Beginners taking their first steps toward learning the basics of stock trading should have access to multiple sources of quality education. It’s like learning to ride a bike: Trial and error, coupled with the ability to keep pressing forth, will eventually lead to success.
One great advantage of stock trading lies in the fact that the game itself lasts a lifetime. Investors have years to develop and hone their skills, and strategies used 20 years ago are still utilized today.See also: How to Invest (2022 Beginners Guide)
When I made my first stock trade and purchased shares of stock, I was only 14 years old. Over a thousand stock trades later, I’m still learning new lessons.
What is stock trading?
First things first: Let’s quickly define stock trading. Stock trading is buying and selling shares of publicly traded companies. Popular stocks most Americans know include Apple (AAPL), Facebook (FB), Disney (DIS), Microsoft (MSFT), Amazon (AMZN), Google (GOOGL), Netflix (NFLX), and more recently listed companies such as Uber (UBER) and Pinterest (PINS).
In the stock market, for every buyer, there is a seller. When you buy 100 shares of stock, someone is selling 100 shares to you. Similarly, when you go to sell your shares of stock, someone has to buy them. If there are more buyers than sellers (demand), then the stock price will go up. Conversely, if there are more sellers than buyers (too much supply), the price will fall.
10 great ways to learn stock trading as a beginner
For beginners who want to learn how to trade stocks, here are 10 great answers to the simple question “How do I get started?”
1. Open a stockbroker account
To trade stocks, you need an online broker. Every broker offers something different. For a list of recommendations, read my full guide to the best online stock brokers for 2022. Some brokers are known for their trading platform and tools, others provide excellent research, and some provide a bare-bones experience but are simple to use. Do some investigating to see which will suit you best.
|Best For||Overall & Beginners||Day Trading||Options Trading|
|Options (Per Contract)||$0.65||$0.50||$0.65|
2. Read books
Books provide a wealth of information and are inexpensive compared to the costs of classes, seminars, and educational DVDs sold across the web. See my list of 20 great stock trading books to get started. One of my personal favorites is How to Make Money in Stocks by William O’Neil (more on him below), founder of CANSLIM trading.
3. Read articles
Articles are a fantastic resource for education. The arena of educational websites has grown in recent years with contenders like Investopedia. I also highly recommend reading the memos of billionaire Howard Marks (Oaktree Capital), which are absolutely terrific. And, of course, searching on Google is another great way to find educational material to read.
4. Find a mentor or a friend to learn with
A mentor could be a family member, a friend, a co-worker, a past or current professor, or any individual with a fundamental understanding of the stock market. A good mentor is willing to answer questions, provide help, recommend useful resources, and keep spirits up when the market gets tough. All successful investors of the past and present had mentors during their early days.
Despite being “old school,” online forums are still used today and they can be a great place to get questions answered. Two recommendations include Elite Trader and Trade2Win. Just be careful who you listen to. The vast majority of participants are not professional traders, let alone profitable traders. Heed advice from forums with a heavy dose of salt and do not, under any circumstance, follow trade recommendations.
5. Study successful investors
Learning about great investors from the past provides perspective, inspiration, and appreciation for the game that is the stock market. Greats include Warren Buffett (below), Jesse Livermore, George Soros, Benjamin Graham, Peter Lynch, John Templeton and Paul Tudor Jones, among others. One of my favorite book series is the “Market Wizards” by Jack Schwager.
6. Read and casually follow the stock market
News sites such as CNBC and MarketWatch serve as a great resource for beginners. For in-depth coverage, you can’t beat the Wall Street Journal and Bloomberg. By casually checking in on the stock market each day and reading headline stories, you will expose yourself to economic trends, third-party analysis, and general investing lingo. Pulling stock quotes on sites like Yahoo Finance to view a stock chart, view news headlines, and check fundamental data can also serve as another quality source of exposure.