Stock Market Trading Advice

Stock market trading advice has two sides: theoretical and practical. The theoretical pertains to the trading method and can be learned beforehand. The practical pertains to the trading itself and must be constantly applied to new market situations.

Trading Method

• There are several profitable trading methods that have been well described and documented over the years. You can learn the basics from a book or an online trading school. Some methods are based on blending fundamental and technical analysis; others use different technical methods and indicators. No method is failproof or works 100 percent of the time, and each has inherent risks. The key is to know a method well and apply it consistently.

Current Stock Picks

• It takes time, effort and dedication to master a trading method and apply it consistently. Not everyone has the time or the inclination to do this. Those who want a shortcut can utilize numerous online services, such as stock-picking sites that supply current tradeable stock picks in real time; daily and weekly stock trading newsletters; or discretionary accounts that automatically mirror trades by a successful trader of your choosing. You can also get an experienced stock trader to mentor you. All you need to do is understand the basics and feel comfortable with the method.

Money Management

• Regardless of the method, a stock trader must practice sound money management to protect his capital. Cash is the lifeblood of trading. If you lose your capital, nothing else matters, because you won't be able to trade. Sound money management must therefore include risk management and loss-cutting rules. There are numerous books on the subject, but the actual system must be developed and tailored to your specific situation.

Emotion Control

• In the end, it's not the stock that makes you money --- it's what you do with it. Traders who can control their emotions make better trading decisions. A whole new science has emerged around human behavior in the market: behavioral finance. There are psychologists who provide counseling to traders on how to control their emotions, and multiple techniques that you can learn and apply yourself, but in the end you must find what works for you and practice it.

Word of Caution

• Stock trading has wide appeal as a shortcut to riches and financial independence. Many people enter this field lightly, convinced that they can beat the game with a little effort. In reality, however, they're up against the sharpest minds on Wall Street, whose job it is to take their money legally and painlessly. Most wannabe day-traders wash out of the market within five years, only to be replaced by new waves of hopefuls. As a result, providing services to unsuccessful traders has emerged as a lucrative business: A whole army of psychologists, trading coaches, online instructors and stock gurus peddle their services to novice traders. Some of their services may be useful, but remember that they're in the business of selling a service, not making you successful.