Five years ago, I was a teacher living, like many people, paycheck to paycheck. But the desire to build something beyond the constraints of a teacher salary led to to my current job: investing instructor and entrepreneur. I knew that there had to be a better way to not only make more money, but do it on my own terms. In the process, I get to help others find the same financial freedom I’ve found.
If you’re not familiar, “swing trading” is a method of capitalizing on stock movement over the course of a few days, as opposed to “day trading” where trading is much shorter and occurs from market open and close. If you’re a beginner, swing trading is a much more approachable practice and much less stressful.
It’s also an ideal home business. With discipline and daily practice, it’s something you can do anytime, from anywhere, and once you get the hang of it, you can make money while you sleep. How can you get started? I’ve taken my best advice for beginner traders and boiled it down into a few key tips.
#1: Be a student.
One of the most costly mistakes new traders can make is failing to invest in the practice. You need time to understand the inner workings of the market, how to interpret its movement, how news affects it and how to find your style.
Here are a few quick ways to get a jumpstart on your education in trading:
- Sign up for an email newsletter on trading
- Download an app that let’s you “play” trade
- Take an online course
- Watch others trade and hear the reasons behind decisions
- Research stocks and commentary–who is saying what
Just as Michael Jordan didn’t become the best basketball player of all time overnight, neither will you develop profitable practices without time spent learning and making trades in a controlled environment.
#2: Make money with money you’ve already earned.
When I first started swing trading, I was in a lot of debt. It was stressful and not the best way to invest in the stock market. This is why I now recommend that new traders make money with money they’ve already earned. If you don’t, you’re gambling on a very slippery slope.
If you don’t have a lot of money to invest, that’s alright. You can start out simply by learning more about the practice. It takes $0 to become a student of trading. Before you invest any money at all, commit to the practice and invest in your education first. Then you’ll see if you’re really game for trading actual money.
Once you’re ready to put some real dollars on the table, you can dabble in penny stocks (stocks under $10) or take a few thousands dollars (at least $2,000) and begin trading. This is a riskier approach because with only a small amount of money to invest, you don’t have the luxury of spreading it out over a number of picks.
If you really want to be in the game, $10,000 is an all-in amount of money to trade. This amount allows you spread enough money over a number of picks so that you protect yourself from losing your entire account. Small wins in these picks can quickly build up your portfolio over time.
Bottom line: if you can’t yet make money with money, you’re not ready to start swing trading.
#3: Have a game plan and stick to it.
Once you’ve begun educating yourself on the process of swing trading and you’re ready to make your first investment, it’s important to have a game plan for how you’ll enter and exit those trades. For me, it’s simple. I know there’s no such thing as a perfect entry or perfect exit. That said, I always try to consistently capture 5–10 percent returns. That way, I can at least be reassured that I’m picking the right stocks as they advance.
Frankly, having a good game plan comes down to knowledge about stocks and a lot of practice. That’s why it’s important to spend some time trading with fake stocks, on an app for example, using fake money before you use your own, hard-earned money.
Swing trading can be your next successful home business or a way to earn supplemental income, plan for retirement or big purchases like houses. To learn more about trading, check out Quick Start Guide at JasonBondPicks.com. Good luck!
