Long time no see, I have something special in the works for you guys so please be patient with me :)
I conducted a workshop over the weekend and I got a lot of questions and I wanted to offer answers to whoever is reading! The number one question I received is where do I start?
Here are some of the steps I took. As you know if you have any questions tweet me, comment etc!
- First make the decision that you want to begin trading. Although this seems like a no-brainer, trading does involve commitment and risks. If you're willing to put in the time you can really learn a lot and do more with your money. Remember a lot of the market is based on people's emotions. As soon as you put a trade into play check your emotions at the door, the market is going to do what it wants. Trade accordingly.
- Set a trading plan.This is SUPER important. Don't fudge your plan to fit what you want to do. When you've hit your desired profit liquidate. If you've been losing on a position, get out. It's important to set these standards beforehand so you are not trying to figure it at the last minute.
- Decide how much money you are willing to invest. This should involve a serious look into your finances. This money should come out of discretionary income, not rent/bill/emergency money. There is an opportunity to make money but there is also an opportunity to lose that money as well.
- Now that you've put some money aside set your targets.This goes for both losing and winning positions.
- What are you willing to risk? Set your risk level at a safe percentage (1%-5%). Meaning if you have $1,000 position and it's down $150 get out and stay out.
- What is your target profit (risk/reward)? How much are you willing to risk in order to make a profit. If you're just going to break even from a trade then what is the point of even doing it? AT LEAST have a 2 to 1 ratio (for every 1 dollar you risk, there is a 2 dollar reward)
- Exit and entry strategies.
- Now that your risk level is set be ready to exit a position if it is not performing. You will not always pick a perfect stock and you will be wrong. Don't wishfully think some magic is going to happen. Get out! Write down where you want to get out, discipline yourself to get out. This also goes for profitable positions, once you've hit your mark liquidate. You will never lose taking a profit. It is a horrible feeling when a position is losing because you held on too long. Don't be greedy!
- Compare online brokerage accounts. If you are going to trade options which is what I mostly talk about in my blog I would suggest Options Xpress, they have pretty good rates. Beyond rates look at their virtual trading system, tutorials for entering positions and options for your mobile device. I haven't looked around recently perhaps I will do a comparison one of these days.
- RESEARCH RESEARCH RESEARCH. Watch the news find out what is going on in the world, what is going on in the economy.
- Pick some stocks that you think are going to grow. I think this is where a lot of people get overwhelmed. The thing that I like about options is that you do not have to pay the price of the stock, which gives you access to companies like Apple and Google. You're deciding on a movement, which makes it a more manageable. PAPER TRADE (or Virtual trade in most cases) Act like your actually trading without using your money. You are the consumer,companies base their success on your purchasing decisions.
I know this was a wordy post but I got a lot of questions on where/how to start so I wanted to give some details.
Thanks!
Brit
I have attached some pictures from my workshop last week!
