Learn How to Trade Shares Successfully

We've all seen the movies and read the stories of dramatic consequential acts of desperation when a trader realises massive losses on the stock market. From "Wall Street" the movie, to the headlines outing rogue traders and tremendous falls from grace, these make sensational stories the public in general lap up. They tell stories of the phenomenal losses made in a mysterious world known as the "stock market".

Fortunately, the majority of these stories are written by screen writers and journalists who need to sell copy, and far from the normal reality of the real stock market. Behind the shroud of what would appear to be another form of gambling is a very real, very measured and much regulated market where shares of real businesses that provide goods and services to the economy at large are traded.

Many view the stock market as a game of chance. For some, it is. Without knowledge of trading, the skills and knowledge of how to trade properly, it is simply a casino. With the right knowledge and skills around stock trading - it is a systemised business. There are methodologies and steps to take to trade successfully.

So does one become a stock trader? Firstly, let's break it down to what we're dealing with here we're dealing with a regulated market with rules and processes that must be observed. For instance, professional commodity traders cannot simply transfer their skills from trading commodities to trading stocks. They too must learn the skills and rules of this market and are in almost the same position as that of a beginner trader, with the caveat that they would have knowledge of how markets operate, naturally.

Securities are the instruments that each and every trader engages in when trading on the stock market. Securities can be bonds, share options, money market instruments such as commercial papers or even treasury bills. For one to become a successful trader in this market, they must learn the features of each of these products. Shares, for example, represent an ownership of a company while bonds are basically loans that one may advance to a company. Understanding these fundamental features of securities assists in the decisions you can make when buying into a position and in what measure.

Learning this market is vital. Obtaining a good education and learning from a professional is essential if you are to succeed in becoming a stock trader. Learning from someone who has succeeded previously, and knows how to continue succeeding as a stock trader is by the best option. There are numerous books, plenty of journals and other publications - but learning from a professional who has done it all before is by far the most effective method. Talking to brokers, bankers, dealers, investment bankers can provide you with valuable insights, however, taking instruction from a seasoned trader will provide you with the guidance you need.

When you commence trading, you need to be trading with an experienced hand to guide you through your first trades. You need to learn your Risk profile as you commence your initial steps into this market. You need to understand what you are comfortable with, as it is your own hard earned cash you are investing. This is not a game of chance, but a game of calculated decisions, and as you learn and grow as a stock trader, you'll become more confident and your Risk Profile will begin to evolve.

Risk profiles can be grouped into 3 categories

• Risk Averse - a trader who does not want to take any risk at all, and where many people start

• Risk Neutral - a trader who operates with confidence in their calculations and are prepared to make some loss if they have it wrong

• Risk preferred - a trader who has very strong confidence in their calculations and is trading toward a high upside for maximum profit

To put some more detail against these profiles, the Risk Averse traders are those who do not want to be exposed to any losses at all. These traders tend to avoid common shares and stocks as a slight change in price can realize a loss. These traders tend to have little knowledge of trading and do not position themselves well to make the profits they initially wanted.

Risk Neutral traders calculate their risks and plan for specific profit levels, have an exit strategy in place should the price of a share or stock option go in the direction toward a loss, or shore up this risk by taking out insurance against losses to ensure their capital is protected. These traders tend to have a good understanding of trading and have invested wisely in their education. They know what they're doing and are prepared to take the occasional loss as a lesson should their strategy be slightly off.

Risk Preferred traders are very experienced traders. These traders are highly skilled and tend to trade stocks that are considered by the market to be highly volatile. These traders do not fear losing money on a bad trading day as they understand that losing some money is part of the path to making huge gains. These traders have extensive experience, extraordinary emotional control, and have invested heavily in their stock trading education.

Many of you reading this article may see yourself currently as being risk averse, and that's probably not a bad thing. When you are unsure about an investment, or a money making skill or practice, it's best to find out before you go ahead with it. There has been great emphasis placed on getting educated on stock trading if you are looking at becoming a stock trader. As most of our retirement savings are often invested in Securities on the market, it's prudent for all of us to understand how to become a stock trader - because that's what we are by proxy. We simply entrust the actual trading to other people.

As we've seen over the past few years, massive losses can be realised and when it's your retirement savings, your money that's being lost by others, perhaps it's best that you learn how to manage your financial future yourself. Start your education today and invest in yourself. There are several education packages available online. After all, it is your future, it is your money, and becoming a stock trader is something you can do.

If you've watched your retirement savings take a dive, your job "security" go out the window, and your way of life look as though it's threatened, then it's time you took some action.
Many of us are facing the same problems and struggling to make ends meet month after month.
The best investment you can make is in yourself. Only you can change this, and there's plenty of help to get you there. Learning how to trade shares is a sure fire way to generate a consistent income, no matter what the market conditions are.

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