How Do I Start Trading?

By Photokanok, published on 26 July 2013
Stock Photo - image ID: 100186685

The first thing to do to start trading is to set up an account with one of the online brokerage companies.  The most well-known are TD Ameritrade, E-Trade, Scott Trade and Charles Schwab.  I use Trade King because the commissions are low ($4.95) and you can call a broker to place a trade for you. The on-call brokers work magic, they can get your trade in better than your price sometimes. If you choose them let me know there's a referral program where we both can get $50.

For charts and analysis nothing beats Think or Swim. I have a TD Ameritrade account just for the Think or Swim paper money and for their Investools free classes. I don't trade on them however because their commission is $10, just for practice and info.

This will get you up and running.  The key however, is to practice before you trade.  Be sure to make use of the paper money trading tools.  This helps you to practice strategies and get used to the stress of pulling the trigger.  Your emotions will get the better of you if you let them so it's good to plan your entrance and exit strategies and to be disciplined.  

 

Making Money on Put Strategies

As I mentioned before in a previous post, some very successful traders use put strategies to make a lot of money in the market.  This was a very lucrative time for many traders who do.  The market was going up and people didn't know where it was going to stop.  Then instability came into the market through Cyprus, Greece and now with the attacks in Boston.  You can almost guarantee something is going to happen in a two-month time period to cause markets to destabilize and when they do the S&P, DOW and NASDAQ all go down.  The best play of course is the SPY because it responds directly to big dips in the market.  The options are also real close between the Bid and Ask price so this makes it easier to get in and out of your trade.

The market always goes up slowly and comes down fast.  You will almost never catch the market going up fast unless it is on some news that nobody but insiders know and when it does it is usually in after hours trading so you missed the run (case in point: Sprint shot up a whole point over night the other day after Dish Network said it wanted to buy them).  So the play is to wait for the market to go up and then place put options at various points going at the most two months out.  For example the market is already down today so I would wait until SPY gets back to 157 and then as it goes up place put options for the June 155 strike price.  Then wait and see what happens.  You can place your stop at 159 and your limit at around 153 (I know the options order window in TOS doesn't show the strike price but after you play around with adjusting your trade price it will show you on the chart where your options orders are).  

Yes it's great to have stop and limit orders but always watch your trades.  There are sometimes your bid doesn't go through as quickly as you would like and you could miss some profits or worse lose money.  When you see your profit margin approaching it may be a good thing to call your broker and ask him/her to place the trade for you at your trade price.  Depending on the brokerage firm they can actually execute your trade for you better than your computer.  They can find a buyer for you and make you some good money.  I've had good experiences with Trade King and highly recommend them.