Today, you’ll learn how to invest in stocks with no experience.
- Save money
- Sign-up with a trusted broker
- Understand the basics of stock trading
- Learn how to be a quant
- Use a proven trading system
You can invest in stocks with no experience by learning how to be a quant. Quants are traders who rely upon profitable trading systems.
The trading systems were already found to be profitable because of backtesting.
Backtesting is one way of learning how to trade even without prior knowledge.
People can actually improve their knowledge by testing what they learned online.
Most online strategies do rarely work. It rarely works because popular trading strategies always lose their edge over time.
Not using popular strategies is the way to go.
People can go to the strategy page link above to see examples.
Those examples can help anyone who wants to learn.
Learning to trade is a long journey.
The journey may take a while, but if one follows the steps below one can be successful.
The first step is to save-up. Saving is actually important to everybody.
Everybody should have some money to invest in or something they can afford to lose.
Losing money in stock trading is painful, but the pain will not be that big if one trades only extra money.
The extra money must be something people can afford to lose.
To lose means money someone actually has. It does not include borrowings.
Some people borrow money to trade stocks.
Trading that way will hold traders down because of emotions.
For example, traders will feel much worse when losing borrowed money.
Feeling worse while trading can affect people’s thinking and decisions.
For example, decisions can be averaging down stocks whenever in a losing position which is bad.
Averaging down is common among new traders.
Traders do it because they cannot control their emotions.
Controlling emotions is important to have good trading results.
2. Sign-up With A Trusted Broker
Signing with an online broker is important when setting up for success.
It is also important to check the commissions, account minimum, account fees, your trading style, and the promotions. (source)
The commissions can eat up profits if it is bigger than average.
The average commissions are the average costs charged by brokers for trading.
However, these brokers do not charge traders with commissions
- Merrill Edge
- TD Ameritrade
- SoFi Active Investing
Trading without commissions does not mean that there are no trading costs.
The costs are actually the spread between the Bid and Ask prices.
Bid prices are often lower than the Ask. So, the difference between the two is considered the trading costs.
Trading costs can amount to huge losses if one is not careful. Losses can also be day trading too much.
Day trading is not recommended because it is too risky for beginners.
It is too risky because of the daily volatility of stocks.
The volatility could be too high which may encourage more trading.
Overtrading leads to more commission expenses.
3. Understand The Basics Of Stock Trading
Beginners must understand the basics of stock trading before doing anything else.
Stock trading is simple if people ask professional traders.
Professional traders will always say that trading is about learning the basics and getting a reliable trading system.
The basics will teach people how to buy and sell stocks, how to get a broker, and how to do risk management.
For example, when to buy at the bid or ask price.
The price is always guided by the trading system one uses.
Trading systems are available online for free. However, because it is free, it often does not work.
It may work if one tweak it with a trading software called Amibroker.
In Amibroker, people can get the best settings in a trading system. The trading system should be tested in-sample and out-of-sample.
An in-sample is a period where the trading system is first tested. For example, one decade.
On the other hand, the out-of-sample is testing the system again in another period.
The other period can be the next decade after the previous one.
Then, another shorter period is again tested to see the profitability of the trading system.
Testing will give traders confidence to trade profitably.
4. Learn How To Be A Quant
Quants can also make predictions by using Amibroker. Predictions are made based on past historical data.
Historical data is helpful because people can compute the probability that something will happen in the future.
The probability that the price will go up or down will help traders decide what stocks to trade.
5. Use A Proven Trading System
As a beginner learn to be a Quant, a reliable trading system can be created.
The system can help people to trade successfully.
Successful traders use a tool to know what to do to make trading profitable.
Profitable people like Jim Simons also use proven trading systems.
Actually, he is also a Quant. Just Google him to learn more.
Learning or finding a proven system is the key to successful trading.
Success comes to those who do the work.
Working hard will reduce the time it takes to find reliable trading strategies.
Reliable trading systems do not come from trading Gurus.
Most trading gurus are teachers but are not doers.