Trading Library

The all important settlement or closing date is when a transaction is finalised. Share trading is like buying or selling property, you buy the house but don't actually own it until after closing. The seller also does not get the money until the closing date. On the settlement date, a seller collects money and gives up stock ownership while the buyer pays for the securities and becomes the official shareholder.

Market depth is the overall level of open buy and sell orders for an individual security. You can quickly check the number of orders and their corresponding prices if you want to know if there are sufficient liquidity levels. For example, low liquidity can be present for particular interest rate securities and warrants.

A market depth table is composed of buyers, sellers, and prices that the buyers want to buy at and sellers wish to sell at. In the middle column you will see quantity, which is the total shares in the market and total shares bought and sold at a certain price.

To be able to bank big profits you also have to risk big amounts of money. Unfortunately most traders, especially newbies don't have that much capital begin with. Apart from that, trading will most likely be a sideline other than a day job to have a stable source of income. One of the ways to get extra cash is to borrow from a bank. This is called a margin loan. The question is, should you risk a loan in hopes of earning a big payout?

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.

Mistakes will be inevitably made in trading. Unfortunately more often than not it’s at the expense of your money. However, for a beginner this is to be expected. Trading is primarily trial and error until you are able to come up with your own system that lets you profit consistently. Unfortunately, these are not the biggest mistakes you have to watch out for. More often the simple ones have more bearing.