Making a living trading stocks isn’t easy due to how volatile the market can be, but with a little luck and a lot of knowledge, you can generate enough income to quit your job and work professionally as a trader. Before you start buying and selling without guidance, here is an overview of how to make a living trading stocks.
Get Started
You should know that getting into the field is much easier than it is to stay involved in the stock market. People enter with dreams of maximizing their profits only to experience loss. Thanks to today’s technology, you’re able to engage in the trading and make a living without having to use personal capital.
Keep in mind that in some circumstances, you will be required to put financial assets toward your account to show that you have commitment. Most people don’t realize that if you plan on making a living trading stocks, you’ll have to put in as much effort as you would with a 40-hour-a-week job. The success of the endeavor is largely a result of how much effort you put into it.
Know the Basic Facts
There are some basic facts you need to know when it comes to making a living trading stocks. First of all, you need to eliminate any and all of your personal debt, and you must have a fair amount of capital. Additionally, you have to understand the system. It can be hard to learn, but it is essential to being successful. If you plan on trading online through a website, be sure the firm is legitimate and doesn't charge high commission fees. Finally, you must be strict with your money. If you’re a gambler, and you find yourself spending more than you intended, the stock market may not be for you.
Research
One of the most important things when trading stocks is doing an adequate amount of research. Personal stock brokers spend hours and hours doing research for their clients to know where to invest their money. If you plan on buying and selling stocks online, many trading firm websites offer tools to help an amateur trader. For example, Charles Schwab offers tools such as watch lists, real-time charts, analysis from Schwab and independent sources. All of these features allow you to make an informed decision about which stocks are profitable.
Avoid Pressure
If you aren’t completely comfortable about a trade, don't purchase it, especially if it is an all-in scenario. It’s best to start by putting portions of your money in different places so that if you experience a loss, it doesn’t totally decimate your account. Expect to experience draw downs, which is a period when you’ll have a fair amount of loss. Even professional traders go through a time when they can’t make a profit. If you’ve hit a roadblock, reconsider other ways to make money until the market becomes favorable and you can invest again. Many professional traders choose to sell books, teach, and participate in other ways to generate income during this time. Always have a backup plan for draw downs. Trading can be a stressful environment, so having a backup plan can decrease the chance of failure.
