Stock trading may have now become online in the past decade or so, but it has existed since back before you were born. Our parents have taught us and inculcated in us the basic life skills for survival. Similarly they too can teach you a thing or two about trading. It might not be advice that your financial advisor gives you, but solid advice that will stay with you throughout your life, which you can apply all the time while trading.
To be a successful trader, you need to do your research. Whether you are a highly expert trader or a novice one, you have got to have sound financial concepts to survive in the stock market. From jargon to different concepts, only studying will help you grasp the market. By reading books and gathering information on the internet you will be able to develop your own trading strategies, analyze past trades and chart out your own moves. Nothing can replace your knowledge, and in the stock market your only weapon is your knowledge coupled with a presence of mind. Don’t tell us your parents didn’t teach you the importance of studying hard before the exams and even researching thoroughly before buying an asset.
#2 Follow the Market
Another gem of a teaching is to follow the market. Wherever you are, however big a trader you might be, you have to follow the market. You can follow news websites such as Yahoo Finance or Google Finance for starters. For more in depth coverage on the internet, read the Wall Street Journal and Bloomberg. Your parents will want you to monitor the market every day and read the news so that you stay up to date to what is happening around you. Daily events do affect the stock market as emotions are a part of trading. If you rely on televised news, tune in to CNBC for updates and broadening your knowledge. However, you have to choose what will benefit you from these updates. Now you understood, why your parents wanted you to watch the news everyday?
#3 Learn from Mistakes
To err is human. Your parents have always taught you that the best lessons are often learned from mistakes. When you learn from it, you make an effort to review your decisions and make sure it does not happen the next time. Similarly in the stock market it is very difficult to determine if something is right or wrong. If you make a wrong move, instead of crying over spilt milk, you should try to determine what went wrong and learn from your mistake so that you do not make it again in the future. Your experience and past mistakes will help you fight half the battle in the stock market.
#4 Financial Goals
If you look at your parents, you will understand that they had a financial goal that they are trying to accomplish or have already accomplished. Financial goals are extremely necessary while trading stocks. What is your aim? Are you a casual trader or do you trade aggressively and make your living in the stock market? Are you investing for the long term or are you trading in the short term? Your financial goals will answer these questions and having a financial goal is necessary to be successful in life.
#5 Trust Your Instincts
In the world of trading, there are self-proclaimed experts and trading gurus who will constantly preach their sermon. Just like your parents taught you to trust your instincts rather than trust strangers, follow that advice and take it to the stock market. Following your instincts by relying on your self-taught knowledge will serve you better than what these people say. Of course you should follow the great traders and what they say but that is already part of your studying process.