Newbie Wants to Start Investing with $1000

Traders come from all walks of life. Some may start early with a finance degree under their belt. Others may start a bit late to earn extra income and study on their own. Whether you’re a newbie or a mum and dad investor, deciding on your trading capital is an integral part in the beginning.

So, you’re a newbie with $1000. Instead of saving it in the bank, you want to earn money off of it and gain experience in the stock market at the same time. The ideal minimum trading capital should be at least $20,000 and you shouldn’t commit more than 10%. By making your trading capital manageable you will be able to make fewer errors due to financial stress. But you still decided to give it a go. $20,000 is a long way to go so why not start with something small.

First of all you have to decide which product you want to invest on. Most of the time, newbies choose to trade shares. Afterward keep yourself educated and informed. Knowing the ins and outs of the stock market is essential. You can’t learn everything by picking up a book but experience will teach you along the way. The stock market is unpredictable and the only way to work around it is finding the strategy that suits your trading habits.

Some practical tips:

• Figure out the trend.
• Test your uptrend rules when the market is on an uptrend; test your downtrend rules when the market is on a downtrend.
• Pick a trend indicator that will make a good entry.
• Pick a money management scheme and an exit strategy that suits you rather than picking one that makes the most profits.
• Trade long when there is an uptrend.
• Trade short when there is a downtrend.
• Trading sideways won’t make you much money.

There are plenty of ways to go about earning in the stock market. But the most important part is that you are realistic. Instead of following a guru or a billionaire’s trading methods, create one that works for you. Read up on development books that will help you create your own style rather than adapt somebody else trading system. Paper trading is a good way to practice. You can test different strategies without having to lose money against the professionals. No matter how much you trade it's important to understand that all of this is a risk, and you have to prepare yourself for it.