These 3 tips are the best way to build a strong foundation for your trading. If you're new to trading, start here.
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If you just started trading a few months ago, then make sure you do these three things.
Because truth be told, the reason most traders lose money is because they don’t follow these three fundamental trading principles.
Dare I say it…
If you simply do these three things, you’ll be more prepared than 90% of the retail traders out there today.
That’s why today, I’m breaking down the basics.
I’m going to review the top 3 fundamental trading tips that every beginner needs to know.
Let’s get started.
Fundamental Trading Tip #1: Define your goals
The very first thing you need to do is know your goals.
Do you want to create daily income with your trading… or do you want to buy and hold for a long time?
Make sure your goals are realistic and feasible.
For example, if you want to create daily income, do you have the time to spend every morning 9:30AM ET to day trade?
If you have a fulltime job that won’t let you trade like that, then you’ll have to swing trade instead.
Not only that… you’ve also got to think about how long you want to trade.
If you’re day trading, you’ll have to spend two hours per day every morning trading the market.
Swing traders can get away with two horus per trading every few weeks.
But either way, you’ve got to consider how much time you’re willing to spend on your trading.
It’s perfectly okay to decide you’d rather be lazy and swing trade instead of day trade.
It all depends on your lifestyle and your personal preferences.
After you’ve nailed down your goals, you can move on to the next tip.
Fundamental Trading Tip #2: Know your risk tolerance
Do you want something that’s high-risk-high-reward, or do you want something more conservative?
Your risk tolerance will be based on your goals, which is why it comes second.
If you’re simply trying to build a retirement portfolio, your risk tolerance would be low because you don’t want much fluctuation.
But since your risk is low, your reward is also lower… but this would be okay if you don’t plan on touching your retirement portfolio for another few decades.
However, if you want to make as much income as possible from the stock market, you’d have a higher risk tolerance.
That’s why at Stock Navigators, we show you how to manage your risk.
After all, higher rewards come with higher risk, and we do everything we can to stack the odds in our favor.
Let me put it this way…
If you have a 1:3 risk-reward ratio (risking $1 to earn $3)...
You’d only have to win 26% of your trades to profit.
Imagine how quickly your portfolio grows if you win just 50% of your trades!
After you know your risk tolerance, it’s time for the final tip.
Fundamental Trading Tip #3: Know a good trading strategy, and how to use it
The final step is learning a good trading strategy.
There are plenty of Youtube videos that can teach you technical analysis, how to read a chart, etc.
At Stock Navigators, we Echo Map the stock market.
Echo Mapping has done pretty well for our students.
See for yourself!
If you want to learn more about the Echo Mapping strategy, we recently recorded a special podcast called, How to Use Echo Mapping to Spot Winning Investments Before They Take Off.
Stock Navigators has one mission - to help people improve their lives via trading. And it's all made possibly by our team of stay-at-home day traders who provide the most up-to-date analysis every single day. With over twenty years of combined trading experience, Stock Navigators helps you stay on top of the market.
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