Today, I have quite a lengthy question from a reader, and so I will give a lengthy answer, but I will do it in segments, as that works best.
I am new to trading and would like to know where is the best place to learn the fundamentals.
I assume you mean the “fundamentals,” as in the craft of trading, meaning the actuality of making a trade. You have already started with your practice account. Actual trading is how I did it, although I did make the mistake of bypassing the “practice” part. Other than a hands-on tutor, it is the best way to learn the craft. You could consider the former idea, but that might be cost-prohibitive. I would also recommend getting the book, “Trading For Dummies.” Don’t take that personally, as the series of books is one of the great all-time ideas for teaching fundamentals on many topics. Finally, read whatever you can that discusses trading as a craft.
Include in my advice the reality of understanding fundamental information about a market, i.e., a company. Reading the financials is key, but interpreting other information is key as well. What the CEO, the CIO, and the CFO say and what other analysts say should be factors in your analysis. In fact, what anyone of understanding says is important.
I’ve made trades on practice accounts over the last year and have actually made some money (practice). I now have five grand saved up and would like to try and make some money.
Keep in mind that practice trading is much different than when your money is on the line. You will find that when you see your money gathering momentum or losing steam, you will react emotionally. The best book on this for my money is “Trading in the Zone.” Get it. Read it. Put in practice what it teaches. Trust me on this – you have to master your emotions. In my mind, the psychological component of trading is more important than the very important craft.
I guess my questions would be how do I become the best trader fundamentally (getting in and out properly) and also the best researcher (where to focus my time on picking new companies).
I addressed the first part of your question above, but your second point is worth much more space than I have time to give it here. Although you talk about researching companies (that is easy to do – get their financials, track their news,), the larger point, and one I have hammered in this column for years, is to research the world. For me, understanding what is going on in all quarters of the world has been a big plus for making my money work. It takes time to build a resource base; it takes time to read and listen every day; and it takes time to mentally process what you know. Yes, staying on top of the world economically, scientifically, socially, and geopolitically is a big chore, but well worth it and necessary.
I just wanted to say I appreciate you taking the time to answer. I have no one in my circle that could help. I will put in the time and work I just need some direction. I want to be the best.
Drop the idea of being “the best.” Instead, become successful, meaning day in and day out you make your money work for you. Don’t get greedy and don’t get fearful, and most of all, don’t get lazy. Work hard, gather information, assess on your own, and do it. Remember, ultimately it is you alone making the trade, so the more you do on your own, the better you will be. However, finding a mentor is a good idea. It might not be easy, but try … You are welcome.
Trade in the day – Invest in your life …
