Beginners Guide To Stock Trading

The stock market represents one of the most potentially lucrative investment opportunities available. In order to take advantage of the opportunity for profit, however, one must first develop an understanding of the basics.

Many people find the market intimidating and avoid participation because they fear the learning curve will be too steep to climb in a reasonable amount of time. However, it is possible to learn what one needs to know in relatively short order. There are a few basic concepts with which one must be familiar. Successful stock trading for beginners starts with a master of these basic constructs.

  • Stock option trading - Many people approach the idea of stock market investment through the most basic of prisms. They think in terms of buying and selling stocks at market prices in the moment. Although that basic approach can be profitable, knowledge of stock option trading can lead to a more profitable approach to the stock market.
  • Day trading strategies - Traditionally, new entrants into the market would “play it safe” by purchasing proven performers and holding onto them for extended periods. Technological developments, however, have created an exciting opportunity accessible even to novice investors: day trading. Day trading involves the purchase and sale of stocks over much shorter periods. Some day traders will log more trades in a single day than many traditional investors might make over several years. Day trading comes with some risks, but successful participants can post earnings that outstrip “standard” investment strategies by a substantial margin.
  • Swing trading - Swing trading is a close cousin of day trading. Day traders often hold stocks for only a few hours before profiting from sales. Swing trading, on the other hand, involves purchasing positions and maintaining them for a slightly longer period. Swing traders occupy the fuzzy terrain between day and trend trading. It’s a fast moving investment opportunity with a great deal of potential.
  • Penny stock trading - Many new investors think of the stock market in terms of established, universally recognized companies. There is another market opportunity for those willing to investigate companies whose profile falls short of “blue chip” status. Penny stock trading involves positions consisting of shares of smaller companies. Smart penny stock traders have the enviable opportunity to identify and capitalize upon rapid growth opportunities.
  • Stocks, options and commodity futures - Novice investors can maximize their earnings potential by acquainting themselves with the full range of trading opportunities. Putting money into proven performers for the long haul is a feasible strategy for long-term investment, but those who’d prefer to see significant earnings over a shorter period must develop an understanding of options, commodity futures and other stock investment opportunities.

Gaining a solid understanding of these concepts can transform a new investor into a legitimate moneymaker. Now you’re ready to dig deeper into each of these exciting areas of opportunity.