The Idea Behind Stock Trading is Simple, But Profitability is Not Easy:
In a nutshell, trading can be boiled down to about 5 steps:
- Perform technical and fundamental analysis (on the overall market, various sectors, and individual stocks)
- Take educated positions based on the patterns, financials, and catalysts discovered in your research
- React based on changes/moves in the market (add to positions, scale down positions, take losses, or stop out)
- Learn from your successes and failures
- Rinse & repeat
Filtering stock trading down to these five simple steps makes it all sound easy, but there’s never any guarantee of profits. The market is constantly changing over time, and as a result, traders need to be able to adapt to various strategies depending on market conditions.
Sometimes one method will work for a few months or years, but then fade out over time. And at the same rate, new strategies and opportunities can be born within the same stretches. In the end, not only do do traders need to be educated, informed, disciplined, and motivated – they need to be adaptable as well.