All kinds of people are researching how to get into stocks. And there’s a good reason for that. 2020 has to be the craziest market I’ve seen in years of trading.
But a lot of those new traders are essentially buying lottery tickets, not stocks. And you know what? A lot of people out there selling stocks disguised as lottery tickets, telling people trading is their ticket to a better life.
What they’re not telling you that the vast majority of traders lose money.
That’s the path this article will start you on. Don’t skip to the end. If you want to learn how to get into stocks and the market, you need to do more than just chase random stocks.
It’s just like anything else. You have to work really hard and want to succeed really bad. You have to pick yourself up when you think you’re beaten.
There’s a process, but it’s not easy. It takes years to understand what’s happening right in front of your eyes.
And it starts right now.
Table of Contents
- 1 How to Get into Stocks: Understand the Stock Market First
- 2 9 Steps on How to Get into Stocks
- 2.1 Step 1: Choose a Broker
- 2.2 Step 2: Fund Your Account
- 2.3 Step 3: Study Books, Articles, and Successful Traders
- 2.4 Step 4: Set Your Goals
- 2.5 Step 5: What’s Your Strategy?
- 2.6 Step 6: Drill Yourself on Chart Patterns
- 2.7 Step 7: Learn Trading Strategies
- 2.8 Step 8: Get the Right Tools
- 2.9 Step 9: Find Your People
- 3 How to Get into Stocks: What to Expect in the Beginning of Your Trading Journey
- 4 How Should a Beginner Approach the Market?
- 5 How to Trade Stocks as a Beginner With Little Money
- 6 How Do You Research Potential Trades?
- 7 How to Buy Stocks for Beginners: Practical Steps
- 8 Conclusion
- 9 One Platform. One System. Every Tool
How to Get into Stocks: Understand the Stock Market First
If you want to become a surgeon, you don’t just ask where to cut first. You go through years of schooling. You learn what the heart does for the body before you ever think about doing surgery on it.
It’s the same with learning how to get into stocks. Nobody forces you to study. You could just jump in and do surgery. But you’ve gotta be careful — it’s on your bank account.
I’ve been obsessed with the stock market ever since I was a kid. I’d look over the stock pages in the daily newspapers. And I still have that curiosity.
You’ve gotta have this kind of passion if you want to trade. It’ll make you pay attention to hot sectors. And it’ll probably make you argue with the TV talking heads who claim to know everything about the market.
9 Steps on How to Get into Stocks
You’ve been patient while I give my dad talk. Now here’s the main event.
Step 1: Choose a Broker
No one learns how to drive without a car, right? Well, just like buying a car, when choosing a broker you want speed and reliability. And don’t forget safety…
There are a lot of brokers out there. Just like cars, one size doesn’t fit all. There are a TON of things to consider when you choose a broker. Is there an account minimum? How about trade-related fees and other account fees? What markets do they cover? How are their borrows?
First, learn the roads you’ll be driving on … and how much you want to spend on gas. That’s the next step.
Step 2: Fund Your Account
There’s that old saying — you have to spend money to make money. Well, that’s true in the stock market. The more money you spend, the more money you stand to potentially make … or lose!
There are ways to build your account regardless of size. So how much you start with is up to you. Just be sure to only trade with money you can comfortably afford to lose.
If you don’t understand that last part, check out the no-cost “Volatility Survival Guide” from my friend and trading mentor Tim Sykes. It can help you understand what’s great about volatility and how to prepare for it in your trading.
Step 3: Study Books, Articles, and Successful Traders
If you want to learn how to start trading, to me that means learning how to trade.
There’s a ton of books, articles, and podcasts of traders that can tell you how to get into stocks. And probably people trying to scam you in there somewhere too. Watch out for people asking you for money in exchange for some kind of secret.
Plenty of us are excited to share the incredible knowledge we have … without trying to scam anyone. I’m not stingy with my knowledge. In fact, I have free briefings every day. You can check me out in my live premarket sessions.
Or start going through StocksToTrade’s awesome catalog of trading videos and podcasts. We break down trading concepts, patterns, and successful trades.
Learn from as many people as you can. If you’ve been following me for a while, you know that I’m a bit of a bookworm. And I don’t stop at trading.
I read books on psychology, business, and discipline as well as trading. But I’d skip the “How to Invest in Stocks for Dummies” guides.
Here are some of my favorite books on trading:
- “The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win,” by Maria Konnikova
- “The Inner Voice of Trading,” by Michael Martin
- “Technical Analysis Using Multiple Timeframes,” by Brian Shannon
- “Zero to One,” by Peter Thiel
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Step 4: Set Your Goals
What are you building toward? You can’t hit a target if you’re not aiming at one. So spend some time thinking about it. Think about your risk tolerance while you’re at it.
Step 5: What’s Your Strategy?
The first step a lot of people take in learning how to invest money in stocks is deciding to not invest … Sounds crazy, right? But there’s a big difference between investing and trading. You’re at a disadvantage from the start if you don’t know which approach you want to take.
For the record, I teach trading.
Traders care more about technical analysis than the company’s fundamentals. That means that you don’t have to like Peloton’s products to trade its stock (NASDAQ: PTON). All you have to know is what its chart says.
Step 6: Drill Yourself on Chart Patterns
This is the step that will most likely have the biggest effect on your trading future. You’ve gotta really know how stocks move and what makes them break out and flame out.
There can be some logic to the market. No, you can’t predict it. But I say it’s kind of like history. It doesn’t repeat, but it rhymes. If you study patterns enough, you’ll get a sense for them. Study other people’s trades. Track your own trades. Watch the market every day.
You’ve gotta see these patterns playing out so often that you get a sixth sense for what they’ll do next. I want you to see this stuff in your sleep and be happy about that.
Step 7: Learn Trading Strategies
Once you have an idea of how stocks move, you can start to figure out how to trade them. And you can get good at it once you learn the trading strategies that work for you.
Not every strategy will work for every trader. It’s like any other profession. Your personality and how you see the world will form your trading style.
Are you kind of anxious? You might not be well suited for day trading. Are you prone to risky behavior? Try going long with stocks before you risk money you don’t have by going short.
This is also where discipline comes in. The most important thing to learn when you’re new to trading is to protect your profits and cut your losses. You have to make a trading plan and stick to it. That’s the difference between traders and gamblers.
Step 8: Get the Right Tools
Trading stocks is a zero-sum pursuit. If you make money on a trade, someone is losing money. And you can bet they want to avoid that as badly as you do!
You need to do everything you can. So use the right tools. I’m biased, but I think you can’t do better than StocksToTrade with its awesome charts, built-in stock screeners, and much more. It’s how you can scan the market for stocks that match your setups.
And StocksToTrade has some of the best charting capabilities out there, in my opinion. Combine that with a news scanner that looks for catalysts, and you’ve got a powerful tool that can help you every day in your stock search.
Step 9: Find Your People
Learning stock trading basic doesn’t have to be lonely! Sure, I want you to get up at 5 a.m. to study. And you should spend plenty of time watching the market … But that doesn’t mean you have to go it alone.
Ready for more commitment? I can’t recommend our SteadyTrade Team mentorship program enough. It’s a program run by me and Mike “Huddie” Hudson, a trading legend in his own right. You see what I give away for free — imagine that plus two live webinars a day.
If you’re looking for news that can move stocks, check out our new Breaking News Chat add-on feature. Two former Wall Street pros alert news that matters most to traders.
How to Get into Stocks: What to Expect in the Beginning of Your Trading Journey
OK, you’re all set up. Now what?
There are some things you have to do every day. You’ve read about most of them in the preceding section. But just to remind you, don’t forget to:
- Study your butt off
- Watch the markets
- Make watchlists every day
- Don’t overtrade
- Protect your profits
- Cut your losses quickly
One more thing you have to do is learn how to lose.
You’re going to lose. Everyone loses when they start out. The best traders lose — there’s no such thing as a perfect trading record.
The important thing is learning to lose while guarding the health of your account. This involves a lot of the steps we’ve already talked about.
You’ve gotta have a trading plan, with defined exits. Only hold a stock overnight if it’s still in the green — no holding onto losses and expecting a bounce. And of course, cut your losses quickly when a trade isn’t working the way you thought it would.
How Should a Beginner Approach the Market?
Before you do anything else, look at your goals and risk tolerance. Then figure out what matches.
There’s a spectrum that ranges in risk levels and potential reward. So know what’s out there from day trading, bonds, ETFs, options, futures — the list goes on.
If day trading is your thing, you can consider penny stocks. Yes, they’re sketchy but many traders love them for the opportunity for growing a small account.
What Are the Best Stocks to Trade as a Beginner?
Again, I can’t give you specific answers here.
Sign up for StocksToTrade’s no-cost weekly watchlist. I suggest stocks for you to review each week so you can build your own watchlists.
But these are just suggestions.
How to Trade Stocks as a Beginner With Little Money
This is the question I probably get asked the most by people learning how to get into stocks. How do you build an account reliably and safely?
You know how I talked about sketchy penny stocks earlier? Here’s what traders love about these stocks: the volatility that can come with them.
When you learn the patterns they follow, trading them can potentially be safer. But trade smart. Prepare so you know what you’re getting into.
When low-priced stocks go off, they can really rock.
How Can I Play the Stock Market with $100?
If you’ve got this little money, the first step is to know what you’re doing. Start with paper trading. That’s one way you can get practice and save more for when you’re ready to trade. When you’re ready for risking real money, always protect your account. Don’t make risky plays.
You can’t succeed in trading if you blow up your account first.
How Do You Research Potential Trades?
The single biggest driver of trade ideas should be your stock screening, your watchlists, and your trading plans. Keep up with the news, too. You can follow traders on Twitter. Or watch my premarket sessions to study plays that have already happened. But a lot of the best learning happens in the moment…
That’s where you put all your studying to the test.
How to Buy Stocks for Beginners: Practical Steps
Still a bit hazy on how it goes? Let me give you my seven-step trading walkthrough.
Step 1: Screen for Stocks
You’ve set up your broker and trading platform, and you’ve got a killer stock screener at your disposal. You’re locked and loaded.
Now, set up some good criteria like percent gains, trading volume, and price, and let ‘er rip! You should find some decent potential trades. This guide shows you the process and gives you some ideas for screens.
Step 2: Check Stock Charts Against Your Strategy
Listen, we all know Tesla (NASDAQ: TSLA) will probably keep hitting new highs. Amazon (NASDAQ: AMZN) is looking pretty good too.
But high-priced stocks don’t fit every trading plan. You might want to concentrate on stocks with more volatility. You might even be a short-biased trader who wants a stock to fail. Tesla’s likely not doing that any time soon.
The first rule of trading (and life): Know thyself.
Step 3: Create a Trading Plan
So you’ve got your stock and your strategy, but what’s the play? A trading plan will make you commit to the risk you’ve set and let you know when to take your gains. Without a clear plan, you run the risk of getting greedy on wins and overcommitting to losses.
Step 4: Make a Trade
This is the big moment. Just protect yourself with the right order for your strategy and you’re good to go!
Step 5: Watch the Level 2 Quotes
Level 2 quotes show real-time supply and demand. This can be your first clue whether a stock’s price is going to break resistance or trend down.
Step 6: Protect Your Gains/Cut Your Losses
When you hit your predetermined entry, don’t talk yourself into staying in a trade. The only way you’ll become a consistent trader is through consistent gains.
Step 7: Track Your Trade
This last step will make you a better trader. Tracking your trades lets you see what you’ve been doing right, and what you need to improve.
It’s not rocket science. Learning how to get into stocks is easy. Like most things in life, the real test comes in how far you take it.
It’s an awesome time to be a trader. And when so many people in the world are having a hard time, it’s great to be able to share a way forward.
Don’t take this chance for granted. Study hard and don’t be a stranger. I want to see you achieve your goals almost as much as you do!
Are you excited to begin trading? Still have questions on how to get into stocks? Let me know what’s up in the comments!