Getting Started Trading Stocks With Paper Trading
In this article I’d like to talk about a few advanced techniques that lots of traders try their hand at after mastering basic trading strategies. Even if you just want to stick with the basics, it is still good to know about a few advanced trading strategies.
Don’t worry if you’re not ready to start trading with real money. You can still start learning about the most basic of all the stock trading strategies… simple buying and selling.
“How?”, you may ask. Simple…
Using Pretend Money.
So, if you’re not ready to actually invest real money, no worries. There’s always Paper trading. Paper trading is just like trading with real money. But, it’s pretend money. So there’s no risk involved.
With paper trading, you just treat it as a regular stock trading account. You can buy and sell stocks. And, prices reflect the real prices of the stocks. To find stocks, I recommend looking through a few stock scans.
So, getting started is simple as 123. Even you’re kids could do it. Yes, you will not actually be making money, but if you take it seriously, you will be preparing yourself for the real thing.
Now I will go over a few stock trading strategies that are a bit more advanced. I will start with day trading.
In case, you’re not familiar with day trading, it’s basically getting in and out of stocks quickly, and being out by the end of the day. Since these traders get in and out much more quickly than other investors, they have a whole different set of strategies using charts, indicators, screeners and other tools for stocks.
This strategy can be highly profitable. However, most that attempt it don’t see a profit for at least the first few months. Another thing about this type of trading is that you don’t use all of their own money. You leverage your money so that even subtle changes in stock price can produce much more of a profit.
Because of the reasons I just went over, day trading is one of the most risky stock trading strategies out there.
Trading Outside Of Regular Hours
Not all stock trading strategies take place during regular trading hours. Some trade before the trading day starts. And some prefer to trade after the trading day ends.
The main upside for this is that investors can profit off of news stories or company announcements that are announced at these times. However, there are a few downsides as well, which is why many investors stick with the regular trading hours.
The main downsides are related directly to the lesser amount of traders. Since there are less traders, it is harder to find someone who wants to sell you they’re shares. And after you have found someone and the shares have made a significant move and you are ready to get out, you may have trouble finding a buyer. In other words, these markets have low liquidity.
The second downside is that stocks tend to be more volatile. Fewer traders means that often you can’t get the price you are looking for. So, you have to settle for a price that is not as good.
Because of this, there will be bigger gaps in trading price. Bigger gaps mean that the stock will move faster in one direction than it normally would. Thus, greater volatility.
Buying Stocks For Dividends
The last of the stock trading strategies that I will go over is buying stocks based on their dividends. This may sound simple, but it’s not.
You can’t simply find the stocks that are paying the most per share. You have to look at other factors such as how often the dividends are paid and whether or not the company will actually pay the dividend.
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