Learning About The Stock Market

Let’s look at some different ways of learning about the stock market.

Ways to get educated

Textbooks or encyclopedic-type books might not be the best option for someone in the early stages of learning. They can be overwhelming and you run the risk of becoming discouraged before you even start.

It might pay to stick to the more basic variety that gives you a good grounding in the essentials. This is all you need to get started. Once you have a working knowledge of the basics, you can then look for books focused on a specific area of interest.

Stock trading isn’t rocket science, and any book that makes it out to be isn’t worth your time and money. I highly recommend “Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets” for beginners learning about the stock market. Use this book to learn the most important stock trading concepts. It’s all about technical analysis and it doesn’t make the subject more complicated than it needs to be. Along the way you’ll learn two different trading methods – a long-term method for investors and a medium-term method for traders.

If you’re interested in fundamental analysis, Pat Dorsey’s “The Five Rules For Successful Stock Investing” is excellent.

Stock trading newsletters, the type that tell you when to buy and when to sell are not only convenient, because someone else is doing most of the work for you, but you can learn how to trade successfully by closely following the provider’s trading method.

It’s quite easy to reverse-engineer a trading system when you know:

• what stocks they buy
• when they recommend buying them, and
• when they recommend selling them

There are many stock trading systems for sale over the Internet. They usually come in the form of one or more Adobe PDF files and sometimes include a video. Over the last couple of years I’ve bought two of them and they were both excellent.

At a minimum, any stock trading systems that you purchase, should teach you how to find good stocks to trade, and provide you with the entry and exit signals used by the system.

A better trading system package would also include some money management guidelines for you to follow.

Educational websites like Stock Market College can be excellent sources of information, but not all stock trading websites will have their information structured for easy learning.

If you find a website that looks promising, read a few articles and see if the material is useful. If not, look elsewhere.

Short courses can be effective. I completed a distance education course through the Australian Stock Exchange many years ago and found it quite useful. It covered the basics of fundamental and technical analysis, and a section explaining how macro economic factors affect share price movements.

Some parting advice

• Learn as much as you can. But don’t try to learn everything at once.
• Realize that you don’t have to know everything about fundamental or technical analysis to make money in the stock market.
• Learn the basics of fundamental and technical analysis, even if you only intend on using one form of analysis.
• A goal might be to find a profitable trading system that you feel comfortable with, and to develop a trading plan that will allow you to make money while minimizing risk.