How To Start Trading Stocks Like A Pro

"I want to get involved in the market. I want to learn about stocks. But where do I start? What do I even buy?"

I've gotten this question a lot, and it's the primary reason I got the idea to start Minotaur Insights in the first place. A lot of people want to get involved, they just lack the basic knowledge to get started. They think they don't have enough money, the stock market is too high, and any other excuse they've read online that convinced them to stay away from the market. 

So where do you start? The answer is different for everyone, depending on the amount they have to invest and their potential to take on risk, but I've put together an attack plan so you can hit the ground running. Let's jump right in.

Step 1: Set up a trading account

When you finally decide it's time to start trading stocks, you won't want to have to wait for your money to clear or for someone to approve your account. Eliminate your potential frustration by getting an account set up early. 

For young investors, we recommend Robinhood because they don't take commissions on your trades, which means you get to keep everything you earn. Other brokerages charge around $4.95 per trade, so we strongly suggest that you begin your trading career with a brokerage that doesn't charge commission.

Step 2: Hit the books

Knowledge is power in this industry, and the more you learn about markets and trading styles, the more prepared you will feel when it comes time to place your first trades. You should read as much as you can until you feel comfortable with your market knowledge.

Don't get me wrong, though. I'm primarily a technical-based pattern trader. I don't need to read about the complexities of the steel industry in order to take large positions in X and AKS. I don't need to know about the newest cutting edge machine learning technology to make 500+% on an IBM trade.

The area I recommend that young traders learn about first are identifying bullish (stock goes up) and bearish (stock goes down) patterns so they can trade in the right direction. I also recommend that young traders learn about all types of investments (stocks, options, bonds, etc.) so they can create the portfolio that best suits their trading style. 

Check out the educational course at BabyPips to learn more about technical analysis. While the course focuses on forex trading, the lessons learned therein are invaluable to investing in any market.

Learning about bullish set ups will help you pick the right spots to maximize your gains and minimize your risk.

Learning about bullish set ups will help you pick the right spots to maximize your gains and minimize your risk.

Step 3: Create a trading strategy

This step is, in my opinion, the most important part of this entire post. Here's how you should create a plan from scratch.

Decide how much you want to invest, and write it down. If you want to add a certain amount of money to your account each month, write that down, and stick to it.

Create trading rules that you will stick to for each trade, no matter what. The quickest way to blowing up your account is abandoning your discipline. Some rules we live by at Minotaur are as follows:

1) Never put more than 10% of your account into any 1 common stock trade.

2) Never put more than 2% of your account into any 1 option trade.

3) Let your winners run, and limit your downside as much as possible.

4) Take emotion out of the decision making process. Pick your spots and invest with conviction.

5) Identify the time frame and the price target for each of your ideas before you take a trade.

6) Know when to walk away from a trade that's gone south. Never take a big loss. 

Step 4: Practice, practice, practice

You can read all you want, but the best way to learn is to practice trading and seeing the results of each of your trades. I highly recommend creating a paper trading account so you can trade a large amount of money and see how you'd perform. This is the best way to practice executing trades and learning more about your trading style without risking your personal finances. 

I love the course at Investopedia, and think it prepared me well for a variety of market conditions.

Step 5: Just get in there already.

You can paper trade as much as you'd like, but you can't buy groceries with virtual currency. You need to eventually jump into the pool with both feet, and at some point, you'll decide to move on to the real deal. By now, you will have been well-read and well-equipped to handle market volatility. Pick your trades, write everything down to maintain your trading strategy, and invest with conviction.

Step 6: Sign up for Minotaur Alerts.

When markets get volatile, it doesn't hurt to get a little help. For only $5 a month, you can get alerts sent directly to your phone every time we buy or sell common stock. For less than the price of a Subway sandwich ($5 footlongs just aren't what they used to be, sadly), you can unlock the power of a supercharged portfolio.

Don't wait, don't hesitate. The sooner you get involved in the market, the better your long-term financial prospects will be. The barrier to entry is low, and the gains are high. Get involved today.

-Happy Trading