How To Get Started in Equity Trading

If you like risk and would enjoy having the potential to earn a lot of money in equity trading, then you should get started right away. There’s an old saying about Wall Street: 'most fortunes are made during recessions'.  If you think you might enjoy equity trading then you absolutely must get started now! This opportunity won’t last long.

Equity trading can be profitable, expensive, stressful and enjoyable. The key to the business is homework and knowing what sources to trust. If you’re just looking to get into the equity trading field, then you should start with the basics; a good place to begin is the Yahoo Finance Page.

Many people who aim to trade equities put everything on the shoulders of fundamentals. This isn’t a bad approach, but it’s a much better approach for investing rather than trading. Of course, investing has a more long term game plan than trading. That said, there are benefits and it is possible that investing is more for you. If you’re the conservative type and would like to take advantage of long term capital gains laws, then stick to equity investing, not equity trading.

If you’re looking to make money fast, and lots of it, then trading stocks is more your speed. While fundamentals are still important, another Wall Street saying can make you tons of money: 'the trend is your friend'. Think about gold and silver now, oil in 2008, big banks all throughout the early part of this decade, the tech boom in the late 90s, and so on.  These were all investments which had large returns in the short term. Of course, there’s one thing all of these bubbles have in common – they popped.

So…how do you avoid the crash when you’re trading equities? The key is to put trailing stops on your orders. This is offered through any trading site like Ameritrade, eTrade, and so on. A trailing stop will lock in your gains. For example, if you buy Ford at $5 and put a 5% trailing stop on it, that means that once the stock loses 5% from its peak, a limit order for the sale of your Ford stock will automatically kick in. The only danger here is if there’s horrific news and there’s a gap down; however, that situation usually only arises in biotech.

While the above notes will help, as a general rule, follow the big money. If you can find where it’s going, you might very well end up joining the party.