The Objectives for future posts in this “Starting Anew” Series
to provide relevant information for the beginning trader

  • Find 10 stocks to paper trade
  • Find 10 stocks for the Watch List
  • Use of Charts – find and explain winning patterns
  • Enter paper trades – Follow the 4 Rules
  • How to track the trade’s daily progress
  • Exit paper trades – Follow the 4 Rules
  • Repeat the process – keep simple records

But First a general introduction and explanation

There are already many articles on this site dealing with the trading approach and offering specific suggestions on how to proceed, but for this “Starting Anew” series let us re-summarize.

Stock market basics, the subject of this website, covers a range of topics that are assumed to be of interest to the beginning trader, someone who is searching various sources for relevant information in order to gain a better understanding of how the stock market works and how to make stock trades based on logical and time-tested trading principles established through the experience of successful traders. Reference to such topics is made in several other articles on this site, they can be found at this link: List of Topics.

Making an assumption, trading versus investing
The stock market is a place for both investing and trading, and although there will be some coverage here of investment as a separate and worthy topic, the emphasis on this site is on trading rather than investing. That is because trading can require less capital to get started and provides a possible route to build a bigger stake in a shorter time.

And a beginner is not likely to have the extra financial knowledge and skills required to personally choose an investment grade portfolio of stocks and must therefore place their faith in some form of investment advice. But we will look forward to providing articles here that describe how successful investors have achieved their successes — with reference to their guiding principles that may better inform the beginner who prefers to invest rather than trade.

Trading is the focus because it is assumed that the beginner looking at websites, such as this one, may not have sufficient working capital to invest in some of the higher priced quality stocks for long-term growth and dividend payment, a major focus of investing. Trading is a shorter-term process, considered riskier by some, but done properly with appropriate risk management, trading can provide handsome returns that can help build the needed stake to begin investing as well as trading. There are already many articles on this site dealing with the trading approach and offering specific suggestions on how to proceed.

Just who is a beginning trader?
There is a need to know this so that we can cater to that person’s needs in learning about the stock market basics It might be sensible to try to identify some of the characteristics that could define the category of “beginning trader”.

Someone starting out with a small capital stake – that is who to provide information and guidance for
For now, let us assume that the beginning trader is someone who has a relatively small amount of money to start trading in the stock market – perhaps less than five thousand dollars, or even just one or two thousand. Perhaps someone who has already made a few trades, someone who has recently started trading without knowing much more than how to place trades and whose early experiences indicate the need for a wider knowledge base and is now checking out sources, such as this website, to see what they have to offer.

Cut the losses, let the profits run –  much quoted advice for the beginner
To preserve and protect a small stake and provide an opportunity to double it, there must be rules to follow that will allow a sufficient series of trades, some of which will encounter losses, but where overall a target profit is achievable because the rule of cutting losses has been followed.

Follow basic rules as established in the AGCO paper trade
As we begin here to paper trade some stocks, it is hoped that reference can be made to some of the basic guidelines of trading. That has actually already occurred in the case of the September paper trades for AGCO, one of which is still profitably in play as of this date, November 11, 2010, and the other trade exited with a paper profit of 186% following the rules established at the opening of the trade. Not all trades will provide such winners but the objective is to equal or better them and in any event, win or lose, to learn some basic rules.

Finding the stocks to trade
We also must have a successful method of finding stocks that are promising candidates for trading, most traders have their own preferred routines and here we can start by trying to find stocks that have the characteristics associated with many known winning stocks. For this, stock charts, described elsewhere on this site, will be a useful resource.

The objective is to quickly find a number of stocks to trade only on paper as examples of how to follow some established rules that help qualify and track a given stock – from specifying the reason for choosing it until the reason for selling it.

There should be some winning bullish trades available now that it appears (as of early November 2010) that we may have a few months of an up-trending market ahead of us.

Within the next few days we will endeavor to screen a number of stocks to find a few to start paper trading next week, the week on November 15, 2010.

Check here to re-visit the List of Topics and Categories on this Website.

Related posts:

  1. A Chart Observation for the Stock Market Basics Beginning Trader
  2. Suggesting a Course of Action for the Beginning Trader
  3. Stock Market Basics and LEAPS for the Small Trader
  4. Introducing Trading And The Stock Market For Dummies
  5. Starting Anew, Steps to Learning Stock Market Basics – Post No. 1, November 05, 2010
  6. Stock Market Basics Guide — Our Objectives
  7. Opportunities for the Stock Trader — Let the Charts Be Your Guide

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