Some people believe they can become a great trader overnight. These people may also believe that making money in the stock market will not take that much work. This is simply not the case. There are many steps you must take to become a great stock trader. Here is a step by step procedure on how great traders became great traders.
1. First you must learn how the stock market works. Whatever techniques you are using to trade the stock market, fundamentals, technical analysis or something else, you should first learn how it works. Learn how traders decide if a stock is a good buy or not. To do this you should read websites and books that are written by experts who are already making money in the stock market. See what they think is important to look at and try using their systems yourself.
2. After you have a firm understanding of how the stock market works you should develop your own system. Make a set of rules to follow when trading. Buy whenever a stock does this; sell whenever a stock does that. These rules should be precise so you will not have any trouble deciding what to do down the road.
3. After you have developed a set of rules for yourself the next step is to open a paper trading account. Practice trading with your rules on paper first. Follow your rules very strictly. If you make money in your paper trading account, great, it’s time to move on to the next step. If you aren’t making money with your rules go back to step 2 and develop a new system. Keep doing this until you are making money.
4. If you have a system that is making money on paper it’s time to start trading with real money. Be careful when trading real money. Most traders will let their emotions control them. If you want to make money you have to get in and out exactly when your system tells you to. It might be good to start trading with just a small amount of your portfolio first, just until you can trade your system without letting emotions get in the way.
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