Stock Trading: Charting a Course to Profitability
Stock trading is an exciting and alluring enterprise that has been so glamorized and depicted as a path to instant wealth. When you watch any movies about traders on Wall Street it’s all glitz and tons of money rolling in.
It’s therefore not surprising that a lot of people jump into this field with both legs, expecting to become instant millionaires with just a few trades. Sadly, what these movies fail to show is that the majority of these traders actually lose money. According to Blake Walker of Trading Review, “it’s a well-documented fact that 95 percent of traders lose money”.
This information is not meant to scare you but to properly prepare you for a profitable trading experience.
Getting Started with Stock Trading
We are going to keep it very simple in this article. Our focus is providing you with the most relevant information you need to succeed as an investor in stocks.
Who Is a Stock Trader?
A stock trader is a person or an entity (can be a company) that trades in stock or equity securities. This person can also be known as a share trader or equity trader. They all mean the same. You can read more about it here.
You can be a trader, a broker or an investor. As a trader or broker, you will be responsible for managing portfolios and funds for clients. As an investor, you will be personally handling the investment of your funds. This article is targeted at the investor. So how do you get started?
Get Mentored by a Successful Trader
We need to establish here that the statement “experience is the best teacher”, taken on its own is not true. This statement will hold true if it is clearly stated that the experience does not have to be yours. You can (and should) learn from the experiences of others.
You cannot learn how to trade successfully from someone who has only failed. The best this person can do is show you how s/he failed. Even if you note how the failures occurred and avoid them, there is no guarantee that you will succeed because you have not learned how to.
A person who has a record of trading successfully can show you how to achieve this. Looked at critically, finding such a person or platform offers you the best chance of starting a profitably trading experience.
What Will the Right Mentor do for you?
There’s no aspect of trading that the right mentor cannot help you with. Let’s list a few of these.
- Point You to Only Relevant Information
- The greatest challenge that many have today is the amount of information available on any subject including trading. Aside from information overload, a newbie is faced with loads of conflicting information from different self-acclaimed experts.
- Your mentor or teacher will guide you to information that will help you achieve the kind of success he or she has achieved. You won’t get conflicting information, so the learning process will be more effective.
- Help You Choose a Suitable Brokerage Account
- Your mentor can help you choose a brokerage account that is right for you. There are a number of factors to be considered when choosing a broker account as shown in this article: https://www.investopedia.com/articles/basics/06/invest1000.asp. Would you be better off with a full-service account or a discount account? What about the little fees and restrictions you may not be aware of? This is where your mentor’s experience will come in handy.
- Show You How to Interpret Financial News. You cannot be a serious or profitable investor if you do not know how to interpret financial news. This is how you learn the direction in which the market may be going so you can respond appropriately. This is a key part of trading in stocks that your mentor can help you with.
Finding a Mentor
Obviously the importance of a mentor to a newbie stock trader is pretty clear. This therefore leaves the big question – how do I find a mentor?
The truth is that it will be difficult to get any successful trader to agree to take you by the hand and show you the way. Aside from being much too busy, how many of the people looking for this kind of mentorship can they possibly attend to?
The good news is that you can find successful traders who have set up platforms that allow them offer leadership and mentorship to a number of new stock traders. They will usually offer suggestions, recommendations and advice on every aspect of trading and investment. You may also be able to send messages to them with specific questions.
If you are serious about succeeding as an investor in stock, take out some time to find the right person under whose feet you will learn.