7 Steps to Becoming a Better Stock Trader
1. Take trading seriously
Trading is not brain surgery but it's amazing how many people take trading lightly. Wall Street expends an enormous effort attracting the brightest and most educated talent. Regardless of what you may think, their job is to help you part with your money as painlessly as possible. If you think you can beat them by watching CNBC or reading Twitter, think again. The amount of money you can take out of the market depends on the amount of time and effort you put into it. There are no short cuts.
2. Separate intelligence from noise
90% of financial "information" out there is opinion. What you need is facts, and the ability to reach your own conclusions. Learn to separate fact from opinion.
3. Avoid information overload
Talk is cheap, and 90% of it is worthless. Learn to narrow down your data inputs to the fewest number of critical elements so that you can make decisions fast and avoid paralysis by analysis.
4. Question what you see/hear
If you have to rely on other people's opinions, you are not trader material. Nobody on Wall Street ever opens their mouth without benefiting themselves. A healthy dose of skepticism (and even cynicism) will protect you from manipulation and help you reach your own judgments.
5. Too much knowledge can hurt you
As a group, engineers and doctors make bad traders. Engineers overanalyze, trying to quantify things that defy quantification. Doctors argue with the market by applying extensive knowledge and logic to what they see. The market is a much simpler creature that often defies logic.
6. Trade what you see
- not what you think or hear: there is a big difference between what people say and what they do in the market.
7. Your #1 goal: capital preservation
The market provides a constant stream of opportunities. If you miss one, there is another one coming up. But if you lose your capital, you will not be able to take advantage of it. Don't rush to get rich quick. Learn how to manage risk and trade small until you build up your confidence.
Published by Slav Fedorov
Full-time stock trader and founder and managing member of TradingZoom, LLC, a provider of timely stock picks to part-time traders. Former banker, stockbroker, financial planner, with over 20 years market ex... View profile
- Virginia Senator Jim Webb Nails the Most Excessive Wall Street CEO SalariesJim Webb, rookie Democratic U.S. Senator from Virginia, says too many Wall Street CEOs are more than greedy. They're unpatriotic.
Oliver Stone's "Wall Street" is More Relevant Than Ever"Greed is right. Greed works." Gordon Gekko boasted in Oliver Stone's classic film "Wall Street." Today with the real Wall Street & our country reeling from greed - how does...- Wall Street Bailout is Barack Obama's Best IssueBarack Obama's campaign was losing ground, but the Wall Street bailout means the Sarah Palin factor is paling by comparison.
Wall Street Meltdown: The Best Films About Wall Street & Big BusinessWall Street is in crisis. As the world look worriedly to the global center of commerce, here's some of the best movies that dealt with Wall Street & Big Business.- How Wall Street Manipulates InvestorsWall Street skims $billions every year with the use of manipulation. The brainwashing tactics used by Wall Street are designed to take advantage of the average investor. Their methods are subtle but extremely effec...
- Destination Chicago? Put Trader Joe's on Your Shopping List!
- Trader Joe's - My Kind of Supermarket
- Shopping Basics at Trader Joe's
- Teavana Teas Versus Trader Joe's Teas
- The Grad Student's Guide to Trader Joe's
- How to Make Money Trading Options
- How to Retire Without Wall Street Investments
- Learn to filter out 90% of "noise" to focus on facts.
- Trade what you see, not what you hear.
- Take what you hear with a healthy dose of skepticism.