The Ultimate Guide to Stock Trading in 2021

Author: James Clark

Everything You Need to Know About Stock Trading to Get Started

Are you ready to become a stock trader and dive into the financial markets? If your answer is yes, you should know what you’re supposed to do before you start trading. There’s more to stock trading than flashy suits, Wall Street rumors, and what you see on the stock exchange. Luckily, you can get started from the comfort of your couch.

In this post, we’ll share the ultimate guide to stock trading in 2021 that you can use to learn the basics and get started.

What Is Stock Trading?

Stock trading is the process of buying and selling stocks to make a profit by capitalizing on price fluctuations. There are different types of stock traders in the market with individual goals, personalities, experience, and trading budgets. Some are looking to make a quick few bucks in a day, while others have long-term plans. Essentially, there are two main types of stock trading:

Active Trading

Active trading involves placing 10 or more trades every month based on short-term events, such as market fluctuations. This type of stock trading requires timing the market to make a profit in the coming weeks or months.

Day Trading

As the name suggests, day trading involves buying and selling stock on a single trading day by capitalizing on tiny price fluctuations. Traders devise strategies to make quick money in minutes and hours.
How to Get Started with Stock Trading in 2021

To become a successful stock trader, you have to start with the basics. Here’s our ultimate guide to stock trading in 2021:

Step 1: Set Up a Brokerage Account

The first practical step to getting started with stock trading is finding and funding a brokerage account to hold your investments. You can easily find one online and open an account in a few minutes. You won’t be investing right away though. It’s just for having it standby when you’re ready.

Step 2: Determine Budget

The next step is to set up a budget for stock trading. For this, we recommend the following dos and don’ts:

 Never invest more than you can afford to lose. Going all-in and losing can get you in financial trouble.
 Limit your spending on individual stocks up to 10%.
 Don’t use money that’s earmarked for rent, debt, or other expenses.

Step 3: Learn About Market Orders and Limit Orders

Once you have set up your brokerage account and budget, you can start trading. The first thing you’ll come across is different order types (fundamental trading units of a stock market). Below are the most common types you can choose from:

 Market Order

This type of order involves quickly buying and selling stocks at the best available price.

 Limit Order

This type of order involves buying or selling stocks at a preset price or better.

Step 4: Measure Your Returns

As a trader, your aim should be to pick stocks ahead of the benchmark index of industries and the companies in them. Actively measuring your trading results to help you determine where to invest your money.

Step 5: Keep Learning and Expand Your Portfolio

There are thousands of traders in the stock market who are actively finding breakout stocks or effectively trading good ones. Your aim should be to start slow and keep learning about different sectors to expand your portfolio.

Step 6: Don’t Fall in Love

You cannot afford to be emotional in stock trading, even if you love a certain sector or company. To become a savvy niche investor, you need to learn how to seize opportunities, and that often means holding on to certain trades while letting others go. You’re in the market for one thing – profit.

Bottom Line

If you’re a new investor in the stock market, you need to determine what type of trader you’re hoping to become and how you want to make money. The best way to learn is to take a step back from the market and play it safe by learning about stocks and market conditions. One last thing: before you jump in with your hard-earned cash, practice on virtual stock trading apps.

For more information on the stock market and trending industrial practices, we recommend subscribing to the PT Premium Service in the Proficient Trader App