Trading stocks - Some important stock market trading tips for begginers

Making easy money is more or less what we all would love, stock markets may give you that potential, but it's really harder than it looks. I have written a few paragraphs that will help you, as most of the tips I learned the hard way.

The starters package to trading stocks requires some tools:

- money (important)

- bank account: Internet banking is cheap and very easy to use.

- software

- trading system

For a apprentice, you should start off with money you don't need, don't take out loans, if your a starter, think of this first investment as learning experience, don't expect to win all the time. Actually most people loose money in the markets, and the main reason is that they don't have trading strategies that help them decide when to buy, what to buy and when to sell.

So, first phase, invest money that you know that you can put at risk. In the markets you win some and you loose some, be prepared to learn from errors.

Banking is very important, for two reasons, information and costs. Most banks give out free information which is good and useful, even have on-line software to help you with your decisions. But most important is the cost, if you do a lot of buying and selling, at the end your earning will be in part for the transaction fees. Also don't forget that if you invest too small amounts, these bank costs start to represent an important percentage of you trade, always account for these costs when trading.

Software and Internet, information, information, information ... never too little when deciding on what stock to buy. You have hundred's of stocks available in markets all over the world, but I suggest you start with 1 market and base you learning experience on it, as each market may behave differently, and in some markets you have to be aware of the Exchange rate.

Fundamentals are important to any investor in stocks, but not essential when choosing the moment to buy or sell, I assure you Technical Analysis is a very good instrument in you day-to-day trading. Basically by analysing graphic evolution of stock quotes and volumes, you may be able to make investment decisions.

Metastock is a software normally used, however it's expensive to buy, most banks have similar tools for free. And more important, on the Internet you can find hundreds of sites and forum about stocks, just be careful and remember, anyone who actually does a comment on a stock may have a particular interest in it.

Trading system

This is the most complicated thing to draw up. Mainly because every stock has a particular behaviour, however it's proven that some similar situations may repeat itself.

I advise you to set up a system, easy not to complicated, something that will give you a good sign to buy or sell, and in a timely aspect. I've seen a very simple system that works like this:

- Moving average 9 days and Moving average 30 when their is cross over, it's either a signal to sell or to buy

This system is simple, buy evaluate past stock price to figure if it's appropriate for a specific stock, and volume .... I usually look at volume, if the average volume is up, that means more people looking to get in to the trade ... good signal if stock rises. Every time a stock rises, it should say more people buying than selling, however it's importance is greater as the volume of the transactions.

Example: If a stock falls 5% with more than twice the normal volume, that is a bad signal ... next day, it'll probably fall again, or begin with a gain and end loosing...

If a stock gains 5% with more than twice the volume, that is a good sign, ... the next day, will even be better if it starts slightly lower ... my bet is by the closing bell it'll be gaining.

One more thing that's very important, apply everything I've said so far to blue chips, as small caps are a total different story. I don't advise small caps for a beginner as sometimes due to the small volumes false buy and sell signals are given.

Good luck and excellent trades.