Have you thought about giving the stock market a shot? Before you dive straight into the world of trading and investing, it is perhaps best to take a step back, slow down a little and familiarize yourself with the philosophy and craft of trading before you’ve blown your pocket empty.
There’s more to trading stocks than Scorsese portrays there to be in The Wolf of Wall Street and– though vividly entertaining– DiCaprio’s impersonation of infamous stockbroker Jordan Belfort is probably not the most fitting role model you could follow when you’re striving for consistent profits on the market.
Europe, are you ready?
TNW Conference is back for its 12th year. Reserve your 2-for-1 ticket voucher now.
At TNW Academy, we want to give you the blueprint to success on the stock market and this is why we recently partnered up with seasoned trader and investor Joe Marwood, who for the past few years has been teaching rookie as well as advanced traders how to trade successfully and manage stock portfolios effectively. Joe is also the instructor for the course How to Beat Wall Street that is available on TNW Academy.
We asked Joe to share with us some of the most valuable trading and investing insights he’s acquired over the years, and this is what he told us.
What is trading stocks about and who is it for?
Joe Marwood: A stock is quite simply a share of ownership in a company and the issuing of stock is the principal way a business raises capital to fund new projects. While most people have an idea of what a stock is, the majority are sorely uninformed about how to approach this complex and important topic.
Some investors buy stocks and hold them for the long term while others prefer to trade over short-time periods. By doing so they hope to buy and sell in the space of minutes, hours, or days and profit from movements in the daily share price.
Thanks to the Internet and the introduction of electronic trading, the cost to deal in shares is lower than ever before which is why there has never been a better time to learn how to trade and invest successfully. Although there is a learning curve involved, the stock market is a completely meritocratic system, so with some knowledge and understanding, anyone can become a successful and profitable trader.
What is the best advice you could give to any beginner trader?
J.M.: For anyone wishing to trade in the stock market the first step is to learn the basics about how the stock market works and what events drive a stock lower or higher.
Learn fundamental analysis (which is the study of fundamental data such as macroeconomics and company financials), learn technical analysis (which is the study of chart patterns and price action) and learn risk management (which governs how much you should bet and how to preserve capital).
Once you have learnt the basics be prepared to spend many weeks and months on a demo trading account where you can practice your trading without risking real money. Once you’ve been able to consistently make a profit, proceed to live trading very slowly. Do not gamble and only ever risk money that you can comfortably afford to lose.
One tip I can give you straight off the bat is to only ever risk small amounts on a single trade such as 1 or 2 percent of your capital. Also, never get tied to a trade. Make sure you’re able to exit the position at any time without emotion.
What are the odds of failing on the stock market and how can you avoid unsuccessful trades?
J.M.: An often quoted statistic is that 90-95 percent of traders in the stock market lose money. However, this figure is misleading because the real odds will depend on the type of trading you do, the timeframe you’re looking at, and your level of knowledge and experience.
It’s certainly true that a large number of beginner traders will lose money and the evidence suggests that most of them will give up within 12 months. But this number also includes all of those who gamble and see stock trading as an easy way to get rich (which it isn’t).
In general, longer-term trading is more profitable than shorter-term trading and traders who are appropriately capitalised at the outset stand a much higher chance of success.
The key to a long and successful trading career is to adopt a strategy that suits your personality and implement it with careful money management, where you only risk a small percentage of your capital each time you bet.
I have known many successful traders over the years and the key is to stay disciplined and consistent in your approach.
Why do people need training in trading and investing?
J.M.: It’s funny because finance is one of those subjects that is rarely taught in schools and colleges which is a shame because learning to manage your finances is one of the most important life lessons you can learn.
By understanding this area you can make key decisions about what to do with your money and these decisions can lead to greater wealth down the road as well as new career options as well.
When it comes to trading and investing in stocks, there is also a lot of mis-information around online and this is why I see it as my duty to educate people about the truth.
What is the best way to learn?
J.M.: Unfortunately there are a growing number of trading courses and seminars that cost thousands of dollars and only scratch the surface of what is truly needed to trade successfully. That’s why the best advice I can give you is to take online courses, read lots of books and spend plenty of time practicing your trading on a simulator.
I learnt to trade by jumping head first into the fire but it’s not a strategy that I recommend. Instead, it’s important to get a solid understanding of the basic concepts and then move on to learning about the advanced strategies needed to trade successfully.
In the How to Beat Wall Street course, I cover much more than just the basics. I reveal a number of strategies that I have personally used to make money in the markets. And if you follow all the concepts taught on the course you can take your trading to the next level.
What else can students expect to learn?
J.M.: On the course, you will learn all the techniques needed to trade in the stock market both in the short-term and long-term. You’ll learn about fundamental analysis, macroeconomics, chart patterns, risk management, advanced trading strategies and more.
But you will also learn some key life lessons that will ensure you have a much brighter future after you’ve finished the lectures. For example, you will learn:
- Why nothing in life is ever certain. (Which is why you must always trade carefully and not risk too much in the process).
- A simple and effective strategy for investing your money each month and building for retirement (a technique that is used by retirement funds all over the world).
- Key market principles and ideas that can help you gain a job in the financial sector (such as for an investment bank or hedge fund).
Why is How to Beat Wall Street a must for any aspiring traders?
J.M.: Essentially, the How to Beat Wall Street course stands out from all other finance courses because it contains a number of unique trading and investing strategies that I personally designed and use with my own money. These strategies are turned into programming code and then back-tested live on historical stock data so you can see exactly how they would have performed over the last 15 years. These are precise systems, built and explained in a careful and scientific manner.
For example, one of the strategies included in the course is based on buying stocks with breakouts in volume. I run the system live on the course and it’s shown to produce over 20 percent annual returns over the last 15 years.
Whilst other finance courses talk about wishy-washy trading methods that may or may not work in live markets, I have used my skills as both a trader and programmer to come up with trading ideas and I show you exactly how they work in plain, easy to understand language.
So, by taking the How to Beat Wall Street course you will not only gain access to over 30 original trading ideas, but you will see exactly how those strategies have performed over time, you will learn how and why they work, and this will enable you to come up with your own trading ideas as well.
Once you have mastered the concepts taught in this course, you will know the truth about trading and investing and you’re life (as well as your bank balance) will never be the same again.