Wednesday, August 15, 2012

Free Online Trading Education - Choosing a Trading System

Trading is both an art and science. There are numerous sites offering free online trading education. This is very important for a beginner. Various types of financial instruments are available for trading. Stocks, bonds, derivatives (futures and options) are broad categories of financial instruments which are traded on the financial markets. Some of these instruments are very liquid and offer an attractive way to build wealth over a period of time. A stock trading school should focus on these broad financial instruments.
The best way to begin trading is opening an account with a broker who offers a reasonable price. It is advisable to start trading live markets with play money rather than real money. Only after being profitable trading play money should you change to trading real money. A stock trading school should focus on making some concepts of capital markets clear to the student. Capital markets with a large number of participants are overloaded with information. A beginner might find it difficult to uncover useful information in this chaos. A stock trading school should ensure that the participants are not misguided.
Analyzing stocks can be a tedious task. Broadly speaking there are two forms of analysis- Fundamental and Technical. Fundamental analysis focuses on the financial health of a company. One must learn to read the financial statements thoroughly in order to master Fundamental analysis. It is also known that fundamentals play a role in determining the price of a stock in the long run.
Technical Analysis on the other hand focuses on the buying and selling activity building up in a stock. The Technical analysts plot the chart with price and time for a stock and try to analyse the possible outcomes during the next few hours/days/months/years. Technical analysis also has a lot of indicators such as Moving Average Convergence (MACD), Relative Strength, etc. A stock trading school can focus on of these or both methods of analyzing stocks.
In order to trade the financial markets, apart from knowledge, discipline also is very important. Some people recommend using techniques like stop loss to limit losses while trading. There are arguments both for and against the usage of stops. Trading is an art and one needs to develop based on his/her personality. To be successful in trading, one must be disciplined and adhere to ones plans. Also a trader should be always alert and aware of any news affecting the markets, he trades. He also must be adept at spotting news which might have very temporary effects.
A trader should stick to one method of analysis. If he is good at reading financial statements and believes in value investing, fundamental analysis can be good at spotting undervalued companies. If the trader is a short term player, a focus on technical indicators or price action is a must. Some traders also adopt the technique of scalping for quick profits. Such traders need to focus on the price action in the market. A good stock trading school should focus on the behavioural aspects as well. The behavioural traits of a trader play an important role in shaping the trading style of a trader.


  1. Great post which will help the options trading beginners to understand what they need to succeed in trading. The trained and experienced trader and knowledge of fundamental or technical analysis will help the beginner to earn profits.

  2. I wonder how quality education is met in online trade schooling. :)