Trading 101: Where to Start

So you want to start trading but don't know where to start? You're already on the right track, because you're asking questions and doing research before playing with the big boys. Nobody's going to hold your hand so you might as well put in the effort.

Arm Yourself with Education

You can never bee too educated about the stock market. If you think you have enough knowledge, curve balls can hit you without warning.

Take advantage of the wealth of information that is available free on the internet. Forums and news websites are great places to start learning about trading and the stock market. If you're the type who loves books, head to your local or university library for resources. Some people recommend Fin and Smart Investor Magazine and Resource Stocks (miningnews.net).

Develop a stock market vocabulary. Trading can get technical, and an arsenal of trading terms is your best friend. Subscribe to analyst reports.

Get advice and tips from friends and people who are already trading. If you're in a position to spend funds on your learning, try taking out a fund manager to lunch to pick his brain.

Formulate a Trading Strategy

They say its not so much what you invest but how you invest. At the very least you will need a trading plan with stop losses, entry and exit prices, and a time frame/s. Some people advise trading medium to long term, as short term trading is easy to start but can get brutal.

Create your risk management profile. How much can you afford to to lose? Get comfortable with risk. This is the stock market after all. Be prepared to lose but make sure you learn from your mistakes and get it right next time. You will pay too high a price for repeating the same errors.

Build your stock portfolio. In the get comfortable stage, try a trial portfolio. People find having a blue chip stock base helpful with a small percentage of speculators thrown in the mix. Research your stocks, but don't blindly commit—protect your money and trade price action first.

Get a trading account (free) where you can read announcements and watch market price movements. Get you money management sorted and be realistic.