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5 Tips to Trade the Stock Market with Confidence

5 Tips to Trade the Stock Market with Confidence

Image courtesy of Pixabay

Trading stocks and other assets can easily make you a lot of money. Millions even. However, it can also result in huge losses, especially if you are not confident about your actions. And confidence in this regard is more than just feeling right. It is about having the capacity to make the right calls in your trades.

The following are five tips you should use to increase your trading confidence:

1. Make information king

To be successful as a trader, you have to be an information sponge. It would help if you learned every little bit about trading, the markets, technical analysis, as well as creating and executing strategies.

Start with the most basic ideas and skills in every aspect of stock trading and then walk your way up. Don't ignore anything, even what you think you already know. Also, come up with a strategy to get information about specific stocks you target as fast as it comes out.

In stock trading, it is information that gives you an advantage.

2. Use a Stock Charting Software

To decide your calls, you rely on both the fundamental and technical analysis of the stocks you are trading. When considering news and other pieces of information about the company, and how their stock is reacting, you are, in basic terms, doing fundamental analysis.

However, you also need to glean information on the movement of the price. Many times stocks prices repeat particular patterns and using that you can predict future trends, and that can inform your decisions.

For useful technical analysis, you need charting software. This can be a page on a browser or a downloadable application. The different kinds out there offer various features and capabilities. They also come at different costs.

You can use a free stock charting software . While these might not have premium features, they can do the job for you. However, if you have money to spend, don't hesitate to pay for the premium tools. It is essential to understand the difference and choose one that gives you the best service at the cost you can afford.

3. Invest what you can afford to lose

You must have come across this advice many times. Owing to its importance, it cannot be emphasized enough. It is considered the most important rule of investing . That is because a lot is taken from your trading arsenal when you trade using money that you can't afford to lose.

It makes you a lot more likely to make decisions based on emotion and not logic. And if you know anything about stock trading, making emotional decisions often lead to losses than gains. In fact, you become prey in the market. The market predators, in particular, rely on your fear and greed to take value from you.

It is also important that you always start small. And that includes even when you have a lot of capital at your disposal. Starting small allows you to learn critical lessons without risking a lot. These lessons come in handy when you put a lot more on the table.

4. Create plans and stick to them

After collecting as much information as you can and doing your technical analysis, you should create a plan and come up with specific goals. This should include things like what percentage profit you need to make from a particular trade.

Once you have created your plan, try as much as possible to stick to it. Only change it if you have new information that directs you to a new possibility.

For example, if you determine that the price of a stock is going to grow and you decide you will sell once you hit a profit of 25%, don't be tempted to wait more even if it seems like the price has the momentum to keep going up.

Having no plan or not sticking to one you have created leaves you making emotional or at best trial and error calls.

5. Follow analysts commentaries

You can always learn from other traders or market analysts. Of course, anyone can make what seems to be an informed opinion online. It is therefore important and up to you to identify analysts and traders that provide valuable information.

You can follow these people on social media, blogs and financial magazines. You can also identify them on forums, both online and offline, where traders often meet to discuss their strategies.

Your list of go-to analysts should be dynamic. It would be best if you always were out to find new names and also drop those you think are not providing helpful information. Again, rely on your intuition when applying strategies and knowledge shared by others. Even more important, thoroughly interrogate ideas before you execute them.


Your primary goal as a trader should be to build a high level of confidence, which can then translate to increased profits. The best way to do it is to inform yourself, use the right tools, put in what you can afford to lose and create and stick to robust plans and strategies.