An Introduction to this Blog
An introduction and where we go from here
Our objective is to explain, from the viewpoint of the trader and using a mainly technical approach, what is involved in assessing the stock market situation, how to interpret stock charts, at least at a simple level, and the ways to identify and select stocks to trade with some rules governing when to buy and sell.
What we will do now, at the beginning:
- Let us start out with a few general comments about the trading process that we can build on as we go along.
2. Then we can introduce and examine some stock charts, a basic source of information that most traders refer to.
3. We will pick a couple of “live” stocks to look at and follow their market action as the days and weeks go by, usually with expectation of holding for about 3 months.
4. We will try to identify a few stocks that we will put on a list commonly known as a Watch List.
5. There will also be a series of commonly used terms applied to various market aspects that we should define as we go, we can call that our Glossary.
6. The reasons- to choose the first trade example
Some of the things we will discuss in future posts:
- Stock charts, what they can tell us
2. Stocks to trade, how to find and assess them, the criteria to look for in their selection
3. Guidelines for entry and exit, the signal to buy and timing to sell, for profit or to cut losses
4. Other matters in no particular sequence
We should also describe briefly what is traded on the Stock Exchanges, NYSE, NASDAQ, ASE, TSE, FTSE etc. A stock exchange is an organization that provides facilities for trading stocks and other financial instruments.
Our Blog title is How to Trade Stocks but the real objective is to point out How to Trade Stocks Successfully, which obviously means profitably.
Not every trade in the stock market makes a profit but unless at the end of a reasonable time period there are enough gains that exceed losses there is not much point even if you end up knowing the mechanics of how to trade.
If required, the stock broker will advise on setting up a brokerage account
You can find out from the broker of your choice how to open a personal brokerage account and how to make a trade. And that account should be an on-line account that you will be able operate from your own computer. You will be provided with instructions on the procedures of obtaining a quote and placing a trade and monitoring the daily activity. And the broker will probably have a wealth of information and resources for you to access, free of charge, once you have learned what it is that you need to know.
We discuss what’s involved in selecting a stock to trade and tracking its performance
We are always faced with the question of “What are we going to buy? And Why? And once we’ve bought an issue, when should we sell it? What is our exit strategy, our profit or loss point that will trigger the sale?
Behind the answers to those questions is a lot of know-how involving decision-making, research, strategy, risk management, capital allocation, information and data sources, and so on. So that is what we have to become familiar with by making reference to it here and examining actual situations and data relating to the stocks we have chosen to trade and how those matters relate to the stock market in general.
While we are not participating here in real trades in the stock market, we can in the next few days, if the market conditions are right, try to identify a few stocks that do meet specific trading criteria to warrant making a trade or two and we can then follow their performance each trading day. We can also build a short “Watch List” of stocks of interest to monitor that may soon meet the criteria to trade. In doing those things, we can introduce the various reasons leading to the choice of the particular issue to trade and what needs to be taken into account to arrive at a final commitment of cash resources.
We can monitor such trades by using the many readily available resources and tools on the web to help us judge our progress. This should help make it a little easier to understand the various steps in making a decision and we can consider other alternatives or matters in reference to those trades and to the market in general as time passes.
You will be able to follow what is happening by going to a free site such as YahooFinance.com and entering there the details of the “pretend” trades that we select and in that way you can see for yourself what is happening each day as the stocks moves back and forth as they will do throughout the trading days and weeks. It is necessary to keep a watchful eye on your stocks and the market in general, but it is definitely not necessary to spend too much time to the extent it becomes obsessive and interferes with the normal enjoyments of life. By following this scenario we should be able to cover the basics in our aim to learn how to trade stocks.
Trading, not Investing
At the outset, I think we should establish that trading is not investing, at least not in the traditional sense. My own take is that trading is an action in speculation, usually of relatively short-term duration, meaning a few weeks to a few months but not years. There are exceptions to everything of course and there are several possibilities we might encounter.
There are also different approaches to trading and what suits one person’s temperament may not be appropriate for another. But this is a learning process and what we do on this blog should be of value as an introduction to market situations that are common to many other trading activities and approaches and from which a wider extension of knowledge and trading style can emerge.
Caution:
This comments in the posts and articles on this How to Trade Stocks blog-site, do not make recommendations or suggestions to actually buy or sell particular stocks, I am not allowed by law to do this and anyway, I would not want you to risk your own money on something that has been chosen for the purposes of illustrating the trading processes and background research that is involved. All the matters discussed are to enable the introduction and explanation of the many aspects of stock market trading. So, learn what you can but I must emphasize: Do not invest in any stock featured on this site.
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