Learn How To Trade The Market In 3 Steps

Learn How To Trade The Market In 3 Steps

Want to trade but don’t know where to start? Millions of neophytes try their hand at themarket casino each year, but most walk away a little poorer and a lot wiser, never reaching their full potential. The majority of those who fail have one thing in common: they fail to master the basic skills needed to tilt the odds in their favor. Take adequate time to learn these and you will be well on your way to booking short-term profits.

World markets attract speculative capital like moths to a flame, with most throwing money at securities without understanding why prices move higher or lower. Instead, they chase hot tips, make binary bets and sit at the feet of gurus, letting them make buy and sell decisions that make no sense. A better path is to learn how to trade the markets with skill and authority, starting with these five basic concepts.

1. Know Thyself

Start with a self-examination that takes a close look at your relationship with money. Do you view life as a struggle, with hard effort required to earn each dollar? Do you believe that personal magnetism will attract market wealth to you in the same way it does in other life pursuits? More ominously, have you lost money on a regular basis through other activities and hope the financial markets will treat you more kindly?

Whatever your belief system, the market is likely to reinforce that internal view over and over again through profits and losses. Hard work and charisma both support financial success, but losers in other walks of life are likely to turn into losers in the trading game. Don’t panic if this sounds like you. Instead, take the self-help route and learn about the relationship between money and self-worth. Continue to the next step once you get your head on straight.

2. Get An Education

Read market books and website tutorials, lots of them, but don’t focus too narrowly on one single aspect of the trading game. Instead, study everything market-wise, including ideas and concepts you don’t feel are particularly relevant at this time. Trading launches a journey that often winds up at a destination not anticipated at the starting line. Your broad and detailed market background will come in handy over and over again, even if you think you know exactly where you’re going right now.

Start to follow the market every day in your spare time. Get up early and read about overnightprice action on foreign markets. U.S. traders didn’t have to monitor world markets a couple of decades ago, but that’s all changed due to the rapid growth of electronic trading and derivative instruments that link equity, forex and bond markets around the world.

3. Learn To Analyze

Study the basics of technical analysis and look at price charts, thousands of them, in all time frames. You may think fundamental analysis offers a better path to profits because it tracks growth curves and revenue streams, but traders live and die by price action that diverges sharply from underlying fundamentals. Do not stop reading company spreadsheets, because they offer a trading edge over those who ignore them. However, they won’t help you survive your first year as a trader.