Just because getting into the stock market is logistically simple doesn’t mean it’s easy to be a good trader. In this post, I’ll detail what you really need if you want to learn how to get into the stock market.
Let’s start with the good news: It’s actually pretty easy to become a trader. You don’t need any special degrees or certifications. Basically, all you need is a brokerage account, a laptop, and an internet connection.
However, these are just the technical requirements. Just because getting into the stock market is logistically simple doesn’t mean it’s easy to be a good trader.
Getting to the point where you can potentially profit in the stock market requires a lot of hard work and dedication. You need to get in the right mindset and gain an understanding of how the market works and how to execute trades.
In this post, I’ll detail what you really need if you want to learn how to get into the stock market.
Table of Contents
- 1 How to Get Into the Stock Market
- 1.1 1. Lose Some Money and Learn From Your Mistakes
- 1.2 2. Do Some Fact Finding
- 1.3 3. Listen and Learn
- 1.4 4. Join My Trading Challenge
- 1.5 5. Study Obsessively
- 1.6 6. Paper Trade
- 1.7 7. Focus on Some Key Setups
- 1.8 8. Go Slow
- 1.9 9. Learn From Your Mistakes
- 1.10 10. Learn From Other Traders
- 1.11 11. Expand Your Knowledge Base
- 2 What Is Stock Market Trading?
- 3 How To Get Into Stock Trading in 4 Steps
- 4 The Bottom Line
How to Get Into the Stock Market
If you’re curious about how to get started in the stock market, it’s important to get your head in the right place first. Here are some of the things I wish a mentor would have told me before I got started.
1. Lose Some Money and Learn From Your Mistakes
To really get going as a trader, you need to lose some money first. I’m only half joking here.
Many of the students who come to my Trading Challenge find me because they have lost money trying to become a trader alone, with no knowledge or preparation. They get to see what it’s like to trade based on their gut instinct and the results are usually not pretty.
The good news is that losing money can be a powerful motivator for many new traders to take a step back and realize that they need to actually need to learn how the stock market works. The humbling experience of losing money makes them appreciate the power of knowing all the more.
2. Do Some Fact Finding
If you want to learn how to get into the stock market, start with a fact-finding mission. Google day trading, penny stock trading, and any other facets of trading that might interest you.
A great place to start is with my free E-Guide to Penny Stocks 101. This guide will teach you some of the basics. It includes an introduction to trading, as well as many key phrases and definitions. It’s less comprehensive than joining my Trading Challenge, but it’s a great starting point.
3. Listen and Learn
Once you’ve got the lay of the land of the market, begin to listen and learn. Read, watch videos, and absorb knowledge. Learn all that you can about trading, including techniques, tips, and trading strategies.
For example, look into podcasts like the SteadyTrade Podcast, that’s geared toward helping new traders succeed. You can also begin to read about successful traders and what their trajectory has been.
Often, resources like these can inspire you and guide you down the path of trading that seems most appropriate for you.
4. Join My Trading Challenge
Let’s be clear: I don’t think that you should be joining my Trading Challenge just because I’m the founder. It’s because of how it can impact your trading career.
When I began my journey as a trader, I didn’t have a mentor. I was ultimately successful, but not because it was easy. I was able to make money because I was dogged in my efforts and didn’t let my losses get me down. I was obsessive and hungry to succeed.
I recognize that not everyone is willing to stick with it through all those ups and downs. And the fact is, they don’t have to! Through my Challenge, traders can benefit from learning from my mistakes, which means that they can potentially avoid the errors I made.
If there’s a benefit to having learned things the hard way, this is it for me. I want to help you cut through the BS so that you can fast forward to being the best trader you can be.
5. Study Obsessively
Before you start trading, you need to develop some strong study habits. Not only will this help you amass trading knowledge quickly, but it will help you develop good research habits that will help you as a trader later on.
By studying, I’m referring to a variety of sources. If you’ve joined my Trading Challenge, you’ll want to watch the videos and read through the study materials, of course.
But you’ll also want to start studying stock charts independently. Even if you’re not trading yet, beginning to look at stock charts can help you begin to be able to identify patterns that will serve you well for as long as you keep trading.
6. Paper Trade
For many traders, paper trading is a powerful first step toward making actual trades. Paper trading is simulated trading that closely mimics the look and feel of actual trading, but you’re not risking actual money. It’s sometimes even referred to as “virtual trading”.
When you paper trade, you get to practice trades without actually investing your money. Sure, it might not come with the adrenaline high of trading real money, but it’s a safe way to get a feel for the trading process.
It’s much easier to deal with making mistakes in the virtual sphere than actual trades with your money. I recommend the StocksToTrade paper trading platform.
7. Focus on Some Key Setups
It can be easy to become overwhelmed as a new trader. To make sure that you don’t hit overload too fast, start by focusing on just a few things at a time.
Instead of scattering your attention in a million different directions, instead, begin to zero in on a few key setups.
In my Trading Challenge, I introduce my students to several key setups and patterns. While patterns are ever-changing, beginning to identify styles of trading can help students begin to take direction.
Many of my students will take these techniques and apply them to paper trading first, to really see how they feel in action.
Once you’ve tried a few setups in paper trading, you may be more comfortable progressing to actual trades. By focusing on a few key setups versus a manic approach, you’ll be able to refine your methods.
8. Go Slow
A lot of people who are drawn to day-trading have extreme, black-and-white views on the world. This can be a good thing if you’re willing to put this analytical attitude toward doing in-depth research on stocks and obsessively watching for patterns.
However, If you’re expecting to get rich quick, think again. Like most things in life, becoming a great trader takes time.
It’s not going to click overnight. You need to take a slow-but-steady approach to trading, letting yourself improve over time.
Adjust your expectations. Don’t expect to find success right away. There will be ups and downs as you find your way as a trader and develop a style.
If you expect to make money right away, you’ll likely end up disappointed. By giving yourself time to develop and grow by going slow, you’re more likely to have positive results.**
9. Learn From Your Mistakes
Not to be a downer, but you’re going to make mistakes as a trader. This is true for new traders, but it will continue to happen as you advance, too. I’m wrong in plenty of trades. However, I keep my losses small, and I learn from my mistakes.
Learning from your mistakes is a key aspect of becoming a strong and long-term trader. To expect to not make mistakes is simply unreasonable.
However, if you can look at your mistakes and learn from them so that you don’t make the same mistake again, they can act as powerful teachers.
Keeping a trading journal can help in this regard because you can track your mistakes and successes and as you review it over time, you can identify patterns in your own trading that can be adjusted.
10. Learn From Other Traders
If you want to know one of the true secrets of how to get into the stock market and stay there, it’s this: Learn all that you can from other traders.
This includes finding a mentor who is further along in their career than you and learning from their experience. It also includes watching what other traders are doing and learning from their successes (and failures). Looking at what other traders are doing can help inspire your own trading.
Of course, let me be clear: Observing is not the same as copying other traders, or following what other traders are doing.
Copying another trader will never work out well. There are too many factors involved, and you can never emulate someone completely. By the time that you copy someone else’s trade, you’re already behind the curve. You need to figure out your own style.
However, seeing other ways of thinking, trading styles, and trajectories can inform and motivate you on your journey, so there’s great value in observing and being inspired by other traders.
11. Expand Your Knowledge Base
Trading isn’t the type of profession where you learn the skills once and you’ve got it down for the rest of your life. To stay relevant and to improve as a trader, you must continually expand your knowledge base.
This means staying on top of the news (you never know where you’ll get ideas for trades), learning how to read earnings reports and other financial documents, and what types of setups work best in which types of market conditions.
So keep reading books, watching and re-watching my videos, listening to podcasts, and improving your knowledge. If you make this a daily habit, it will serve you well as a trader for years to come.
What Is Stock Market Trading?
Now that I’ve given you some Yoda-like market advice, it’s time to get into the nitty-gritty of the specific steps you need to take to get involved in stock market trading.
To best understand stock market trading, it’s important to go through just a few basics:
What is a Stock?
A stock is a share of ownership in a company. If you own a share or shares of stock, it gives you certain claims to the earnings and assets of the company in question.
Buying and Selling Stock
Shares of stock are represented by stock certificates, which represent a legal document. While it used to be that you’d receive physical certificates which you’d physically take to a broker if you wanted to sell them.
These days most trading is conducted online, and your certificates are held electronically by your broker. The broker can quickly facilitate purchases and sales. Once again, this is usually done online these days.
Stock exchanges are where the stocks are traded. These exchanges provide volume/liquidity in addition to a place where stock transactions can be conducted.
You’re probably familiar with the big exchanges like the NYSE and the NASDAQ. But for penny stocks, which are what I primarily trade, you’ll look at smaller exchanges like the OTCBB.
How To Get Into Stock Trading in 4 Steps
Curious about the best way to get started in the stock market? Take these four simple steps and you’ll be well on your way.
1. Open a Brokerage Account
To actually place market orders and execute trades, you’ll need a brokerage account.
As a trader, it’s important to choose a good broker because this is basically how you’re going to execute your trades. You don’t want to be surprised down the line to learn that you’re subject to fees or percentages that are higher than you thought.
Be sure to take the time to research the different options out there so that you can choose the best one to suit your personal style.
Choosing the Right One
Choosing a broker isn’t a one-size-fits-all model. The right broker for you will depend on things like the amount of money you want to start within your account, your personal style, what types of tools you’re looking for, and so on.
2. Penny Stocks: Smart Investments With Little Money
Many new traders are starting out with small accounts. As such, it’s important to make the most of every investment.
At the same time, as a new trader, you want to focus on small gains. You don’t want to take huge positions in trades, but rather to build confidence and experience through small trades at first.
However, on the big exchanges, even a single share of many stocks can be pricey — for instance, few new traders could afford many shares of Amazon, which at the time of this writing is trading for close to $1,900 per share.
Buying a single share of a mega-cap company is no way to grow your account quickly. So how is a trader to work on building an account and gaining experience? In my opinion, the best and most accessible way is to trade low-priced stocks, aka penny stocks.
Penny stocks aren’t always sold for literal pennies. But they’re stocks that trade for very low amounts, usually less than $5 per share.
While the penny stock market is notoriously volatile, its rapid fluctuations can offer the opportunity to profit quickly and with minimal investment.
Penny stocks allow you to make small investments and focus on gains, no matter how small, so you can build your confidence and benefit from trading.
Penny stocks are how I made my fortune in the stock market, and they’re the primary focus of my teaching. I firmly believe that they offer opportunities for traders, particularly those who are starting with small accounts.
3. Strategies That You Need to Master
The stock market is all about strategy. Without a plan, you’re really not doing much more than gambling.
To really make intelligent trades, you have to perform plenty of research. This typically starts with creating a watchlist of stocks that are experiencing movement and narrowing down your choices. Then, it’s time to analyze.
This might start with fundamental analysis, where you do research on the company offering a given stock.
By evaluating their past performance and the outlook based on earnings reports, press releases, and the overall buzz around the company, you can get clued in on catalysts that could have a positive or negative effect on the stock’s price.
From there, though, you need to back it up with numbers and data.
As opposed to fundamental analysis, where you’re focusing on the trajectory of the company offering a stock, here you focus on the actual stock’s performance.
You’ll look at historical data to review the stock’s performance over time, looking for any past trends that could inform what the stock will do in the future.
You can do this by looking at these key things:
- The price action, or how the stock price has moved over time. For instance, does it have a history of gaining?
- Price trends, or predictable spikes or dips. Are there trends in the price, maybe at different times of the year?
- Patterns. Often enough, when a stock performs in a particular way in the past, it can repeat itself pretty closely in the future. So, when you look at a stock’s performance over time, do you see any patterns emerging?
Key Chart Patterns
Over the years, I’ve been able to identify key chart patterns that I depend on and look for when seeking out trades.
For instance, my absolute favorite is called the “supernova”. It’s named after supernovas in space, which have a big explosion and then fizzle out.
This amounts to an explosion in a stock’s price that offers many opportunities for traders, including the ability to buy as the stock is ascending in price, or to short-sell on the way back down (or, sometimes I do both).
While that’s my favorite pattern, it’s far from the only one out there. In my pennystocking e-guide, I detail more patterns in greater detail.
4. Never Stop Learning
A continued dedication to learning is not just important but essential as a trader. After all, as William S. Burroughs once said, “When you stop growing you start dying.”
For one thing, continuing to learn will help you be better able to adapt to market shifts and changes. When the market changes and your go-to setups aren’t working anymore, having a large knowledge base can help you make changes that can help you become and stay profitable.
Maintaining a trading journal can be pivotal in this regard, too. It allows you to keep track of your own patterns as a trader, and learn from your own past experience.
When I got started as a trader, I had woefully little guidance, and I made plenty of mistakes because of it. But I was obsessive enough about the market that eventually I began to get the hang of it, and was able to begin to be profitable.
But I won’t lie: It was hard. My motivation as a teacher is to create an entry into the stock market for my students that is a lot easier than mine.
My trading success was hard-earned. I created my Trading Challenge in the hopes that others can benefit and not have to go through things the hard way.
I want to cut through the bullshit and teach you the necessary skills to become a trader who can profit more than you lose.** It’s not about perfection.
My Challenge includes lessons, webinars, blog posts, and more.
But it also includes trading. I fully support diving in and starting to take small positions. I’m right there with my students, trading with a small account so I understand the climate they’re trading in. That way, I can best advise and post appropriate commentary.
The Bottom Line
Getting into the stock market is a little trickier than it might seem from the outset. Yes, the entry is extremely easy and requires little equipment.
However, to become an intelligent and potentially profitable trader takes time and effort. That part isn’t easy, but it’s worthwhile. You’ll have to consider many different things, expand your mind, and work very hard. But as many have seen, it’s worth the effort.
Are you ready to enter the stock market? Is anything holding you back? Share a comment below.