4:06pm ET: How to get started in trading & investing
Tags: investment education, trading education, options education
I just received a very nice note on Seeking Alpha from a young investor looking for ways to further his trading education. Here’s his note followed by my response:
Dr. Kris,
I have to admit, I only understand about 50% of what you say in this article [“Silver plays to make your portfolio shine”–see below]. I’m very interested in learning more about how all of the trading and investing works, would you be willing to recommend the best way for me to start studying and learning this stuff? Do you recommend any books or other reading materials I can use to develop a better understanding of all of the things you are referencing?
Thank you for your time!
Paul
My response:
Hi Paul,
Thanks so much for your lovely note. I try to write a variety of articles that will appeal to different levels of market expertise and knowledge. Some are written for the novice and some are written for the seasoned professional. It’s nigh impossible to write every article that will appeal to all.
Where to get started? First of all, you’re doing the right thing by reading articles here [on Seeking Alpha], even if you might not understand all of the content, There are so many free web-based courses and seminars that provide trading basics. I know that CNBC’s Fast Money show offers online trading videos. [Check out the Fast Money trade school.]
A great place to get information is from your own broker. All of the major online brokers (Schwab, Fidelity, Etrade, etc.) offer a wealth of trading information.
Go to the library and peruse the section on trading and investing and select those books that appeal to you. Join investment clubs (check MeetUp.com to see if there are any in your area) and learn from other investors.
For options education, I highly recommend checking out the educational tools on the CBOE (Chicago Board of Options Exchange). The Options Industry Council also offers a comprehensive options education program.
A couple of things to remember regarding trading new strategies for the first time: First of all, realize why you’re trading a certain equity. There should be a compelling catalyst that will propel your stock in the desired direction. Secondly, but no less important, paper-trade every new strategy before playing with your hard-earned cash. (I recommend at least 3 months of paper trading.) Many online brokers have virtual trading platforms that will let you do just this.
Twenty years ago I didn’t know a stock from a sock. To educate myself, I read every book I could get my hands on. I also took courses and seminars. Some were valuable and some weren’t. Being in the market is a constant learning experience and there’s a whole lot out there that I still don’t know, but the good thing is that at least I know what I don’t know.
Best of luck and don’t be afraid to ask questions, even if you think they’re stupid. The road to understanding is successfully traveled by asking just those types of questions.
Dr. K
1:00pm ET: Intraday support/resistance
SPX 1298/1312
DTX 510/516
DJIA 12100/12200
Nasdaq 2704/2741
OEX 581.5/587.5
VIX 17.6/19
Average VWAPs: +55/-42
Trin range: 0.50 – 0.85 (Trin is now at 0.55 which is getting into bullish reversal territory)