Today, you’ll know how you can learn to trade by yourself.
- Learn the basics of trading
- Scan stocks that move 8% or more in the last five days
- Choose a strategy
- Trade without losing money
- Trade real money
You can learn to trade by yourself when you study stocks that move 8% or more in the last five days. Studying stocks this way allows anyone to see what is really working to create a good strategy. Then, the strategy will be used in paper trading to test it.
Further, traders already learned how to trade without relying on other people.
Relying on other people is only recommended to learn the basics of trading.
The basics of trading are the foundation of profitable trading.
People become profitable only if they know how to buy and sell when trading. Buying and selling securities requires an understanding of what are the Ask and the Bid prices and other technical terms in trading.
Without an understanding of the technical terms in trading, one will never improve.
1. Learn the basics of trading
People can learn trading by themselves online for free. There are free videos on Youtube, websites, and including this one.
At Youtube, anyone can learn everything about trading.
For example, this stock trading video will help anyone starting out.
Stocking trading is about buying low and selling high, and selling high and buying low.
Buying low and selling high is one way of making money in the stock market. Making money for short-term traders is done by anticipating what the share price is going to do.
To anticipate the share price action, people can actually use a reliable trading system.
Reliable trading systems are created from a series of tests done through backtesting.
Backtesting is a powerful way to know whether a trading strategy works very well.
This knowledge will give traders confidence in trading because they know that the strategy works.
The strategy could be buying the stock when the Relative Strength Index is below 5 or less.
When buying a stock, traders need to know what are the Bid and Ask prices.
The Bid price is the price buyers are willing to buy, while the Ask price is the price sellers are willing to sell.
The best prices are always placed on the top.
2. Scan stocks that move 8% or more in the last five days
There is a way to learn how to trade yourself. The learning starts by observing stocks that move 8% in the last five days.
Eight percent move is recommended if one’s target is around 8% per trade.
Target is set first before doing any stock observation.
Watch the Amibroker video below to get more information
People can actually observe stocks’ behaviors before an 8% move.
The 8% move is usually preceded by some price actions. Price actions are the things that should be noted by the trader.
The notes should include stock price patterns and the usual stock price move.
The patterns that exist over and over are the most important.
It is important because that is when traders can build their own trading systems.
Trading systems are built by observing price behaviors before a stock’s significant move.
The move could be either 8% or more.
The 8% can be reduced to 4% to look for strategies for day trading.
However, day trading is so stressful and it will not be discussed here.
The discussion will focus only on learning to trade by yourself.
Learning to trade is done by observing stocks that actually moved.
It is not only about buying a trading course and immediately trade real money.
Before using real money for trading, traders must know what to look for.
3. Choose a strategy
After observing what stocks do before moving 8% or more, traders can select or make their own strategies.
The strategies selected could be either for the short-term or long-term.
Short-term strategies are used for trading within seconds up to several days, instead of weeks, months, or years. (source)
To decide which period to use, please watch this video.
The short-term period is recommended because people will get more experience.
However, traders should decide what is best for them.
4. Trade without losing money (Paper Trade)
The next step is live testing of the trading strategy. It is considered live because people are actually trading.
Every trade is log into a trading journal and then the journal is evaluated after a period of time.
Time will tell if the strategy which is selected is profitable.
The trading strategy could fail or succeed, but what is important is that people did not lose money.
Losing money while testing a strategy is really bad.
It is bad because money is already lost even without knowing the result of the test.
Testing trades will really help people learn to trade.
5. Trade with real money
Finally, people can start trading by using a reliable trading system.
A trading system can make or break a trader. The trader should follow steps one to four to avoid a lot of mistakes.
The mistakes could be not properly evaluating the trading system or something else.
The evaluations should already be done here because it is time for real trading.
Real trading is where people finally learn to trade.
They will learn that trading is really difficult.
The difficulty lies in the emotions.
Emotions can really affect people, especially when dealing with trading losses.
Trading losses can make traders not follow their trading system.
Following the system is what we call trading discipline.
Most disciplined traders make more money than the ones who are not.