By David Kosmider
Trading is a game just like any other game. When you are learning how to play a game you first need to know all the rules and then you need to practice what you have learned. Be careful to not mix up those steps though, because as my tennis coach in high school said, practice makes permanent not perfect. You want to be practicing the right way.
So lets start with the rules. What are the rules to trading?
You need to know when you can trade. Are you going to place all your orders after hours and let them execute during the day or are you going to watch the market during trading and place your orders? You need to know what the different type of orders are and how they affect your trades. Are you going to place market orders, limit orders, stop orders or a combination of different types depending on the situation? What are the advantages and disadvantages to each and how will you use them for money management?
Then, what is your hold time going to be? Day trading? Swing Trading? Short-term trading? Long-term trading? Different time periods work have different potential opportunities and risks. What are you going to trade? Just stocks? Perhaps options as well or even futures and currencies. How does volume affect your trades? There’s plenty more to learn as well, but you get the idea.
Once you know the rules then you need to practice.
Practice in trading usually comes in the form of developing and testing a system that works before using it to trade with real money. To do this you will need to learn about different indicators and oscillators, how they work and what they work best with. You will need software of some kind to test the results of your strategies.
Then it is a good idea to do some? paper trading? with your newly developed system, that is using either one of the stock market trading simulators available on the internet or just keeping track on your own. Get used to applying your strategy to real life and get a feel for how to manage it for several days at least. Then you will be ready to start trading your new system.
David J. Kosmider is the President and cofounder of TimingResearch.com which provides advice and recommendations to stock and options traders worldwide. View all of his articles and services here: http://www.timingresearch.com/
This article was originally published By www.ezinearticles.com
