Hey Tim here! I’m going to show you what steps you need to get started to learn how to invest in 2020 if your a new beginner. Now first off, you need to decide what type of investing you want to do. There’s different types of investing.
Firstly day trading means you’re entering in and out of positions within the same day. That can be anywhere from a few seconds to a few minutes, or up to even a couple hours. Essentially with that in mind, day trading requires a lot of discipline and psychological control. It takes a lot longer to learn how to do it properly. I recommend that most people do not start off with day trading. You need have a full three hours in the beginning of every single morning with no distractions. This can be hard if you have a full time job and children because you need to be focused on only day trading starting at 9:30AM ET. This is why I recommend people start out with swing trading and long-term investing.
Swing Trading and Long-term Investing
Swing trading means you enter position anywhere from a few days up to a few months. You still need good analysis for swing trading, but at least you’re not required to spend so much time glued to your screen in the mornings. It doesn’t require as much psychological control. The last is long-term investing, which I believe is the easiest. This is where you buy and hold anywhere from 5-10+ years. You buy solid longterm companies at a discount. Once you’ve pinpointed what type of trading and investing you want to do, the next is coming up with a good trading strategy plan.
Fundamental and Technical Analysis
There are two types of analysis that you can use- fundamental and technical. These take time to research and learn. Fundamental analysis is essentially when you’re looking at a company’s financial statements. Looking at financial statements, looking at overvalued or undervalued balance sheets, revenue profits and aspects like that. I would recommend Googling fundamental analysis and researching it to get a good high level understanding. Or check out my other youtube videos for a bit more into fundamental analysis.
Personally I mainly focus on technical analysis. Technical analysis is analyzing charts based on past patterns and trends. A lot of traders use technical analysis. You’ll even see hedge fund traders and wall street traders use technical analysis. If you Google technical analysis, you can find a lot of free videos on it, but I will recommend a few resources so you know where to start. My technique is to learn about candlesticks on live charts. I would also learn about trends and trend lines, and how to analyze trends on a chart. Once you have a basic understanding of fundamental technical analysis, you need a trading platform where you can look at charts of stocks to analyze and practice. A good website for that is www.tradingview.com. You just go there, type in any stock symbol and pull up that stock and see and practice technical analysis.
Assuming you’ve spent a few months to learn how to analyze charts, now you need to sign up for something called a brokerage. A brokerage allows you place trades with real money. Many beginners use Robinhood. Personally I use a more professional trading platform called Think or Swim, but if you’re just starting out, Robin hood does the job. It’s very popular. I’m sure many of you know about it! Deposit some money in the platform and you’ll be allowed to place trades. You should always start off with a very small amount of money if you are beginner. Most importantly NEVER trade with money you can’t afford to lose.
Another rule to follow is creating a strong risk management plan. It doesn’t matter how good of a strategy you come up with if you don’t manage your risk and your money. Without a risk management plan you can blow up your account. I’ve seen it happen to many people too many times. Also, don’t just watch a few YouTube videos and think you’re a pro. It takes at least a few months if not longer, of full dedication and discipline to learn. Don’t be like one of those people who buy three stocks, they all go up and then they think they’re on top of the world, and they throw all their money into stocks that then drop. Definitely be careful.
How much do you need to start investing?
Lastly, I get a lot of questions on how much money you need to start investing? Well, when you do swing trading and long-term investing, you can start as low as a few hundred dollars up to a few thousand dollars. For day trading stocks, you need at least $25,000 in your account to avoid the pattern day trader rule, The PDT rule says you can’t do more than three day trades over the course of, about a five day period unless you have more than $25,000 in your account. That doesn’t apply for swing trading and long-term investing which is why I highly recommend that rookies do not start with day trading. Do your research and make sure that those are the steps you follow before you get started in the stock markets.
If you want something more advanced or you want more details on different topics please comment below and let me know!