There are only three things you need to know before trading stocks: timing, price, and volume.
Stock Trading for Beginners
Time: How long has it been since the last trade? You need this information to find out how volatile the stock price is. For example, after a large company announces its quarterly earnings report, stock prices often fluctuate widely throughout the day. Therefore, the longer it has been since the last trade, the more likely it is that larger stock price changes have occurred.
Price: What is the current share price? This is how much you would do.
Introduction
As mentioned above, there are three things you need to know before trading stocks: time, price, and volume.
The two most important things you should know about the time before you start trading stocks are:
Risk-reward is the relationship between the stock’s current price and its highest price in a period; therefore, the greater the risk, the higher the reward (If you buy a share for $20 and its highest price is $10, you will receive a return of 1.5% per year. If your price is higher, you will receive a return of 20% per year ). Short-term risk and long-term reward (The risk of a stock price fluctuation is much greater than the risk of a stable-priced asset. A good reason to avoid stocks with high volatility is that there is no cash return). Find the best stocks to buy now.
What are the 10 commandments of stock trading?
The first: The first 10 commandments of stock trading are all based on one of my favorite phenomena: arithmetic.
Start with the basic equation:
Price times Volume
What does this mean? It’s an equation that you can divide by 3 and solve for the answer. What you get is the share price divided by the trading volume.
You want to divide the stock price by the volume of your trade to figure out its value. This is the most important rule to know.
The second: it’s easy to be impulsive. Do not feel.
Every decision you make with money needs to be thought through before you act.
The Basics of Stocks Trading
Trading stocks is different from picking stocks and has its own set of rules. You can learn more about the basics here.
The stock market is made up of individual companies, and each of these companies trades in hopes of profiting from the price changes that have occurred.
When you buy a stock, you commit to buying a certain amount of shares at a certain price. The share price (or current value of shares) is the total of all shares currently outstanding. So, for example, if there are only 100 shares and you buy 100 shares, you are committing to buy 100 shares.
This article in The Motley Fool discusses the process of buying and selling stocks. You should start by reading this article before buying your first stock.
Time: How long has it been since the last trade?
Volume: How many shares are being traded? For stocks with very low trading volume, this is not helpful. For example, on the New York Stock Exchange, only about 10 percent of shares are traded each day. If you are trading with large companies, you will need to buy a lot of stock. Or, if you are trading microcap stocks, you may need to sell some stock to cover your trading costs.
With these three data points, you should be able to identify a trading opportunity. For example, if you notice that the stock price of a large company has gone up in the last 30 minutes, there is a good chance that there will be another big move after the end of the trading day.
Price: What is the current stock price?
Volume: How much volume was in stock? It’s how much inventory is sold or bought each day.
The basic rule is that volume is high when people are buying stocks, and volume is low when people are selling stocks. So, if you see a large increase in volume, the price is likely to follow suit.
Tactical Vanity #3: Understand Your Fear of Losing
Don’t worry about making mistakes. This is all part of the learning process.
Everything worth knowing was learned from failure. The problem is that we fear failure.
After all, if we got it right, we wouldn’t have to do this indefinitely.
See how you can approach the stock market like a college student. First, buy the right amount of stock you know you are going to lose.
Volume: How many shares were sold in the last transaction?
By understanding these three simple things, you will be able to trade stocks profitably.
But stock trading is not easy. There are some basic rules you must follow. Here are the 10 commandments of stock trading:
Trust: You must buy stocks you trust. When you have some skin in the game, you won’t sell if the stock price drops.
You must buy the best stocks you trust. Then, when you have some skin in the game, you won’t sell if the stock price drops. Overnight Price Changes: When the stock price rises a penny in the middle of the night, it means that some people have bought. This is a good sign for investors.
When the stock price goes up a cent in the middle of the night, it means that some people have bought.
Time, Price, and Volume Consequences
The best way to find out when the price will rise, or fall is to figure out what the price will be in the next half hour and three hours. If you make a trade at this price, and it is lower when you check again an hour later, then your buy or sell will have gone wrong.
The best way to know when the price will increase or decrease is to calculate the price in the next half and three hours. If you make a trade at this price, and it is lower when you check again an hour later, then your buy or sell will have gone wrong. The next best way to find out is to wait for volume, which indicates how many stocks have traded in the last half-hour, three hours, and the last hour. Again, you can tell by looking at a graph.
