Tip 1: Practice

Practice. In all other areas of life, especially the most difficult ones, we practice the skill before we engage in the real work. This is particularly noticeable in sports. Before the first game is played the players practice for months. If we think about professional sports, most players have practiced for years in some type of minor league–high school, college, or a farm system. No Olympian has won gold without thousands of hours of practice, hard, long, practice. In the vast majority of occupations, the top income earners have spent many years and much money learning the necessary skills in order to succeed on the job.

So, why would we think it would be any different with trading in the stock market? Why would we think we could read a few books and jump right in and make money?

The stock market is a difficult environment. Even professional money managers get it wrong sometimes. There are numerous factors that affect whether the whole market will go up, down, or sideways. And specific stocks may be influenced by even more factors, from unforeseeable global affairs to unknown internal company issues. Trading stocks successfully over a long period of time is consequently a skill that requires practice.

Before entering a trade with real money take the time to practice with your broker’s practice account. They will typically give you an electronic account with around $30,000 in it and the account works just like a real account. So, you can make trades in real time without the possibility of losing real money. Get your feet wet. Set goals. Find a strategy. Reign in your emotions. Learn to use technical analysis indicators and oscillators that work for you. And practice, practice, practice, over a long period of time to see how the market or specific stocks move, before you ever put your real, hard earned money at risk. Be the Olympian stock trader that wins gold, just after you’ve seen yourself make money¬†consistently in practice.

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