8 Tips for Successful Stock Trading

Stock trading is a fast-paced, intense way to make money – and to make it fast. It’s not about how often you trade, it’s about knowing exactly how to trade and how to do it well.  Let your stocks work for you with these 8 tips for successful stock trading.

What Sort of Trader Do You Want to Be?

Before you make your first trade, it’s a good idea to figure out exactly what sort of trader you want to be – what sort of trades you want to make. Would you prefer to make day trades, where you close your trade at the end of each day? Would you prefer short-term trades where you stay in the same position for a few days at a time? Or would you prefer to trade long-term, over weeks or months? The type of trades you do dictate how much time you’ll spend trading, so it really depends on the amount of time you can dedicate to trading as well as how much time you actually want to spend online. You can always change your mind, but you’ll get used to trading in one style very quickly, so it’s a good idea to make a decision before you make your first trade. Remember, longer-term stock training requires much less attention and is far less intense than day trading, so this will impact your decision too.

Choose the Right Broker

Day traders will need to have access to high-speed, direct technology as the stock values can change by the second. Short-term and long-term traders can use less sophisticated technologies and so they can afford to use a less sophisticated broker. Day trading also comes with higher fees than longer-term trading and so this is something you’ll need to keep in mind.

Control Your Risk

Stock trading is risky – there’s no doubt about it. But you need to know how to control and limit that risk before you start making serious, high-value trades – or you risk losing lots of money and doing irreparable damage to your trade account and reputation. To win, and to win consistently, you need to limit and control your risk. This might mean trading smaller stocks or trading safe stocks and although the initial return on your investment might not be as high, the damage limitation ensures that you’ll minimize your risk of losing money.

Learn How to Trade in All Markets

When the initial crash happened in 2008, brokers on trading floors up and down the country were absolutely terrified. The markets were all down and this meant that stocks were losing millions of dollar’s worth of value. Since then, the market has gone up and down and up and down – so be aware that as the markets change, your stock values could change. Learn how to trade in potentially tricky markets and what to do when your stocks diminish in value. If you don’t know what to do, ask your broker!  They are there to help and they know what they’re doing, so ask their advice and learn from them. Learning how to trade in all markets is essential, especially with the current economic climate.

Trade the Best Stocks

Obviously, you want to trade the best stocks – you’ll be rewarded with less fees and more money. But trading the best stocks can take some time. Instead of going with your heart, think with your head. What looks like the best option? Which stocks almost guarantee a reward with minimum risk? Risk can be tempting, but you may end up losing money. Again, if you’re struggling to identify the best stocks in the market, speak to an independent financial adviser. Your broker might simply try to advise you to trade their own stocks, so in this situation, it’s best to ask elsewhere.

Know  When to Get Out

Before you ever make the trade, you need to know when to get out – or at least, the signals that might indicate that you need to get out. If you don’t know when to get out, you risk selling your stocks at the wrong time and losing a great deal of money. Before you make the trade, get to know the company, get to know the market, and get to know how successful other traders have been with their stocks. It’s also a good idea to see how quickly other traders have sold on stocks in the past and how much profit traders have made so that you can get to know how much is a good price for the stocks and when is a good time to get out.

Invest in the Right Advice

According to statistics, 9 out of 10 traders believe that their chances of winning every time are “above average” – which is statistically impossible – but 80% of them actually lose money. Instead of losing money, invest some of it into a good education to show you exactly what you need to do to trade successfully, without losing money and without using too much risk. Invest in the right advice, be it from your broker or from a financial adviser, and you’ll guarantee good returns on your investments for life – because you took the time and the effort to learn about trading before actually doing it.

Speak to Other Online Traders

The only way to really get to grips with the online stock trading market is to speak to other online traders. Make friends and you’ll be able to share invaluable advice that could really improve your online trading experience and guarantee you a good return on your investments.

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