It can be accurately said that I had little knowledge about the global financial markets when I started my job at Worldco as a newly hired proprietary equity trader. Yes I did have a small brokerage account my parents hooked me up with when I was in high school but that was about it. For people reading this who don't have a finance background or a million bucks to their name now, we are in the same boat. I started with just a fascination with Wall Street -- how you could make money out of nothing -- and wanted to give day trading a shot. Each morning at my desk I would ask myself "Which stocks should I be trading today?" and I constantly feared the fact that I was now trading my own account and against people with decades of experience. Finding ways to get to know the market and individual stocks were the utmost priority for me when I started out. Here are the things I did when I was a rookie daytrader that I believe helped me get comfortable with the stock market, and prepared me for trading each day:
- Read the Wall Street Journal.
- Read Barrons each weekend.
- Keep a trading journal.
- For trading tomorrow's market, watch the stocks that moved the most percentage-wise (both up and down) today.
- Get up on time and don't be lazy because most of you will be working from home.
- Turn on CNBC while you are trading.
- Learn what each stock ticker represents.
- Look up the intraday charts of all the stocks you are following every once in a while during market hours.
- Join an internet stock chat room.
Get the paper or get a wsj.com subscription. You have the smartest financial writers posting columns in here. Understand what is going around in the world financial markets and learn some basic economics by reading the articles. Read this daily before 9:30am EST. The most important parts of the paper are the front page articles and Money & Investing sections. Watch the stocks mentioned in the WSJ as they will probably be the most actively traded stocks for the day and observe their price movements.
There are some interesting stock specific articles in here. I also kept track of their most up and down stocks for the week for next week's trading ideas.
As a newbie trader, it is important to write down after the close each day what trades you did and why they worked or didn't. Reflect upon your success or failure for the day. Also write down stock tickers in here if you are following them. You tend to forget some stock tickers along the way because you are just overwhelmed with information as you start.
This will give you something to watch if you don't know which stocks to follow that day. Look for continuation of strong upside or downside moves and if any of the strong moves that happened yesterday were too frothy and see if they correct today.
Your bed is so warm and during the Winter it's hard to wake up when the sun don't shine yet. The early bird catches the worm applies here especially when you are just starting out. After you get some experience, you can then be a bit lazier like myself these days.
Try and understand all the financial jargon they are spewing out. Sometimes you can also trade the CNBC pumps and dumps they mention every now and then.
Memorize the name of each company that has a stock ticker and what each company's line of business is. If someone asks you for example what are some oil drilling stocks, make sure you can answer them with a handful of different stock tickers. Each stock trades with its own personality. Some trade very erratic with big swings and large bid/ask spreads while others trade very thick with only a penny bid/ask spread. Learn how each stock trades. All this will take time of course, but the more stocks you daytrade the faster you will learn this.
This helps you find more trading ideas. Look to see if any of them have favorable trading setups - breakouts, breakdowns, etc. Always be typing up intraday charts of stocks if you can't find stuff to trade.
But not any chat room -- only ones that really expose new traders to successful trading strategies like the MookTrader stock chat room. I did not have the luxury of doing this when I started out trading in 1996 as the internet was not at its stage where it is today.
Nineteen years later, I no longer have to do most of the points I mentioned above. Life is a lot easier after some trading experience under your belt. Time is your friend when just starting out so don't get discouraged!
- Hubert Tsai