Ep 107 : Trading & Investing Q+A for Beginners (or People Getting Started)
★ SUMMARY ★
In this episode, we’re going to discuss some common questions that you may have about the stock market. I’ve composed a few different questions based on what people have asked me in the past, as well as questions that are very common when it comes to the trading. Here is an overview of some of the questions we’ll answer:
How does the basic concept of investing work?
When it comes to the stock market, the basic concept of investing is the following: You take your cash or your capital and you put it into a certain company, whether it’s Apple, Google, Microsoft, Netflix, or any other. And as the value of that company fluctuates, your value of investment also fluctuates, it moves up or down. And then you’re able to sell those positions to the next person and take the money, collecting the price difference.
How do you start when you don’t have a lot of money or have a job?
When you don’t have a lot of money, it’s very difficult to get started in investing, because the amount that you can make on a percentage basis is very small, compared to the absolute dollar value that something costs at the store.
You need to focus on figuring out how to trade properly first, and once you learn how to trade properly, you can use other people’s money. This is how many investors have made it big. For example, Warren Buffet uses other people’s money to grow and create wealth.
The same thing for you, you need to first learn to trade, learn to invest properly, once you learn and you can be consistent at it, then you can use other resources, whether that’s taking out a loan, using other people’s money, or taking your business funds and putting that money into your trading account and then growing that account.
What would you say is the biggest problem new traders have when it comes to trading or investing?
For many people, their problem is overconfidence, they think that they’re better than they are, and this prevents them from learning because they think they already know it all, so they are not open to absorbing new information.
Always think about how you can improve. When you’re reading, watching things, or when you’re listening to some material, pay attention and absorb the information, and think about what is it that’s new about it? And try to learn from it.
How can a person best deal with the pressures and stresses of trading?
I would say if you’re having pressure or stresses when it comes to trading, the best approach is to slow things down, if you’re trading too large, this is normally where the stress and pressure come from, if this is the case, then try to trade lighter.
The second thing is, you need to find activities that balance you out. Typically if you’re doing a mental activity, like trading, and you’re getting stressed, you need to find other activities that are opposite to that, such as watching a movie, playing a sport or going out with friends, in order to relax and release stress.
How long does it take to become a good trader?
If you’re really good at being aware of yourself and you take massive action, I would say it takes probably 2 to 3 years, as far as trading successfully and more consistently. However, it is different for everyone. Personally, it took me 7-8 years to really get anywhere good at it.
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