How to make money in the stock market for beginners? 1. Open a brokerage account. 2. Fund account. 3. Choose your trading style. 4. Pick between stocks, options, and futures. 5. Study what trading style you want to implement. 6. Practice paper trading in a virtual account until you’re successful. 7. Slowly scale your way up trading with real money.
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Table of Contents
How to Make Money in the Stock Market for Beginners
- Look up the best value and growth companies on StockRover
- Import the top companies into TrendSpider
- Only pick the best companies with the best candlestick patterns
- Use the weekly and monthly charts as a guide
- The trend is your friend; only buy in the direction of the trend
- Invest only what you are willing to lose and never more
- Aim for small wins, build confidence, manage risk
- Stick to JUST STOCKS! You are a beginner and not ready for options
- Use a 100% free commission broker like Robinhood or Webull
- Make sure you trade or invest in a stock simulator to practice first
Spoiler alert: you can start trading with as little as $1000! I will show you how it can be done. Psst, it’s not that hard.
Are you confused yet? Although some people believe investing and trading stocks are similar, they are quite different.
For instance, investing is taking your money, placing it somewhere, and hoping to grow it in the short or long term.
Whereas in day trading, you don’t hold positions overnight. You hope to enter stocks that are moving due to some catalyst quickly. And, in some cases, quickly exit. People do it day in and day out; some even make a living doing it. Can you make a lot of money in stocks? Absolutely.
Another type of trading is swing trading. It’s a completely different ball game. Generally, you hold stocks for some time, typically a few days to a few weeks.
Big Broker?
Do you need a big brokerage account to get started? Not really. Contrary to popular belief, you don’t need deep pockets or access to a trust fund to start trading.
Even if you have only been able to save up a modest amount of funds for day trading, that’s okay! It just means you trade fewer shares of whatever you are trading.
Can you make a lot of money in the stock market? You can make a little or a lot, depending on your situation and how much money means to you.
Would you believe me if I told you you could start trading with as little as $1,000? If I told you I started small, investing in .20 cent penny stocks and made a few thousand dollars, would you believe me?
Well, it’s true. I just did the math based on how much risk I could take (no more than 2% of my $1000 account) and planned my trade accordingly.
My 3 Steps for Success
When I started trading, I felt like information was flowing at me from a fire hose. Quite frankly, I was drowning.
I’ve been reading a lot lately about simplifying all aspects of life. And I thought, ok, if I was new to trading, what advice would have helped me the most when I started?
To cut a long story short, if you apply these three principles to your trading life, you’ll cut off the fire hose for good. They are as follows:
1. Follow proper risk management strategies.
2. Pick the right broker and platform.
3. Pick the right mastermind group.
Let’s Talk Risk
But Alison, I only have $1000. And I would say great! Given your situation, let’s talk more about how to make money in the stock market for beginners.
My cardinal rule is that I never risk more than 2% of my account on every trade. My job as a day trader is not buying and selling stocks; it’s managing risk. Write that down.
So, if I only have $1000, I can’t risk more than 2% – this case, which is $20. It may sound small, but small wins can and will add up slowly but surely. Base hits people! Not every trade needs to be a home run!
Risk to Reward Ratios
All new traders should map out their risk-to-reward ratio. That’s how beginners can make money in the stock market. What are you risking versus how much you can make? If your risk is more than your reward, that’s a trade you shouldn’t be taking.
This is why you might want to consider using a stop-limit order. If you’re willing to risk 10 cents to make 20 cents (1:2), stop limit orders would be placed with those two price points.
Good traders won’t take trades with less than 2 to 1 profit-to-loss ratios. If you buy $1,000 worth of stock, you risk $100. It would be best to sell it for at least $1,200 to make at least $200.
Of course, if the price comes to $900, you must accept the loss and exit the trade at only $900 (a $100 loss).
COURSE |  |  |  |
|---|---|---|---|
| DESCRIPTION | Learn how to read penny stock charts, premarket preparation, target buy and sell zones, scan for stocks to trade, and get ready for live day trading action | Learn how to buy and sell options, assignment options, implement vertical spreads, and the most popular strategies, and prepare for live options trading | How to read futures charts, margin requirements, learn the COT report, indicators, and the most popular trading strategies, and prepare for live futures trading |
| INCLUDED | Daily watch lists • Trade rooms • Trading scanners • Discord • Live streaming Day Trading > | Daily watch lists • Trade rooms • Options scanners • Discord • Live streaming Options > | Futures target levels • Trade rooms • Real time teaching • Discord • Live streaming Futures > |
Can You Make A lot of Money With Stocks?
Making a lot of money with stocks is doable. But only if you know what you are doing. Technical analysis and fundamental analysis are the key to success. You can make money going long or short stocks. Options also allow you to make money in any market, including range-bound markets.
Steps
I believe I already said this once before, but I’m saying it again: Your job as a day trader is managing risk, not buying and selling stocks—a very important stock training tip.
How do you manage that? You have essentially three steps in managing risk.
Step 1: I determine my maximum dollar risk for the trade I’m planning (never more than 2%).
Step 2: I estimate my maximum risk per share, the stop loss, in dollars, from my entry (10 cents).
Step 3: I divide “1” by “2” to find the maximum number of shares I can trade each time.
Learn How to Make Money in the Stock Market
To better illustrate this, let’s return to my $1000 account. Because of my 2% rule, the maximum dollar risk for the trade is $20.
I calculate my share size by dividing “Step 1” ($20) by Step 2 (10 cents) to find the maximum number of shares I can trade.
In this case, I can only buy 200 shares.
Best Trading Companies
Picking The Right Broker
As a beginner without a lot of spare change to throw around, money matters, I hate giving advice, but I must, in this case, not look for the cheapest broker.
That’s for later once you’ve nailed down your education and trading strategy. Then you can shop around for the cheapest fees.
For beginners, it’s a must that you can practice on quality, state-of-the-art tools (a.k.a laptop) and equipment so you can mimic a real-life trading experience.
Think of it like this – if you want to compete in the Daytona 500, you better practice on a 700 horsepower car, not your 120 horsepower family sedan. I was saying.
Below are three awesome brokerages out there for beginners. There is no doubt that many exist, but here’s just a taste for now.
1. TD Ameritrades’ ThinkorSwim
TD Ameritrade often tops the pile of online brokers, making it tough for investors to decide between. They recently lowered the cost of their commissions dramatically. TD Ameritrade offers many tools to help a trader succeed, making it attractive to traders on a budget.
No minimum amount is required to open an account, and the customer service is impeccable. You won’t pay activity or annual fees with this broker. They offer free trades on stocks and ETFs and .65 cent option trades.
I like it for newbies because of its robust trading platform, Thinkorswim (ToS). For instance, it’s jam-packed with educational offerings, including onboarding tools (“swim lessons”) for the novice trader.
And, if you’re getting your feet wet, you can practice to your heart’s desire in the fully functional demo account.
2. Fidelity
Fidelity was rated the Best Online Broker in 2018 by Investor’s Business Daily and StockBrokers.com. They were also named Best Online Broker in 2016 and 2017 by Barron’s, Kiplinger’s, and Investor’s Business Daily.
Like ToS, it costs nothing to open a Fidelity account, and they don’t require you to maintain a minimum account balance or charge you annual fees.
Furthermore, Fidelity has lowered its fees and is one of the best brokers! They have free commissions, just like TD!
A $0.00 commission applies to online U.S. equity trades, exchange-traded funds (ETFs), and options (+ $ 0.65 per contract fee). Sell orders are subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). Check out our in-depth Fidelity review for more information.
By opening an account, you have access to over 265 commission-free ETFs. If you’re anything like me, you shop around. They align with the big players such as E*TRADE and TD Ameritrade.
Low commissions and an easy-to-use platform offer a solid experience for beginners and advanced investors.
3. TradeStation
They are one of the most trusted brokerages in the world and are best known for their impressive desktop platform. TradeStation is geared toward active traders and charges a $99 monthly fee on accounts that don’t trade 5,000 shares or 50 options contracts each quarter.
TradeStation’s simulator has research tools, stock chart indicators, and access to community forums to exchange ideas with other traders.
Final Thoughts: How to Make Money in the Stock Market
Dr. Brett Steenbarger, the author of great books such as The Psychology of Trading, once wrote:
“There is no question in my mind that, if I were to start trading full-time, knowing what I know now, I would either join a proprietary trading firm or would form my own “virtual trading group” by connecting online (and in real-time) with a handful of like-minded traders.”
It’s vital to be part of a mastermind group that will add value to your trading career. To whom do you turn to ask trading questions? With that in mind, I encourage you to join a community of traders in our live trading rooms.
Where there’s a will, there’s a way. The only limitation to making money in the stock market as a beginner is the one in your mind. If I can do this, you can too. You don’t need anything over the top to start.
If you need more help, take our online trading courses.
