Learn To Trade The Market

Learn To Trade The Market with Best Trader

Did you ever watch the classic comedy movie, Back to School, with Rodney Dangerfield? Amid all of the joking and laughing and gags, there’s a serious message. It takes hard work to succeed. Likewise, to learn to trade the market, and to succeed, you must go back to school and work hard.

There’s lots of books on the market that you can read. There’s a plethora of online videos and courses. Some are better than others. You can follow traders online. There’s trading coaches. I’ve found that some coaches are much better teachers than traders are. You can join a trading community and ask questions.

Aside from what you study and read on your own, I can’t emphasize enough how important it is to be part of a trading community that will add value to your trading career. You need somewhere to turn to ask your trading questions. BearBullTraders.com is my favorite trading community of course but there are other good ones out there too. Trading alone is very difficult and can be emotionally overwhelming. It’s very helpful to join a community of traders so that you can ask questions, learn new methods and strategies, get some hints, and make your own contributions.

In my experience, there’s only one right way to begin your trading career and to learn to trade the market: focus on the process of trading and not on how to make money for a living. Your goal must be to develop trading skills and not to make money. Consistently profitable traders take every negative or positive trade they make as an opportunity to improve themselves. You must focus on getting better every single day.

Regular readers of this blog will very likely be able to predict what I am going to write next. You must practice. And then practice some more. You have to study and learn and practice. You need to work hard and develop one trading strategy. It can’t be imitated from reading books, speaking with others, or attending classes. You must slowly and methodically develop your preferred method. And then practice it. Practice it in a simulator using real time data, with the exact same amount of money and number of shares you plan to work with when you go live.

Trading cannot be reduced to some rules that you follow every morning. Always do this. Always do that. Every day is a new day with a new puzzle to solve. You have to learn to trade the market. Most stocks will trend with the overall market unless there’s a reason for them not to. If the market’s moving up, most stocks will also move up. If the market’s going down, most stock prices will also go down. But there’s always some outsiders, those stocks bucking the trend because of what we call a catalyst. They’re Stocks in Play and they’re what you are looking for.

What’s a catalyst? It’s unexpected news, either positive or negative: earnings reports, earnings surprises, FDA approvals/disapprovals, mergers/acquisitions, restructurings, layoffs, management changes, debt offerings. To learn to trade the market, you have to find the best Stocks in Play.

To learn to trade the market, you also have to discover the balance of power between buyers and sellers and then bet on the winner. It’s different every trading day. If the market’s bear, the entire stock market’s losing value because sellers are selling stocks. The sellers are in control. If the market’s bull, the stock market’s gaining value because buyers are buying stocks. The buyers are in control. If both camps are about equal, wise traders stand aside. Let the bulls and bears fight. Enter trades only when you sense who’ll win. You never want to be on the wrong side of the trade.

As part of Wall Street’s computerized trading, the majority of stocks will trend with the overall market unless there’s a reason not to. If the market moves up, the majority of stocks will move up. If the market goes down, the prices of the majority of stocks will go down. But, remember, a handful of stocks will buck the trend of the market. You need to look for them. StockTwits and Twitter are good places to learn what’s trending. If you follow a handful of traders, then you’ll see for yourself what everyone is talking about. There’s also a huge advantage to being in a trading community.

Follow the trend but only follow the trend if it makes sense to you. Successful traders are independent thinkers. Use your judgment to decide when and when not to trade. You don’t have to run with the crowd but, and it’s perhaps a subtle difference, you should not run against the crowd either. Never argue with the crowd’s decision, even if you don’t understand it.

My personal breakthrough in day trading came when I realized that the key to winning was controlling myself and practicing self-discipline. You must know in advance what you will do in any given trading situation. It’s challenging to predict what the market will do, but you’ve already lost if you first don’t know what you will do.

To learn to trade the market, you must remember that you don’t generate money in the market. The only reason there’s money in the market is because other traders put it there. The money you desire to win belongs to other traders and they have no intention of giving it to you. That’s why you must learn and study and practice. Are you ready? The bell’s ringing. It’s time to go back to school.