How to Trade Stocks and Invest in the Stock Market Part 1
We begin the first in a series of newsletters providing tools to trade stocks or manage your long-term investment portfolio effectively.
Let us begin.
The first step is to choose a brokerage account and complete their KYC (Know-Your-Customer) requirements and fund your account.
The next step is to understand what type of trader you are and the timeframe best suited for this type.
Let’s look at the various types of traders and their respective timeframes.
Day Trader
Day traders are active traders who execute intraday strategies to profit from price changes for a given asset.
Day traders target stocks that are ”in-play,” meaning that they experienced a violent move in the after-hours or pre-market trading.
These are often low market cap penny stocks (< $5/share).
It is essential to highlight that day traders do not hold positions overnight.
Often trade on timeframes ranging from 30-minute to 1-minute or shorter.
Great precision on entry and exits is necessary to execute in this short timeframe, and the mental capital requirements are significant.
Swing Trader
Swing trading involves taking trades that last a couple of days up to several months to profit from an anticipated price move.
My preferred timeframe is allowing me to step away from the screens and participate in daily activities.
Position Trader
Position trader refers to an individual who holds an investment for weeks to months with the expectation that it will appreciate.
These are long-term investments that are typically associated with a buy-and-hold strategy.
I suggest that every new trader gains their knowledge and trading experience on a more extended timeframe before attempting the shorter time frames. Trading on a short timeframe requires far greater precision that need additional skill and expertise.
In future articles, I will discuss the following that will provide you with the knowledge to manage your investments:
Why I believe that Technical Analysis is superior to Fundamental Analysis and that you should ignore the news and most (not all) of the stock market pundits;
The terminology used in the market place used in future articles;
Understanding market structure and how all markets (stocks, bonds, commodities, foreign exchange and cryptocurrencies) behave the same way;
How I identify trades for investments using Technical Analysis;
Risk management strategies that I use;
What I believe is the Holy Grail of trading and investing (it is not what you think);
Several winning and losing trades demonstrating entries and exits.
You can also join my Klarenbach Research Telegram Group, where I provide Trade Ideas and analyze your ideas. https://t.me/klarenbachresearch.
I enjoy discussing the markets, whether they are currencies, equities, commodities, or bonds.
I am fascinated with price action, so basically anything with a chart.
Let’s have a conversation, and we can explore a new perspective of the markets that you can apply to your analysis.
Life is Good
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