Trading for Dummies® 2nd Edition

Chapter 1. The Ups and Downs of Trading Stocks

In This Chapter

• Making sense of trading

• Exploring trading types

• Gathering your trading tools

• Discovering keys to success

Making lots of money is the obvious goal of most people who decide to enter the world of trading. How successful you become as a trader depends on how well you use the tools, gather the needed information, and interpret what you've got. You need to develop the discipline to apply all that you know about trading toward developing a winning trading strategy.

Discovering how to avoid getting caught up in the emotional aspects of trading — the highs of a win and the lows of a loss — is key to developing a profitable trading style. Trading is a business and needs to be approached with the same logic you'd apply in your approach to any other business decision. Setting goals, researching your options, planning and implementing your strategies, and assessing your success are just as important for trading as they are for any other business venture.

In this book, we help you traverse these hurdles, and at the same time, we introduce you to the world of trading. In this chapter, we give you an overview of trading and an introduction to the tools you need, the research skills you must use, and the basics of developing all this information into a successful trading strategy.

Trading versus Investing

First, we need to discuss how trading differs from investing. Investors buy stocks and hold them for a long time — many times too long, riding ...