Should You Become a Stock Trader?
Trading stocks can be one of the
most liberating careers that lead to ultimate financial freedom, however as it
has been dubbed many times over, trading is also “The hardest easy money you
will ever make.” As such, it takes a certain kind of mentality and attitude
towards trading to become successful, do you have what it takes?
Characteristics of Successful Traders
Patience: Patience is a virtue as I’m sure you
have heard. Nowhere is it truer than in trading stocks.
Risk Appetite: Trading is inherently risky, it
is guaranteed that at some point you will have a trade that will lose you money,
you must be okay with taking on risk.
Adaptability: The market is constantly changing,
you must be able to change along with it.
Expectations from Trading Stocks
Trading is not a “get rich quick” scheme
It takes money to make money, you will need a
substantial amount of capital if you want to make a living off just trading.
Trading is a job just like anything else, you
will need to put in plenty of time and effort into learning and studying the
Length of Time Holding Trades
When trading stocks it is
important you know how long you plan on holding a position for. If you plan on
just buying positions and selling them within the same day you would be
considered a “Day Trader” Day traders hold positions for the shortest amount of
time and typically don’t hold any positions overnight. Next there is the “Swing
Trader” who holds positions for a few days to a few weeks, swing trading is
much more flexible than day trading as you don’t have to be constantly in front
of your trading screen. Lastly there is the “Position Trader” who hold trades
anywhere from a few weeks to a few months. Position trading could be the ideal
way to start trading on the side as it provides even more flexibility away from
the trading screen that even swing trading.
Types of Trading
Steps to Begin Trading
have to be a millionaire to start trading stocks, you can start with as little
as a couple thousand dollars and as you become more experienced increase the
amount of capital in your trading account. First order of business would be to
open a brokerage account, there are many options so do some research and see
which suits you best. After you open a brokerage account begin paper trading.
Through paper trading you will gain experience that will lead to the next step,
developing a trading plan. After developing a trading plan and testing it out
some more in paper trading, you are ready to deposit money into your brokerage
account and trade live.
Being a Stock Trader Can Lead to
you have the patience, risk appetite, and adaptability to become a stock trader
you should definitely give it a shot. Make sure to do some soul searching to
determine which time length and type of trading suits you best and begin
learning everything you can about the current market. With paper trading you
can experience the market without risking any of your hard earned money so
there is no reason you should not give stock trading a chance.