Stock Trading As a Side Income

The stock or shares market was first established on Wall Street and Broadway on May 17, 1792. It soon gained popularity and became a major investment choice for many traders.

A stock exchange lists all the major companies. Traders can witness the up and down movement of the shares and place their buy and sell trades. The equity market was previously limited to big investors such as hedge funds and banks. But now, with the increasing developments in finance and technology, retail traders can enjoy the same benefits as professionals.

Our article will cover all the major features of the shares market and see how traders can easily trade this sector.

How can you trade the stock market?

Stocks trading would require traders to sign up with one of the brokers. Brokerages provide access to the shares which are listed on a respective exchange. To begin, market participants have to provide their email id and password and verify their credentials. Afterward, various options are available to fund your account. As soon as the money shows up on the platform, traders can start trading.

There are multiple exchanges in the stock market which list the specific companies. It is impossible to trade one share on any exchange that it is not listed on. For example, eBay is present on NASDAQ, and executions are done only there.

Following are the names of major exchanges in the US stock market:

 

• National Association of Securities Dealers (NASDAQ)

• New York Stock Exchange (NYSE)

• American Stock Exchange (AMEX)

 

Stock Trading Strategies

Over the years, investors have developed several strategies to trade the shares market. This includes analyzing the fundamentals and technicals. With the increasing developments, trading algorithms have also become common. These expert advisors or robots trade the stocks automatically, depending on the coded information.

Fundamental traders use economic news and statements to predict the future of the price. For example, a trader can buy a stock depending on the quarterly earnings report.

Technical analysis is also a common practice involving indicators, lines, Fibonacci intervals, and trend measurements. Traders use the swing, day, and scalping approach for trading, depending on their style.

Trading Hours

The trading hours of the stock market are relative to their country and exchange. The New York stock exchange is open from Monday through Friday, 9:30 a.m. to 4:00 p.m. Eastern time.

Traders can trade the shares during these hours. There is also aftermarket trading, but that is mainly limited to big investors.

Important Points to Remember

While trading stocks, it is essential to remember the following points:

 

• Risk management should be maintained at all costs. Traders should not take more than 1 or 5% of their total portfolio in one trade. A high position size opened with big leverage can produce profits. However, it can be deadly as the downside is also significant.

• Psychology constitutes 80% of the total trading. With a poor mindset, traders can not expect to be in the game for the long term.

• Strategy is also one of the critical constituents of trading. With a good game plan, it is possible to avoid higher drawdowns and be consistently profitable.