How To Get That Initial Momentum In The Stock Market
Let's face it. Everyone wants to fulfill the dream of becoming a profitable trader in the stock market. However, very few people have the discipline to fulfill this dream. There are many reasons for this like lack of education, emotions, bad risk management, and other things. However, there are those five to ten percent of traders that do succeed in the market. It may take some time but you too can reach that status. To get there, it takes years of learning, practicing, and honing your craft. Trading isn't easy and anybody who says it is lying to you. Just look at the success rates. Despite all the types of trading styles out there, momentum trading gives you the most amount of profit in the shortest amount of time. Another term for momentum trading is scalping. It's where you find a very active stock and capitalize on its swings in the market. The only bad thing about momentum trading is that it is a lot riskier than simple swing trading or long-term trading. In this article, I am going to be breaking down how you can get involved in momentum trading by doing it the right way.
One of the biggest mistakes I see new traders make is hopping straight into the markets with no prior experience. This is one of the reasons why the failure rate is so low. How can you profitably trade, especially a live account, if you don't know what you are doing? It makes no sense. Starting out, I would buy a few books on trading psychology such as Trading in the Zone and Trading Psychology 2.0. This primes your brain for the emotional rollercoaster that the market is. Start getting familiar with the markets, buying and selling stock, capital, and other psychological principles. These will help you a lot when you actually get into trading.
The second most important thing is trading education. It can be very hard to see what trading courses are legit and which ones are not in this type of industry. Sadly, there are a lot of people out there to portray that they are profitable traders when they really aren't. Three courses that I would highly advise looking into are Warrior Trading, Ricky Gutierrez' course Learn, Plan, Profit, and Claytrader's courses. All of these individuals have proven that they know how to profit in the market. Claytrader and Warrior Trading scalp a lot in the market so these courses will be best for momentum trading. Watch these courses over and over again, studying them frequently.
Once you know how to deal with your emotions while trading and have learned the art of momentum trading, now it is time to put it into action. I would highly recommend simulation trading before putting your actual hard earned money on the line. Momentum trade day after day and make sure the strategy that you learned works. I would highly recommend simulation trading for at least 3-6 months before opening a live account. This gives you time to save up to open up a brokerage account. Only open up a live account after you have been trading profitably for at least three months. The profitability will give you confidence moving forward.
Open a live brokerage account
The next step is to open up a brokerage account. If you are a beginner, you probably don't have twenty-five grand that you can deposit into an Etrade account in order to momentum trade. This is the lowest amount of capital you can have where you don't have to follow the PDT rule. So, you will have to open up a Suretrader account. The good news about Suretrader is that they don't have to follow the PDT rule. For starters, I would recommend deposit one thousand dollars to three thousand dollars into the brokerage account. Suretrader also allows you to use leverage when trading, allowing you to grow your account faster.
Consistency and Growth
When getting started with a live account, try as much as possible to replicate what you did in your profitable simulation trading account. When many traders get started, they obtain bad habits. They don't size into positions but rather use leverage on a trade. In other words, they take too large of a position. This can really blow up your account if you are not careful, especially if you are shorting stocks. All in all, you need to focus on consistency when trading. You don't need to try and maximize your profits every time. This shows greed and the market won't reward you for it. Instead, never be afraid to cover profits on a green trade. These profits will add up over time. Also, don't focus on the dollar amount you are earning but rather the percentage at which your account is growing. Growth is the other important part of consistency. Once you have grown your account enough and really know what you are doing, you with see those large green days that you wish to see. It is just going to take some time to grow your account. Remember, trading is a marathon and not a sprint. You won't become a millionaire overnight but you can amass a good amount of wealth over time, especially if you have good habits. All in all, these are my best tips on how to get momentum in the stock market.
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