Trading your own money is best training

It typical times when we are not in a recession or depression, there is no special formula or way figure out the best time to buy.  During a bull market the vast majority of stocks will trend upward over several months time.  The idea is to find the stocks that will make the biggest gains if you do not just want to buy index funds. 

Picking individual stocks is the way to make large amounts of money in the market.  The 10% idea is not your goal if you want to make a living trading stocks or if you want to increase your wealth substantially over shorter periods of time.  If you are going to be a trader you have to find the hottest stocks and ride them or you won't make enough of a return to survive. 

You must get familiar with stocks and have your watch lists set up so you can see what they do everyday.  If you are in a reasonable stable market you will gradually start to see the trends of how the best stocks move and just how quickly you can get a return on your investment.  It is even a good idea to have a practice trading account so you can try to understand the trends of the market better.  A lot of the stock market is all about momentum.  Sometimes there is no reason for a stock to run higher and higher other than the fact that people keep on buying.  There is nothing wrong with getting on that train for a while as long as you put your stop orders in to keep you from getting whip sawed.  

The best education in stocks occurs when you have your own money on the line.  So if you want to learn to trade you have to get an online account and put a few bucks in and start trading.  Your practice account will teach you some thing but you will never get the same experience as when you have some of your own hard earned money on the line.  If you are going to succeed you need to be able to handle the pressures of trading your own funds.  Otherwise you should just be a broker and trade with other people's money and collect commissions.

Getting out of the Market

It is never wrong to get out of the market. Contrary to popular rehtoric that you will miss the upside if you are out of the market, trading stocks is more about surviving to play again than it is about waiting in the deep water for the next wave to shore. There are times when making money in stocks is fairly easy and simple and there are times when it is nearly impossible properly assess risk or hedge your trades. You hear it on television everyday that you need to be in the market so you don't miss the next bull run but it is just not true. The large funds who manage all the 401 k money and large mutual funds are the only people who benefit from you keeping your money in the game during a bear market. They get paid fees that are often based on percentages of money managed rather then on performance. The hardest thing to do after a down turn is to take out your money because the desire to get it back becomes stronger with every loss. If you have any way of paying bills during market corrections, such as the one now in 20007-2009, you would be much better off not trying to fight the market. If you are using your own funds or managing someone's money you will have to be the contrarian and stand firm with your advice. You can lose money quickly in bear markets but if you are a good trader and keep enough in your pocket to try again when the bear leaves town you can make back all of the losses in short order. If you ride out the storm by staying all in you might end up with nothing left take advantage of the easier opportunities. Fear and greed are aways the drivers of the market. The most unusual time to see greed drive decision making is after major losses. Even if it is still during the teeth of a bear market, people tend to become more greedy and will fall for the notion that you have to be in the market at all times to catch the rallies. They have a stronger feeling of greed take over and it often overshadows their fear of more loss. It is this time when the next down leg can wipe out the last survivors and cost them their chance being around for the bottom.

Pick a strategy

First on list of things to do for a new trader is deciding whether you want to be short term, medium term or long term trader. The two biggest factors in making this decision will be your tolerance for risk and your schedule. If you are working another job it will be very hard to give enough attention to your portfolio to be a very short term or day trader.

How can you learn to trade?

Learning to trade stocks effectively is not an easy thing to do. There are hundreds of things to learn if you want to be a day trader but you can only learn them by getting in the game. I don't think you could ever be prepared for trading your own funds from a book or a course. You can learn from classes or courses but the best lessons come from trading your own money. It certainly keeps your attention. I took the challenge to be a day trader just in time for the credit crunch in 2007. I don't know for sure but I am assuming that it wasn't the easiest time to start. It really has seemed more like being thrown into the fire. My mistakes have been many but I am still learning and trying to get better.