Stock trading basics that you must know
When you want to trade stocks actively or you want to invest in shares for a long-term, then there are a few things that you must know before trading. If you know what to expect or the tools that you need, then you can prepare yourself for stock trading. Stocks are the parts of a company. The stock price is also known as the share price and it shows the value of your company. Its outlook is determined by people who trade the stock such as investors and traders. There is no set price in stock and they fluctuate continually, every second of a day.
Most of the trading in stock takes place during the working hours though some trading may happen outside the working hours. It is also known as after-hours and pre-market trading. You can purchase stocks and then sell them at a much higher price so that you make a profit or you first sell and then buy it back at a reduced price to earn a profit. The latter process is termed as short selling. The short-term traders perform it all the time and the long-term investors stay away from it. Before you start, you should familiarize yourself with the basics of elliott wave theory and the movement of prices.
The objective of trading
Establish the purpose of your trading. If you want a full-time job, then do a research at night. There is nothing wrong or right here. Do any one or all of them. Day trading takes less than a day and it often lasts for a few minutes. Swing trading lasts from a single day to many weeks. Investing may involve trading for many months or years. Before you decide the objective, you need to consider the finances. Investment requires less capital. As trading is done for a prolonged time period, commissions are not a factor. Stock trading is exciting as it involves reward and risk. However, before you decide to trade you should consider various theories such as Elliot wave theory that can help you to become a successful trader. Every individual should find out a strategy, which works for them, their personal situation and their goals.
Practice before you deposit money
As you narrow down and select your brokers by playing with their demo accounts, it is important for you to practice placing trades. Try to formulate strategies and test them based on the historical price charts. Place false money trades depending on the strategies and then analyze the findings along with the statistics to observe whether the strategy can produce a profit. If you are not able to make a profit by trading fake money you will find a very little purpose to waste real money. At the same time, if you produce fake money return then it does not mean that you can make real profits. There will be always a difference between real trading and demo trading still; demo trading is a highly valuable tool. Again, trading using Elliot wave analysis can give you lucrative results.