If you are looking to get into the markets, you have to really educate yourself prior to actually risking any money.  Most people are attracted to the markets because they hear of person X making 50% this year, person Y doubled their money on a trade and on and on.  People are not apt to share in the major disasters they have had, and often exaggerate the profits and underestimate the losses when speaking about what they have done.  It is very common to not want to relive a painful moment when speaking to others about your investment decisions.  So before you decide to take the plunge, you will have to figure out what exactly it is that you are tying to accomplish

 

In order to start down your path, you will need to recognize the three methods to get involved with the markets:   short term (minutes to days), swing trade (days to weeks) and long term investing (weeks to years).  Simply discovering which type of trading suits you might seem like an easy task, but it is most likely the most important decision you will make.  You have to match up the trading style with your personality and your level of risk

 

Short term trading is also know as day trading and can strictly be intra-day only or it can entail holding positions overnight as well.  Day trading is probably the riskiest type of trading for most people, and really requires almost a full time effort.  If you have a full time job when the markets are open, this is probably not for you, or only in small batches.   While some people do day trading manually, others prefer the help of a day trading robot to automate things.

 

As opposed to trying to learn day trading, swing trading is a great alternative for most people.  With swing trading the amount of time and concentration required is far less than with day trading, but it will still require you to monitor your positions each evening, and if something is close to a price target or stop area, monitor during the day as well.  Swing trading tries to capture a bigger move in a stock, such as a 5% or 10% or more move in a single direction with limited risk.  Because you are holding for bigger gains and a longer period of time to reach those gains, the amount of actual trading activity is far less than with day trading.  One should keep in mind that while it is less risky than trying to day trade, it is still betting on the short term direction of a stock and by nature is risky in itself.

 

Long term investing is what a majority of the population is comfortable with – buying stocks and holding them.  The only thing that has changed in recent years is the economic climate has changed so that you no longer can just hold something indefinitely and figure you have very little risk.  Many investors have learned a hard lesson when they watched a significant gain turn into a big loss because they just held on.  Every investor these days needs a fixed plan to exit a position rather than hold and hope.

Most traders or investors who want to get into trading eventually start using a scanner to help them find day trading and investment ideas.  For those of you that dont know what this is, its simply a computer scan of the market designed to highlight stocks meeting certain criteria in real time (or end of day, both are available).Now scanners are not all bad, they are useful to sort through the noise of the market as no person can watch 2000 stocks at once.  The biggest issue is the simplicity of what can be scanned for - everything is a true or false, yes or no answer.

The problem is the market never deals in absolutes.  Its always in shades of gray.  When W and X happen the stock goes up sometimes.  When Y happens, if Z happens too it often sells.  The problem here is not the flag – that is fine – its that a basic scanner does nothing to tell you of the qualtity of what you are scanning for.  One huge thing no one thinks about is every single stock is unique - they have their own personality which changes slightly over time, but is based on the people who trade the stock on a regular basis.The issue is a scan might uncover good trading opportunities in IBM, but that same scan is useless on Walmart - but you have no way of knowing this.  Or Walmart may need a third, fourth, or even fifth confirming thing at that same time in order to be reliable.  Or it may need something counted and tracked that happens prior to the scan being true.  On and on this type of stuff can go, all of it really is not talked about.

This is why more and more traders are looking for an intelligent day trading robot that is able to track statistics on what it is watching in real time, learn how to adapt to changing market conditions, and basically put scanners to shame.  What sets them apart is a day trading robot is able to use statistics and other tracking devices to turn on certain filters, adjust the parameters, or learn to not trade in certain situations.  The key to using a day trading robot is to realize that its simply a tool.It is not a golden road to riches, nor is it infallible.  It is basically a more intelligent market scanner that is actually able to trade and track the status of signals that it finds - a scanner just finds the signals but tells you nothing about the quality.

A word of caution - avoid any and all trading robots that claim to trade penny stocks (pink sheet and bullitin board names).  I have never seen one that can prove it can make anything.This does not mean they are non existant, but I have yet to see one that does not appear to be a get rich quick scam.And throw away money most of them do.  Most of these types will have some kind of cool video showing how it works to find “hidden” chart patterns, then they show the next day the stock going up.  First off - do a little research - look at the symbol in the video, go to the date they are talking about on a chart and look yourself.  Most of them literally have no volume AND have no price pattern at all.  Often times they have serious gaps in the chart (days where no trades happen at all).I would love to have them present to me how a computer can read a chart pattern in data that literaly does not exist.  The volume spike comes as a result of the robot's followers all trying to buy an illiquid stock.  If these things are really good – make a version that is different than the one they are distributing, meaning no one has that copy, and put a different stock list in there.I want to watch it pick a penny stock in real time without it able to broadcast this fact to others and watch what happens.I am fairly certain I will be staring at a blank screen as nothing much happens.