HOW TO TRADE STOCKS FOR BEGINNERS
If you are trying to learn how to trade stocks for beginners, the first thing you want to pay attention to is the definition of the word “trade”. To trade a stock simply means to buy or sell the stock. When you go online and make a trade, you have purchase or sold a stock.
With the advent of the Internet though, the word trade has taken on a slightly different meaning which makes things unclear what someone really means when they use the word. The Internet has allowed people to buy and sell stocks more quickly and easily than ever before and as a result, a whole new phenomenon of “day trading” emerged.
Day traders are people who sit in front of their computers all day while the market is open and trade in and out of stocks. They are not value investors and they can’t even be called investors of any kind. Their only goal is to buy a stock and get out of it quickly after it has gone up a little. These day traders sometimes make hundreds of trades a day and really make a mockery out of the whole system of stock investing. How they accurately pay their taxes on stocks is different from the normal person because there are too many trades to list individually and they use a computer print out for all the data.
So now, when someone mentions that they trade stocks or that they want to trade stocks, you never know whether they are merely using it as another word for “buy and sell” or whether they are really talking about day trading. If they are using the word to mean the normal buying and selling of stocks, they are talking about investing in the stock market in the normal sense of the word. However, if they are using it to say they trade stocks all day, they are really referring to something that has little to do with long terms investing and the things we were all taught the market stood for.
Day trading is considered another form of gambling by many as you never hold the stock long enough to have any of the stock fundamentals or industry fundamentals mean a thing. Trading stocks and keeping them for investment purposes involves identifying undervalued stocks or stocks you think are ready to break out and “investing” in them for a period of time. That period of time is measured in days, weeks, months, and years unlike day trading where it would be measured in minutes or hours.
“How to trade stocks for beginners” thus is a difficult question to answer unless you know exactly what the person means. Just learning how to trade (as in buy and sell) is easy but learning how to day trade is very complicated and difficult. Many people have lost a lot of money day trading as they try to follow complex trading programs online. Learning how to invest long term in stocks is the better choice for any beginner for sure.
