Becoming a successful share trader will require lots of reading. You'll not only need to learn how to make money when the market rises, but also how to make money when the market falls. For added safety it's a good idea to learn about trading options.
Learn the fundamentals, or the financials. Learn how to read the charts and how to spot a company that is about to rise, plus how to hedge your trade in case it goes against you. How to buy to go up, but trade an option to go down, so you're covered either way.
Understand how volume changes price. Learn about other indicators, such as Bollinger bands, MACD lines, moving averages and momentum. Learn put and call options. Watch how the news can affect share prices. All this information is available through reading books, watching DVDs and CDs, the Internet, online courses and seminars.
Practice By Paper Trading
Paper trading is practice without using real money. Some companies offer virtual accounts where you can trade, but not use actual money. Join your local share market game.
There you can learn and play. It's a little like playing monopoly, only with shares. Keep a journal, so you have a record of what you've done right and wrong. Write out a plan and trade it. If your plan doesn't give you regular success, change the plan.
Trading Live
Going live brings other elements into play, like emotions - fear and greed. Once you go live, your heart rate increases. You wonder whether you've made the right choice, you start to second guess all the work you've done.
If the trade doesn't do exactly what you thought it would, fear takes hold and you sell. You sell too early and the market changes direction and now you wish you'd hung on a little longer. This is why you need a written plan. Have a plan for buying and for selling. If you don't follow your plan and the market moves up, greed starts to set in.
You hang on past your profit taking point, when you know you should sell. You think that this is great, you're making a nice profit. You hang on, even though your criteria tells you to sell. You wait another day.
The next day the market turns and you lose your profit. You think this is just a slight fall and decide to hang on for another day. The trade is now going against you and you are looking at a loss. You tell yourself you don't want to sell now, not when your loosing. The price never recovers and when the pain gets too bad, you sell.
Follow your written plan. If a trade turns against you, you'll either have an option in place to pick up the difference, or you'll get out before you lose too much money. Alternatively you can pocket your profit. You can always buy in again after you've locked in a profit.
Money Management: A lot of the time trading is about managing your money. Trade only what you can afford to loose. Take your losses when they are only small. This way you get to trade another day. Expect to make mistakes and lose money, particularly when you first start.
How much should you start trading with? You can trade shares with as little as 50000tk. The only problem with this is that it wont give you much room for diversifying. 100000tk is nice to start with. Or you can trade only options. This allows you to start with much smaller amounts.
Learn the fundamentals, or the financials. Learn how to read the charts and how to spot a company that is about to rise, plus how to hedge your trade in case it goes against you. How to buy to go up, but trade an option to go down, so you're covered either way.
Understand how volume changes price. Learn about other indicators, such as Bollinger bands, MACD lines, moving averages and momentum. Learn put and call options. Watch how the news can affect share prices. All this information is available through reading books, watching DVDs and CDs, the Internet, online courses and seminars.
Practice By Paper Trading
Paper trading is practice without using real money. Some companies offer virtual accounts where you can trade, but not use actual money. Join your local share market game.
There you can learn and play. It's a little like playing monopoly, only with shares. Keep a journal, so you have a record of what you've done right and wrong. Write out a plan and trade it. If your plan doesn't give you regular success, change the plan.
Trading Live
Going live brings other elements into play, like emotions - fear and greed. Once you go live, your heart rate increases. You wonder whether you've made the right choice, you start to second guess all the work you've done.
If the trade doesn't do exactly what you thought it would, fear takes hold and you sell. You sell too early and the market changes direction and now you wish you'd hung on a little longer. This is why you need a written plan. Have a plan for buying and for selling. If you don't follow your plan and the market moves up, greed starts to set in.
You hang on past your profit taking point, when you know you should sell. You think that this is great, you're making a nice profit. You hang on, even though your criteria tells you to sell. You wait another day.
The next day the market turns and you lose your profit. You think this is just a slight fall and decide to hang on for another day. The trade is now going against you and you are looking at a loss. You tell yourself you don't want to sell now, not when your loosing. The price never recovers and when the pain gets too bad, you sell.
Follow your written plan. If a trade turns against you, you'll either have an option in place to pick up the difference, or you'll get out before you lose too much money. Alternatively you can pocket your profit. You can always buy in again after you've locked in a profit.
Money Management: A lot of the time trading is about managing your money. Trade only what you can afford to loose. Take your losses when they are only small. This way you get to trade another day. Expect to make mistakes and lose money, particularly when you first start.
How much should you start trading with? You can trade shares with as little as 50000tk. The only problem with this is that it wont give you much room for diversifying. 100000tk is nice to start with. Or you can trade only options. This allows you to start with much smaller amounts.
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