Trading tips for beginners
After you are have everything setup with Robinhood, there is a few trading tips you should know before you start diving in. First off, do not invest money that you are going to need next week to pay bills. Investing isn’t a race, it’s a marathon and you have to learn to crawl before you walk. If you treat the stock market like a slot machine, you are going to blow your account, get depressed and probably never trade again. That being said, trading isn’t for everyone. You have to be willing to pay to learn and I’m not talking about writing me a check. I’m saying you have to be willing to take a loss when you are wrong and preferably learn from it. The market is full of risk and the saying “No Risk, No Reward” defines the stock market. The goal is to limit the amount of risk by doing your due diligence in your research and to have a plan. One of the basic rules you will learn in this book:
I hope this works is NOT a strategy
There are so many strategies in the stock market it would be impossible to list them all here. There are swing traders, day traders, breakout traders, dip buyers, earnings traders, news chasers, momentum, technical and fundamentalists to name a few. The one thing they all have in common is, they have a strategy. They all plan to buy at a set price AND to sell at a set price. Don’t be afraid to ‘sell too soon’. A general rule of thumb is If you are up 10% take some profit. There is nothing worse than nailing the buy price but fumbling the sell price just to see your profits tumble down the drain because you got greedy. The traders who win more than they lose follow strict rules. You have to have a code and stick by it. The moment you start trading off your emotions or your gut, you are going to start failing.
Try to AVOID Day trading
Daytrading is when you buy and sell the same stock on the same day. There are “pattern day trader” rules that only allow you to do this 4 times in a 5 day period. So it isn’t a big deal if you need to do it every now and then. For example, if you buy a stock and then all of a sudden it spikes 30%, it’s probably a good idea to go ahead and sell. If you are using Robinhood then the app will prevent you from going over this limit automatically so there really isn’t too much to worry about but it is worth mentioning.
That’s all I got for today.
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