How to Get into Trading Today

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Contributor, Benzinga
July 16, 2023

To the beginner, the process of trading stocks can seem like an overwhelmingly complex and daunting task. While the stock market itself is complex, the act of trading doesn’t have to be. 

If you want to know how to get into trading, this crash course will have you executing your very first stock trade in no time. Discover the most common types of traders, learn practical steps for getting into trading and gather a few quick tips to help you navigate the learning curve of buying and selling assets. 

Types of Traders Across Financial Markets

You can take many different approaches to being a trader and apply any number of concepts to all of the major stock markets, including the foreign exchange market (forex), the New York Stock Exchange (NYSE) and the Nasdaq exchange. 

For instance, you can buy stocks and hold them for months or years in hopes that they will increase in value. However, most new traders prefer to be active, meaning they are continuously buying and selling stocks.

Here are the three main types of active approaches to trading:

  • Active trader: An active trader is an individual who attempts to generate a profit by taking advantage of short-term price fluctuations. To do this, they typically hold stocks only for a few hours to a few days. The two most popular types of active traders are day traders and swing traders.
  • Day trader: A day trader purchase and sell stocks each day. They do this to capitalize on value fluctuations that last only for a few minutes or seconds. Day trading is an effective way to generate quick profits, but it can also result in disastrous losses. 
  • Swing trader: Those making swing trades also look to capitalize on short-term price fluctuations. However, swing traders hold an asset for several days, or in some cases, a few weeks, in hopes that it will swing up in value. This is still considered to be a form of active trading because traders must continually monitor the value of their stock so they can sell when the price spikes.

Now that you know the basic types of traders, you can examine simple steps for how to get into trading.

6 Simple Steps for How to Get into Trading

If you are ready to start trading on the stock market, you should take the following steps.

1. Set Your Trading Goals

Before you begin to trade stocks, you need to determine what type of trader you want to be. For instance, if you want to be an active trader, determine whether you want to focus on daily trades or swing trades. 

While you can explore both options, it is best to devote most of your time, energy and assets to one approach so you don’t stretch yourself too thin.

Set realistic goals for yourself. While you may get lucky and make a tidy profit overnight, this sort of instant success is rare. Instead, prioritize minimizing losses and making small profits on each transaction. Although generating more modest profits does not provide the same level of instant gratification, it is far less risky.

2. Open a Trading Account

Open a trading account. To open an account, you need to enroll on a platform that is hosted by a licensed broker. You can choose from many options, each of which is tailored to specific types of traders.

To help you find the right broker for your goals, Benzinga has composed an extensive list of the top platforms, which includes eToro, moomoo, Robinhood, TradeZero and many others. 

3. Set Your Budget

Making your first trade can be an exhilarating experience. However, it is important that you don’t dive too deeply into the stock market as a new trader. Instead, set a firm budget, be disciplined and only invest money you can afford to lose. 

For instance, if you set a weekly budget of $100 and immediately lose half of it from an unexpected price shift, don’t add more money to your next trade. If you are not sure what stocks to invest in next, don’t. Instead, do your research, recompose yourself and wait until a new opportunity arises. 

4. Learn the Basic Types of Market Analysis

There are three core types of stock market analysis:

  • Fundamental: This type of assessment determines whether a company’s projected future value and its current stock price align. If a company’s value is underestimated, the stock may be a good investment. 
  • Technical: This type of assessment evaluates recent trends and trading activity to determine what will happen next. Technical analyses are of particular interest to active traders, as they can help you predict what could happen to a stock’s value in the short term.
  • Sentimental: A sentimental analysis gauges current investor attitudes toward a particular stock\.

Familiarizing yourself with these types of analyses will help you make informed investment decisions and increase your chances of generating a profit. 

5. Practice with a Simulator or Demo Account

Before you put your real money at stake, practice trades in a demo account or stock simulator. A simulator can help you better understand how price fluctuations impact the net value of your investment. 

When using a simulator, make sure to run a variety of trade scenarios. The stock market can be unpredictable, especially when you are engaging in day trading. The more scenarios you explore, the better prepared you will be when you encounter the unexpected. 

6. Plan Your First Trade

Finally, conduct extensive market research and identify a few targets for your first trade. Weigh the pros and cons of each potential investment, then when you are ready, make your move. 

Once you have made your purchase, keep a close eye on the stock’s value. While it is important that you don’t sell too early, riding a wave of surging prices too long can result in losses. Monitor your assets and aim sure to sell before the price begins trending in the wrong direction. 

Open a Brokerage Account with Benzinga’s Top Brokers

Check out a list of Benzinga’s top brokers and find the ideal partner to jumpstart your day trading journey. 

Quick Tips for New Traders

If you want to succeed as a new trader, do the following:

  • Perform due diligence before investing
  • Set (and follow) a budget
  • Work with the right brokerage
  • Continuously learn about the markets you engage in
  • Stay disciplined
  • Know when to cut your losses
  • Manage and balance risks
  • Try a simulator before putting your money at stake

Accelerate Your Journey to Stock Market Trading with Benzinga

Once you have identified your trading goals, set your budget and decided what sort of trading you want to engage in, there is only one thing left to do. Start trading. To do that, you will need a brokerage account.

If you would like to dive deeper into your options and start trading today, check out Benzinga’s list of the best stock brokers for beginners.

Frequently Asked Questions

Q

How much do day traders make?

A

According to Zippia, full-time day traders can earn between $68,000 to $198,000 annually. However, casual day traders earn significantly less. Your earnings vary based on a variety of factors, including your skill at day trading, how much you invest and market conditions.

Q

How do you get into day trading?

A

To begin day trading, you need to open a brokerage account, upload funds and buy some stocks. By definition, day trading involves holding stocks for a short time and selling them quickly, usually the same day they are purchased.

Q

Which is the best market to trade for beginners?

A

There are several great markets for beginners, but many new traders like to get involved in the foreign exchange market (forex). This market allows you to buy, sell and exchange currencies at current prices.

About Sarah Edwards

Sarah Edwards is a finance writer passionate about helping people learn more about what’s needed to achieve their financial goals. She has nearly a decade of writing experience focused on budgeting, investment strategies, retirement and industry trends. Her work has been published on NerdWallet and FinImpact.