comes from the fact that you’re not using real money but only making trades on paper. Still, when you use your broker’s simulator platform to paper trade, you can learn how to place orders, set stops, manage your account, short stocks, add to a position that’s already active, and much more. Using a simulator is an ideal way to learn the basics, get the kinks out of your style, and calm beginner’s jitters.

Learn About Indicators

Indicators are mathematical equations that reveal something significant about the price movement of a particular security. For example, one of the most popular ones is the moving average. These indicators can be powerful because they show you not what the current value is, but what its recent average pricing has been. In a volatile marketplace, averages are a good way of gaining insight into the true worth of a company’s outstanding shares.

Start Small and Be Patient

Unfortunately, many first-timers fall into the rut of wanting to earn big profits and earn them quickly. Impatience is the single most dangerous enemy of every market enthusiasts, experienced or not. What’s the solution? You need to know yourself and your habits in order to control impulsiveness. Find something that works for you. Many newcomers use dollar limits on their trades, or don’t ever risk more than a certain percentage (often two percent) of their available account balance on any given trade. Whatever it takes, find a way to keep your emotions in check because making a profit in the securities markets is about calculation, knowledge, and patience.

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