Three parts of stock market education

Stock market education is necessary for every aspiring trader or investor. Somebody says that trading and investing is like art. I do not think so. I think that everybody can learn about the stock market and become profitable and successful trader or investor.

There are many areas that should be learned. Stock market education should be divided into several parts to learn all equity market basics and also advanced techniques. Best way of learning stock market should lead to creation of trading or investing strategy that fits to investor’s personality and objectives.

Learn invest in stocks market with fundamental analysis

If you plan to hold your open positions for longer period of time it is wise to learn stock investing with fundamental analysis. Ability to read basic earnings reports and important numbers from them is essential for long term investors.

Fundamental research is huge area. It is not possible to learn everything. Big investment banks have many analysts to concentrate only to this type of analysis. I recommend to find two or three important values and define your investment research based on some quite similar approach using such basic values.

Another way to perform different style of fundamental analysis is Global macro analysis. This type of research is orientated to more broad targets. It tries to understand economic development of different economic sectors and regions around the world.

I personally think that Global macro overview should be part of stock investing plan of every investor. But short term swing or position traders should place similar research into their trading plan too. I recommend to include this area into your market education.

Learning about stocks charts

Good knowledge how to read stock charts is key for profitable short term trades strategies. Most short term strategies used by swing, position and also day traders are based on technical analysis of stock charts.

Technical analysis is also huge area. It is possible to learn different ways to trade stocks using charts reading. It is possible to study and use many technical indicators. I personally recommend to make it simple. Select few key technical indicators and basic way how to read charts and stick to it. It will make your education process easier and your trades more profitable.

stock market education stock chart sample

Risk and money management

Every investment education should include details about proper risk and money management. It is often told that picking stocks is not so important like correct management of money you have for trading and investing. Risk management plays very important role too.

This is probably most important part of stock market education. Many aspiring traders and investors do not pay enough attention to these parts and it is one of their biggest mistakes. Great defense is part of every winning stock trading or investing system.