CFD, Options, Warrants, Forex, Shares, Products & Services, Psychology, Fundamental Analysis, Technical Analysis

Everybody has to start somewhere in the uphill climb to be share trading pros. Do not jump ship and abandon your 9-5 job just yet. Get your feet wet by trading on the side, and when you are earning more than you are losing, maybe, just maybe you can trade from home full time.

The trading information available on the web can overwhelm the newbie, so where do you start? Read on for beginner tips in cracking the market.

What Computer System Should I Use?

There are many ways to earn from the stock market. Whether you want to delve in share trading for a short or long period of time, there are varying approaches that you can use. However, there are certain factors that are profitable. If you prefer to gain maximum profits in short term trading these are some suggestions that you can look into.

Research:

All of us has to start somewhere. Unfortunately that somewhere isn't always a good place to start. When it comes to trading, most often than not, newbies are lured by the prospect of earning millions without realising how much hard work is needed for it to happen. Apart from that, you will need a considerable amount of capital to begin with. Don't expect to make big gains out of small wagers, especially in the stock market.

Making a killing on small price changes when share trading is called scalping. Scalpers, as these traders are called, will generally place hundreds of trades in one day, inundating the market with orders. Their goal is to trade a lot of shares at the asking price and sell them as fast as possible at a slightly lower or higher price for profit.

You sell a stock you don't own when you "short" the market. You don't own the stock, the broker lets you borrow it. Where does the broker get the stock? The stock comes from the brokerage's own inventory or from another brokerage firm. Shorting is the opposite of a long investment. Trader X goes long when he buys stock ABC and expects the price to rise in the future. When trader X goes short, he expects a price decrease.

Usually, traders short to profit from risky investments during market fluctuations. Here are some ways to profit from a drop in the markets by shorting:

As beginner, you may not have enough capital to start trading. More importantly, you want to make money from the market - hoping to turn a couple of hundred bucks to a thousand – so why risk a huge amount of money in the first place? So with the little money you have in your account, is it wise to trade even though you don't have enough capital?

Things to Ponder if Undercapitalised

Setting a stop loss point is probably the most important rule a trader needs. Share trading is a game of chance, and it's only natural to hold on to losing trades. Using stop losses will minimise risk that you will sink with the ship and lose all your capital.

Aside from hard stops, many traders find using an ATR (average true range) stop efficient. The average true range is a moving average (14-days) that measures volatility over time, but not price direction. When using ATR stops, the stop length (usually 14) is marked by the average true range percentage.

A franking credit is a unit of tax paid by companies in countries with a dividend imputation system. The Australian simplified imputation system started on 01 July 2002 which allows that only frankable distributions may be franked.

Who can frank credits?

Australian resident companies, corporate limited partnerships, corporate unit trusts and public trading trusts are franking entities. Mutual life insurance companies are excluded from issuing franking credits.

What distributions can be franked?

Market capitalisation is calculated by multiplying a company's shares outstanding by stock price per share. Large cap (capitalisation) companies are the big boys of the Australian Securities Exchange. Blue chip companies like BHP Billiton, Macquarie Group and Telstra have market capitalisations that are usually more than $10 billion.

Some say share trading is an art rather than a science, and the only absolute is market unpredictability (and that rule about using stop losses). The 'rules' below are guidelines that can help the beginner share trader in the game longer.

Get used to losing money.

Prepare your mind and pockets for losing capital when share trading. Loss is normal and necessary if you want to progress from newbie to shark.

Create a trading plan.