I think a big misunderstanding is that it takes money to learn how to trade stocks online. I will tell you right now that is not the case at all, and in fact I highly recommend NOT going down that path. There are two great, easy, fun, risk free, and simple ways to practice investing in the stock market without actually putting a real dime into the stock market; try using a stock simulator or a trade journal.
Stock Simulators
I used stock simulators quite heavily when I first got started in the stock market. What a stock simulator allows you to do is trade real stocks (Apple, Microsoft, Exxon Mobil, etc.) with FAKE money. The stocks reflect their actual prices as they are on the actual market, and you buy them literally the same way as you would online, by filling out a trade ticket.
The best stock simulator in my personal opinion is over at investopedia.com. You can track your portfolio, trade options, short stock, place market orders, limit orders, heck even trade on margin. Once you get your account setup (I will write an article on how to do all of this next week or something to make things easier for you) joining trading groups / contests is the way to go. Once in a trading group or contest you are given typically $100,000 in fake money, then from there you can practice new strategies and grow your portfolio.
The reason stock simulators are so powerful is the flexibility to learn while not risking your nest egg. Did you know that some of the best traders in the world don’t even make money on 50% of the trades they make? The stock market is a huge game, and unless you understand the rules and some simple tricks then you are setting yourself up to get beat. Getting “beat” means losing REAL money, so why not start with fake funds to kick start your game?
Trade Journals
Back in the day when I started trading at 15 (which is more humorous than anything because I am only 21) sophisticated simulators didn’t exist. People actually went out to the store, bought a notebook, and would record their buys, sells, profits, etc. all on paper in a journal.
These journals though are extremely effective because you LEARN so much just by writing out stock symbols and calculating percentages with a hand held calculator each and every day. To setup a trade journal, all you need are columns for buys, sells, purchase price, return, etc. and you simply fill in the blanks each day.
Remember each trade is a lesson, so write down notes and inspirational comments to keep you working hard. Give yourself say $1,000 to $5,000 to invest with (I used how much I actually had at the time which was about $3,000) and use that money to make your purchases as you would be in real life.
To help you out, I actually have some scanned copies from my ORIGINAL trade journal. Take note of the simplicity of the journal entries themselves, and how I used notes to help me along and keep myself motivated even at the young age 15 years old.
(click to enlarge and zoom)
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