5 Ways to Use the Stock Market As a Cheat Code to Life
Letting your money work for you opens opportunities.
Trading your time for money sets a cap on your income, due to the fact you are limited by the number of hours you can put in each day. On the other hand, letting your money work for you has no limitations and doesn't stop to catch up on sleep or even take a lunch break. And since money talks here are 5 tips so that you too can utilize the stock market as a cheat code to life.
1. Get started with knowledgeable action
The very first step to starting any goal you set forth is to simply take action. When it comes to the stock market the first step shies away from simply just taking action and leans towards taking knowledgeable action. “Action that is taken with the proper foundation of knowledge to succeed”.
You want to make sure you have the tools and resources needed to succeed whether it be a simple article covering the basics of the stock market or a detailed course that takes you step by step through the journey to success utilizing the markets.
2. Join a trading community or team
An online trading education community brings traders together to help them achieve their goals. Opting to join such communities can help you make educated trade decisions while learning from the real-time trading experiences It will also allow the Sharing of Trade Alerts from experienced traders.
There are many amazing trading communities to explore. I recommend sticking to one that you feel comfortable with and that live-streams real-time trading activity so you can learn from the thought process and reasoning on why the trade was initiated.
Related: How to Start Investing
3. Develop a trading strategy
There are thousands of different trading strategies used in the financial markets and each one is unique from one another. Choosing a trading strategy that resembles your trading style Scalper, Day trader, Swing Trader, etc, is vital but it is not nearly as important as modifying it so that it matches your goals and comfortability when executing a trade. Your strategy can be based on an already existing one but should ultimately be modified to suit yourself as a trader.
6. Implement risk management on every trade
One common fact about the market is it will happily take your money if you give it the opportunity to do so. The way to combat the instant swipe of your funds is to implement one of the most important rules of trading: RIsk Management (RM.)
Taking a loss on a trade is never easy but the personal gratification from knowing you developed a plan and followed your plan outweighs any loss imaginable. My rule of thumb is I never risk more than 2% of my total portfolio and 10% per trade taken. By structuring my risk management plan and following through with it. No matter the loss it allows me the capability of living to trade another day.
5. Journal your trades
As with any business, you would keep a P/L - Profit & Loss Statement to track data and analyze what is profitable and what is not. The same concept should be applied to trading after all it is a business and should be treated like one. Keeping a track record of your trades allows you to analyze what strategies are working and what mistakes or errors you made that can now be avoided in the future. Journaling your trades can be done online using an excel sheet or through a tangible trading journal if physically writing better suits you.
The stock market is expected to bring in 300,000 more millionaires this year. My question to you is will you be one of them?
Entrepreneur Leadership Network Writer