Want to Become a Trader but Don't Know Where to Start?
People often ask me this question: how do I get started trading?
You may have decided to start trading to earn some extra money or gain a new skill set during the Covid-19 pandemic which plunged many parts of the world into a lockdown, but you feel confused about which steps to take.
Provided that you already have some knowledge of how the financial markets work, as a novice you’ll want to start with stocks. Once you’ve mastered that, you can think about options.
You may have been told that spending hours analyzing market news, relying on technical indicators and pouring over complicated stock charts is the way to approach your trading.
The first problem with this approach is that the public information available on financial media such as CNBC, MarketWatch, Bloomberg, Reuters and so forth is lagging and cannot be reliably used to predict the behavior of markets, nor to create a process for identifying the best times to buy and sell a stock.
The second problem is that traditional analysis of a stock’s overall trend to spot the best trade setups is rather hit and miss. A better path is to learn how to trade the markets with skill: this involves mastering a proven, repeatable system and letting smart technology do the hard work for you, so you can focus on your trading strategy and success.
As part of your trading journey, you should discover how three elements form the absolute foundation of a proven and repeatable method:
- Market Timing
- Stock Selection
- Trade Plan
Mastering these elements sets you up to become a profitable ‘wise trader’.
The first step is to understand the prevailing market behavior and direction. From here you can identify the optimal strategies for those market conditions, whether they may be bullish or bearish. Conditions may even be such that being positioned in cash is optimal for the time being.
Understanding the overall market conditions means you can focus your trading activities when markets are trending. Think of crossing a passage of water during smooth conditions vs. choppy conditions. We prefer smooth waters! Don’t try to swim against the tide of the market or sector direction. And if it’s choppy, why swim at all? Wait for calmer, less volatile conditions.
Once you’ve learned how to recognize optimal market conditions to trade in, your main focus will be on Stock Selection. This is the selection of stocks based on a certain set of criteria revealing optimal trade setups.
Even with today’s extraordinary computer firepower at your fingertips, analyzing vast amounts of complex financial data can be time-consuming. Some traders prefer fundamental analysis (corporate financial performance) as a primary prediction method for a stock’s future performance, while others base their decision-making entirely on technical analysis (the study of charts).
Either way, you’re still making trading decisions as a ‘market outsider’. Another – smarter – way of finding stocks that will grow your trading account is to follow the ‘Big Money Footprints’ of professional leveraged players like hedge funds and billion-dollar fund managers.
By following professional position building in stocks and options, you can effectively piggyback on their analysis and identify stocks with higher probabilities to perform best.
Having a solid plan and following it is essential for achieving trading success. The right trading plan will be aligned to your financial and trading goals, reflect your personal trading style, and preferred strategies. But, in any case, your Trade Plan must give you an EDGE in the markets.
In other words, your trade plan should include:
- Entry criteria
- Defense plan
- Growth strategy
- Exit criteria
The benefit of a trade plan (done correctly) is that it keeps you firmly in control of each trade you make, enabling you to control risk and successfully grow your trading account over time.
Learning to Trade the Stock Market with WiseTraders
As you can imagine, Market Timing and Stock Selection can be a powerful combination … especially with an effective Trade Plan.
Our particular advantage at WiseTraders is that our trading methods are thoroughly researched and independently verified by hedge fund analysts. Most importantly, we keep it very simple for you.
Our methods are powered by our proprietary, patented indicator, the OVI (Options Volatility Indicator). With our OVI we give you the opportunity to learn what the ‘Big Boys’ of trading are up to each day, put you in control of your trading decisions, and help you place wise trades.