Getting Started in Trading the Market

Some of you may be just getting started in trading the market. I don’t blame you trading can be such a great experience and lead to much higher returns on your money than any other investment strategy out there.

The benefit of short term trading is the shorter time frame. If you could make 10% in a month it beats making 10% in a year, right. Yes, Trading does come with high risk, but that risk can be managed with stop loss orders, and position sizing.

Now, I’m not saying that everyone should sell every long term investments they have and go into short term trading, but learning to trade can be a great way to increase your return in the market.

Here are some tips for anyone getting started in trading.

1. Develop a strategy. If you don’t have a strategy you will not succeed. You will just be another one of the herd letting your emotions, and the news make your decisions. You should have a plan of what your buy signals and sell signals are.

2. Paper Trade. Having a strategy for trading is great, but unless it is actually working you don’t want to invest with your own capital. Paper trade your strategy for a few months before you commit any of your real money.

3. Start small. Don’t sell every long term investment you have and become a full option trader. Start small; maybe at first make 10% of your account your trading money. Once you feel comfortable maybe increase that to 20% of your account and so on.

4. Keep some investments. Even when you are fully comfortable with your trading it is still wise to keep some money in safer investments. If for no other reason it can take some of the emotions out of the mix. If you are only trading with 30-40% of your account it will have a lot less of an emotional impact on you then if you were trading with 100% of your account.

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