One of the questions that I receive a lot
is Marcus.
How do you get started
with trading?
And you see it doesn't matter whether you're absolutely
new to trading
or you have been trading for a while.
The good news is when it comes to trading
they're actually only three things
that you need to know.
And I think that's pretty cool because
if you think about investing in
real estate,
where you need to know 68
different things
or running a business,
where you need to know three hundred
and forty two different things
when it comes to trading it all boils
down to three things.
So the first thing that you need to know
is what do you
trade so you can trade stocks,
you can trade options, you can trade futures,
you can trade forex,
you can trade crypto currencies.
What should you get started with?
And here's my take on it.
I think that you should get started
with stocks
and options.
Now of course you can trade futures you
can trade forex you can trade crypto
currencies however these
instruments futures forex
cryptos they are more volatile
and I don't think they're perfect for a beginner.
If you're a beginner stick to stocks
and options.
This again step number one.
Want to trade is how to find
the best stock to trade.
There's 15000 stocks
and you know what I like
to look for. I want to see stocks that
are moving
and by moving I mean that have small
but consistent trends.
So stocks that are not erratic,
stocks that are nicely moving
going up and down
and that's where I use my tool
the power X analyzer to find
these stocks to run the scanner
and find it of all these 15000
stocks that we have currently traded at theU.S.
exchanges.
Step number two, is "When to
Enter". So let's just say when to
BUY a stock.
Right. Because you need to have specific
criteria of when to buy.
That's step number two.
Now what I'd like to do I like to trade
what I see not what I think
and therefore I like to use indicators.
Technical indicators are easy
to use, technical indicators are
objective.
So this way I don't have to worry
about how to interpret news
and that I think they're perfect
for beginners because they're
black and white. Right?
I mean either an indicator
is above a certain level
or below. Now,
the three indicators that I like to use
are stochastic,
RSI
and MACD and the
levels that I like to look for especially
for stochastic
and RSI is the 50
level.
Once we cross above the 50 level
it is more likely for stock to go up.
And once we cross below,
it is more likely for a stock to go down.
Now I like to use three indicators,
so that all three indicators
are confirming each other.
Step number three,
is "When to Exit a Trade".
OK. Now that you enter the trade
you have to exit.
And does not matter whether you're trading stocks
or options forex futures
crypto is.
At some point you have to exit
and there's two types
of exits.
One is to limit your
loss. So you've got to have a stop
loss. If the trade does not go
in your favor you need to know
when to exit
and say OK this did not work.
Trust me, there will be trades
that are going against you.
So...
You need to know when to exit.
The other type of exit it's a profit target.
So when a trade is going
in the right direction.
So when a stock is going up
the question is "When do you exit?".
Now what I'd like to do.
I'd like to determine both
my profit target
and my stop loss before
I even enter a trade because
this way I don't get emotional
while being in a trade
and by emotional I don't mean that
I'm crying.
No! I've been emotional,
this means that we
we have two emotions that are
driving our actions as traders.
Right. It's greed
and fear.
And when you have a trade that is working
out you might tend to get
greedy.
I mean I used to in the very beginning of my trading
career and hope that wow this is...
This is the trade that will make
me thousands
or 10 thousands of dollars.
And what I experience often is that the trade
actually then turned around
and went against me.
So take profits while they
are there. Nobody ever
got broke taking profits.
Now it's saying with a stop loss.
Right. I mean never hope that a trade
might turn around if it didn't work
out, if it didn't go into your favor,
if the trade went against you,
GET OUT and instead of hoping that it turns around
just pre-defined your stop loss level.
Right?
Choose a level that you're comfortable with.
Now I personally like to use the concept of
the ADR,
the Average Daily Range,
to calculate my profit targeted
my stop loss. Because when using the Average
Daily Range it means that
if a stock gets more,
more volatile I can use a larger
stop loss and a larger profit
target.
And when a stock is less volatile
or maybe the markets are becoming less volatile,
than I'm using a smaller stop
loss and a smaller profit target.
So anyhow. How do you get started?
Well, it all breaks down into
three things.
Number one,
what do you trade whether it's stocks
options futures
or forex. I recommend start
with stocks and then you have to find a way
to pick a stock
out of the 15000 stocks that
are available.
And you know that I like to use the indicators
here. Then step number two,
is know when exactly
to enter. So have very specific criteria
that tell you when you buy
a stock
or option or futures...
Doesn't really matter.
And step number three,
know when to exit when exiting,
I like to use a profit target if the
trade is going in my direction
and I like to apply a stop loss
if it doesn't work out so that immediately
I get out and move on to the next trade.
Now my profit target,
I typically choose twice
as big as my stop loss so that I make
more money on my winning trades than
I lose on my losing trades.
I hope this helps! And if you are a little bit overwhelmed
with all the the stuff around trading
just think of these three categories.
Right?
Want to trade,
when to enter,
when to exit
Hope that helps.
And I'll talk to you soon.