There are two ways to profit from stocks: investing and trading. Investing is a condition for buying and selling stocks over the long term. While trading is generally interpreted as buying and selling stocks for a very short or very short term.
This is because the time difference between stock trading is often interpreted as a riskier activity than an investment. Therefore, new traders are asked to be more careful. Here’s how to trade stocks for beginners to make profit.
1. Start with investment
The first step is to prepare yourself with the stock’s incoming and outgoing data. technical analysis and fundamental analysis, starting with long-term investments because the basic skills and (Especially) technical analysis is essential in short-term stock trading. Therefore, it is not surprising that many stock traders are also investors.
Investing in stocks can be started using investment applike Magic and IPOT first, later if you have enough skills. You can trade stocks using more sophisticated applications such as MetaTrader 4 or MetaTrader 5.
2. Choose a trading style
While investing, you can determine the trading style that suits you. The reason is that the shorter the trading style, the better. The more time you spend in front of your computer, the more time you spend.
There are at least 4 types of trading styles you should know: scalping, daily stock trading. Swing Trading and position trading. Scalping is a form of trading where buy and sell stocks in just a few minutes. Day trading is a form of trading where the same stock is traded within 1 day. Swing trading is a form of trading where the same stock is traded within days or weeks. while trading longer positions
If you choose scalping or day trading You will inevitably spend a lot of time analyzing and observing market conditions. Therefore, both of these styles are not suitable for part-time traders.
3. Learn to manage money
Money management is one of the keys to success in investing and trading. in stock trading money management in trading You can do this by buying stocks with cold money. It’s not just about choosing a single stock and using leverage wisely.
Because like forex or any other instrument Some stock brokers also offer leverage facilities. The benefits you will receive will increase even more. but vice versa The more potential losses you have to bear will also increase. Therefore discretion is required to use this facility.
4. Learn to manage time
In addition to money and method (analysis), an important factor to consider when trading is emotion (mind). Therefore, traders need to have good time management. so that when the trading session occurs you will not stress Lack of rest or mood This is because stressful and emotional traders tend to make illogical decisions.
Time management is important. Especially if you use daily stock trading or scalping as your trading style. Make sure you have at least weekly intervals to analyze market conditions and determine which stocks are expected to be profitable.
5. Create a trading plan
A trading plan or trading plan document is a detailed document of the results of market analysis. your trading strategy and the stock you will choose This document can guide you in making the right trading decisions and help you evaluate past trading strategies so you are not trading recklessly.
You can compile this trading plan on your laptop or notebook and evaluate it regularly as you analyze market conditions. Although it looks simple But this document is important to help you avoid unnecessary risks.
6. Take advantage of the filtering feature.
There are approximately 700 companies listed on the Indonesian Stock Exchange (IDX) and thousands of stocks listed on other stock exchanges around the world. blue chip stock Not always good price performance on the contrary, second liner stock It doesn’t have to be bad either.
Therefore, the trader has to be able to know the condition of each stock in order to determine the stock to choose from. It will be inconvenient if you evaluate the conditions of the stocks one by one. to overcome this Trading applications are usually available. screening feature and news
in the news feature You can view the stocks that are currently being traded and discuss them. for the filtering feature You can select stocks based on your chosen technical and fundamental criteria.
Although it must be accompanied by sufficient analysis. The presence of this news and filtering feature can help you pick good stocks quickly. But remember, don’t choose fried stock.
7. Practice with a demo account
Strategies written in trading plans that you can try. demo account and retrospective The demo account is a special facility that the broker provides. so traders can test their strategies
These accounts are generally free to access forever. And it comes with fake money for practice and real-time data. This way, traders can test their strategies without fear of losing.
Backtesting is a trading strategy testing feature related to technical indicators. To test this strategy Traders can view the accuracy of trading strategies using historical asset price data. by testing strategies using demo accounts and back testing Traders can immediately assess if they feel that the outcome of the strategy is unsatisfactory.
8. Constantly learning and evaluating
There is no right way to trade stocks for every trader. As each trader has his or her own characteristics and preferences, however, it is certain that a successful trader is one who never stops learning and is willing to evaluate his strategies on a regular basis.
Trading stocks can bring great profits. But besides the huge profits There is also a high risk. at least You must have enough time to analyze market conditions. Regularly develop and evaluate trading strategies.
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