This article of our Stock Trading Course for Beginners will focus on a stock trading system. This system is a step-by-step process that can be used daily to make profitable trades.
It is critical that you are prepared to trade stocks each day. This involves developing a routine around your trading. Our system focuses on making trades around the market open, which means being on the market before it opens. The official time the stock market opens is 9:30 AM ET. For traders on the West Coast, this means 6:30 AM PST, and for traders in the Midwest it is 8:30 AM CT. You should be awake at least 30 minutes before the market open, if not earlier. A clear mind is critical to trading, so you should do everything necessary to avoid being drowsy.
Stock Trading System
The following system is based on taking advantage of early moves around the market open.
- Screen for stocks.
- Select your preset FINVIZ screener, or input the settings and monitor results. Refresh the list every 2-5 minutes.
- Read the news.
- Find out what is driving the stock. If the stock has no major announcements that could be driving it, it could be based purely on excitement, which is incredibly unstable.
- Perform technical analysis.
- Examine the chart. If you make use of indicators, check how the stock is reacting in relation to them. Be sure to look for any upward trends as well as support and resistance in the past months or years.
- Buy the breakouts.
- When the stock breaks resistance intraday, it is one of the best signs to buy. If you want to play more conservatively you can wait for resistance to become support.
- Sell on resistance.
- When the stock encounters new resistance, or fails to break historical resistance from technical analysis, it is a good indicator to sell.
A major factor every trader deals with is risk. Learning to control risk is critical to making profitable trades. The following steps help you control risk:
- DON’T trade with your full account.
- Determine a number or percentage you are willing to lose.
- Choose your entry and exit points, and STICK TO THEM.
- CUT LOSSES QUICKLY.
Trading is not a game, and 90% of people lose money. You have read this far and now have an understanding of how to trade, but you must be disciplined and control your risk.