10 Great Ways to Learn Stock Trading in 2023
Are you curious about the markets but have no idea where to find out how to learn to trade? It’s easy to find investing education online, but beginners might find it difficult to spot the differences between quality, unbiased information and what might be a glossy sales pitch or, worse, advice that’ll leave your account belly-up.
One great advantage of stock trading lies in the fact that the game itself lasts a lifetime. Investors have years to develop and hone their skills, and strategies used 20 years ago are still utilized today.
See also: How to Invest (2023 Beginners Guide)
When I made my first stock trade and purchased shares of stock, I was only 14 years old. Now that I’ve been at it for a long time, I’m often asked how to start trading. It’s an endless pursuit. Over a thousand stock trades later, I'm still learning new lessons, but I still find it just as interesting as when I started.
What is the stock market?
A stock market is a marketplace that allows investors and publicly traded companies to safely buy and sell stock. Stock markets facilitate raising capital and increasing investors’ liquidity. They also perform the valuable economic function of determining prices for hard-to-value assets.
Each publicly traded company lists its shares on a stock exchange. The two largest exchanges in the world are the New York Stock Exchange (NYSE) and the NASDAQ.
Once a company has its shares listed on an exchange, anyone, including you and me, can use an online broker account to trade shares. Whether you are an everyday investor or an institutional hedge fund managing hundreds of millions of dollars in client money, anyone can trade.
What is stock trading?
First things first: Let's quickly define stock trading. Stock trading is buying and selling shares of publicly traded companies. Popular stocks most Americans know include Apple (AAPL), META (META), Disney (DIS), Microsoft (MSFT), Amazon (AMZN), Google (GOOGL), and Netflix (NFLX).
In the stock market (just like any other market), every trade needs a buyer and a seller. When you buy 100 shares of stock, someone is selling 100 shares to you. Similarly, when you go to sell your shares of stock, someone has to buy them. Stock prices move when buyers want more or less stock than what’s currently available at the current price. When demand for a stock is high, prices go up. If there’s less demand, then stock sellers need to accept lower prices to sell their shares.
10 great ways to learn stock trading as a beginner
Experience is, hands down, the best way to learn stock trading. Since none of us is born with that experience, here are 10 great answers to the simple question "How do I get started?"
1. Open a stockbroker account
To trade stocks, you need an online broker. Every one of them can buy and sell stocks for you, so they compete with each other for your business by offering unique features or low prices. Some do a great job on both.
Beginners also need reliable educational content and tips throughout the sites. Fidelity, Schwab, TD Ameritrade (which was bought by Schwab in 2020), E*TRADE, and Merrill Edge do a great job with this. For a full list of recommendations, read my guide to the best online stock brokers for 2023.
2. Casually follow the stock market
News sites such as CNBC and MarketWatch serve as a great resource for beginners. For in-depth coverage, you can't beat the Wall Street Journal and Bloomberg. By casually checking in on the stock market each day and reading headline stories, you will expose yourself to economic trends, third-party analysis, and general investing lingo. Pulling stock quotes on sites like Yahoo Finance to view a stock chart, view news headlines, and check fundamental data can also serve as another quality source of exposure.
TV is another way to familiarize yourself with the stock market. CNBC is a beginner-friendly channel, while Bloomberg is oriented more toward professionals. Even switching the financial news on for 15 minutes a day will broaden your knowledge base. Don't let the constant barrage of confusing jargon intimidate you; just watch and allow the news, interviews, and discussions to soak in.
One caveat before you emptor, if you will: Don’t think all these talking heads are sharing their best get-rich ideas with you out of the goodness of their hearts. The recommendations are next to useless. Ignore them. What’s interesting is the reasoning behind them. The more of that reasoning you hear, the more you’ll learn about how to analyze stocks. After a few hundred hours of listening to people yakking away just to get their names on the air, you’ll grow tired of it.
3. Find a mentor or a friend to learn with
Almost all of today’s most successful investors had mentors when they first got started. A mentor could be a family member, a friend, a co-worker, a past or current professor, or anyone with a fundamental understanding of the stock market. A good mentor will be willing to answer questions, provide help, recommend useful resources, and keep your spirits up when the market gets tough.
4. Study successful investors
Learning about great investors from the past provides perspective, inspiration, and appreciation for the game that is the stock market. Greats include Warren Buffett (below), Jesse Livermore, George Soros, Benjamin Graham, Peter Lynch, John Templeton and Paul Tudor Jones, among others.
5. Read books
Books provide a wealth of information and are inexpensive compared to the costs of classes, seminars, and educational DVDs sold across the web. See my list of great stock trading books to get started. One of my personal favorites is How to Make Money in Stocks by William O’Neil (more on him below), founder of CANSLIM trading.
6. Read articles and listen to podcasts
The arena of educational websites has grown in recent years. Most of them are hit-or-miss. One of the most trustworthy sites is Investopedia. I also highly recommend listening to the memos of billionaire Howard Marks (Oaktree Capital).
7. Consider paid subscriptions, but skeptically
Some paid subscription services are OK, but most are a waste of money. Two of the best subscriptions to sign up for are Investor's Business Daily and the Wall Street Journal.
Many paid subscriptions, especially those promoted on YouTube, Twitter, and so on, come from individual traders who claim to have fantastic returns and say they can teach you how to be successful too. Most are scams, and those that aren’t outright scams are unlikely to work as advertised. Testimonials might be fake or come from subscribers who happened to get lucky enough to actually make money. For more about this topic, read 10 Reasons Why I Quit Day Trading.
8. Cautiously explore seminars, online courses, or live classes
Seminars and classes can provide valuable insight into the overall market and specific investment types. This is an age of free content, so I’d need a mountain of evidence and recommendations from people I trust before I shell out my hard earned cheddar. Will O'Neil workshops, Dan Zanger and Mark Minervini, which I have attended.
Not all seminars come with a cost. Some seminars are offered for free, which can be a beneficial experience — just be conscious of the sales pitch that will almost certainly come at the end. Whatever is offered, just say no!
Caution: As with paid subscriptions, be very careful with classes and courses. Many can run thousands of dollars and are sold with promises that you'll acquire some kind of closely guarded and incredibly valuable knowledge. Their fantastic sales funnels will suck you in, take your money, excite you during the course, then leave you with a strategy that was either never profitable, or was profitable many years ago, but is useless today. See: Why Day Trading Is a Loser's Game.
9. Buy your first shares of stock or practice trading through a simulator
Once your online broker account is set up, he next step is to take the plunge and place your first stock trade (instructions below!). Don't be afraid to start small. Trading even 1, 10, or 20 shares will serve its educational purpose. Some brokers even allow you to buy fractional shares of stock. Instead of buying a whole share of a $300 stock, you can invest $2 and own 1/150 of a share.
Caution: One of the most common mistakes new investors make is to buy too many shares for that first stock trade. A good rule of thumb is to never risk more than five percent of your trading capital in one trade.
Don’t draw any conclusions about your ability or your luck too early. Losses are common. Many traders succeed by cutting losses quickly and letting winners run. One great trade can more than make up for five small losses.
If the thought of trading stocks with your hard-earned money is too nerve-racking, don’t. Try using a stock simulator for virtual trading, also called paper trading. Online brokers TD Ameritrade, E*TRADE and TradeStation offer paper trading to practice buying and selling stocks. There’s no cost to open an account with these brokers and no minimum deposit, so go for it.
10. Follow Warren Buffett's advice: Buy and hold the market
For most people, online trading (especially day trading) won’t outperform buying a diversified index fund and holding it for many years. Warren Buffett, one of the greatest investors of all time, recommends individual investors keep it simple: buy and hold the market instead of trying to beat it. See: how to invest.
If Warren Buffett suggests we simply buy index funds, why trade in the first place? I do it because I like the challenge and the opportunity to learn something new every day. Ask other traders why they trade, and they’ll probably tell you the same thing. Traders are a unique breed. We’re not just driven by greed. We’re perpetually curious and competitive, mainly with the markets, but also with ourselves.
There are many strategies for trading stocks. One of the best strategies is to not trade them at all. Instead, you buy and hold. You buy shares of stock, then hold them for years and years. The complete opposite strategy would be day trading, which is when you buy shares and then sell them the same day before the market closes.
Each strategy has its advantages and disadvantages. For example, day trading can be expensive since you are trading frequently. Furthermore, since your trades are less than a year in duration, any profits are subject to short-term capital gains taxes.
To keep costs as low as possible, legendary investors like John Bogle and Warren Buffett recommend buying and holding the entire stock market. Known as passive investing, it is a buy-and-hold strategy where you buy an entire market index, typically the S&P 500, as a single mutual fund or exchange-traded fund (ETF) — see more on these below. By buying an entire index, you are properly diversified (you have shares in hundreds of large companies, not just one), which reduces your risk long term. In fact, John Bogle is credited with creating the first index fund.
Three other common strategies you may hear traders refer to:
- Momentum trading: This is trend-following. If a stock is in an up trend, you buy and hold until the trend starts weakening. If the stock is falling, then you sell short until that trend plateaus.
- Swing trading: Swing trading is more of an intermediate term strategy, where you hold onto a stock for more than a day, up to a few weeks. It’s good for stocks that bounce between established lows and highs, also known as support and resistance levels. Swing trading involves using technical analysis to identify a trading range, then buying and selling shares as the stock trades within that range.
- Penny stock trading: buying shares of very small companies whose stocks trade for less than $5 a share and trade over the counter instead of a stock exchange. Using a reputable broker for penny stocks is important, as is knowing that penny stocks are usually priced cheap for a reason.
ETFs and mutual funds
By this point, you know what a stock is, so let's break down ETFs and mutual funds. ETFs (exchange-traded funds) and mutual funds are similar in that they both represent a collection, or "basket," of individual stocks or bonds.
Take, for example, the S&P 500 market index, which is composed of 505 companies. Buying shares in that many different companies (a few of whom offer more than one class of shares, hence the 505) would be very difficult to do. Thanks to mutual funds and ETFs, we can simply buy a single security that holds shares in all of them. The largest S&P 500 mutual fund is the Vanguard 500 Index Fund Admiral Shares (VFIAX) and the largest S&P 500 ETF is the State Street Global Advisors SPDR S&P 500 ETF (SPY).
By buying an ETF or mutual fund, your portfolio is better diversified than if you owned shares of just one or two stocks; thus, you are taking on less risk overall. This is the primary advantage of buying ETFs and mutual funds over trading individual shares.
The main difference between ETFs and mutual funds is in how they trade. ETFs trade like stocks, which means you can buy and sell them throughout the day and they fluctuate in price depending on supply and demand. Mutual funds, on the other hand, are priced each day after the market closes, so everyone pays the same price. Also, mutual funds typically require a higher minimum investment than ETFs.
How do beginners trade stocks?
To trade stocks, you must first open an online brokerage account and make a deposit. Beginners may start with buying individual shares or an exchange-traded fund, or ETF. ETFs give investors broad, diversified exposure to the stock market, as opposed to investing in a single company where the risk is concentrated in one stock and one management team (Elon Musk’s history leading Twitter is a good example of management risk).
For example, you can buy shares of the Vanguard S&P 500 ETF, ticker symbol VOO, representing the 500 largest U.S. companies. In addition, some brokers support fractional share trading for beginners, so even if you don’t have enough to buy a full share, you can buy a portion that fits your investing budget.
Once you open and fund your online brokerage account, the process of placing a stock trade can be broken down into five simple steps:
- Choose whether to buy or sell.
- Insert quantity.
- Insert symbol.
- Choose order type.
- Review the order, then click the trade button.
1. Choose buy or sell
The first step is always to choose what we would like to do: buy shares long or sell shares short. Selling short means that you are borrowing shares to sell and hope to replace them at a lower price. It’s a bet that the stock will go down. As a new investor, keep it simple and buy shares long. Your first trade should be a buy, because you won’t have any shares to sell.
2. Insert quantity
Next we enter how many shares we would like to buy or sell in total. To calculate how many shares we can afford, simply take the total amount of cash currently in the account and divide it by the stock’s last price. So if stock XYZ is trading at $10 and we have $1,000 in our account, we can afford to purchase 100 shares of stock ($1000 / $10).
3. Insert symbol
TThe ticker symbol represents the company we are going to trade — sort of a nickname. For example, Disney has a ticker symbol of "DIS," Apple is "AAPL," and Meta is "META." If you're unsure of a company’s symbol, you can click on the Symbol field on your preferred stock charting site and search to find it, or simply do a Google search for the company name plus "ticker." Tickers are also required to read a stock chart.
4. Choose order type
The most common order types are market, limit, and stop (see my guide, Best Order Types for Stock Trading). Market orders buy or sell immediately at the current best market price. Limit orders only buy or sell these shares at, "$X price or better". Lastly, stop-loss orders are combined with a market or limit to trigger once $X price hits. For investors just getting started, I always suggest sticking with market orders. Penny stock investors should use limit orders.
5. Review the order and place the trade
After the basic inputs have been made, the “Place Trade” button will appear to complete the order. By default, a summary screen appears once this button is clicked to summarize the order and confirm there are enough funds in the account. Once investors have experience and are comfortable with the trade ticket, this confirmation page can be disabled.
Here's an example of a TD Ameritrade order ticket filled out.
Other fields (expiration, special instructions, routing)
New investors should ignore these fields and leave them set to their default values. These options give investors more control as to how long certain orders should remain active and how they should be filled. For example, "GTC" for expiration means "good-till-canceled."
Regarding routing, 99.9% of orders are routed using the online broker's automated system. However, day traders will sometimes hand-select (direct route) their orders to a specific market center to receive market rebates. See this guide to routing on our sister site, StockBrokers.com, for more.
Tips for success
It's always smart to learn from the greats. Here's a variety of stock trading tips from some very successful investors. By applying any of the following lessons, you can become a better trader. Success takes time, and these rules will lead you in the right direction.
William O'Neil is the founder of CANSLIM investing, Investors Business Daily, and has authored numerous books on investing, the most famous being "How to Make Money in Stocks: A Winning System in Good Times and Bad". Some of his top tips:
- As a new investor, be prepared to take some small losses.
- Persistence is key when learning to invest. Don’t get discouraged.
- Learning to invest doesn’t happen overnight. It takes time and effort to become successful at it.
- As a beginner, set up a cash account, not a margin account.
- Concentrate on a few, high-quality stocks. There’s no need to own 20 or more stocks. (Yes, this differs from what I stated above that I like about index ETFs, but there are many ways to invest.)
- Don’t get emotionally involved with your stocks. Follow a set of buying and selling rules, and don’t let your emotions change your mind.
- Don’t buy a stock under $15 a share. The best companies that are leaders in their fields simply do not come at $5 or $10 per share.
- Learning from the best stock market winners can guide you to tomorrow’s leaders.
- Always do a post-analysis of your stock market trades so that you can learn from your successes and mistakes. (That’s where a trading journal comes in real handy.)
- Stocks never go up by accident. There must be large buying, typically from big investors such as mutual funds and pension funds.
- Replace the old adage “buy low and sell high” with “buy high and sell a lot higher.”
- History always repeats itself in the stock market.
- Ignore personal opinions about the market.
- Three out of four stocks, regardless of how “good," will eventually follow the trend of the overall market.
- When starting to invest, keep it simple.
- Short stocks only in a bear market. Use tight stop losses and take profits often.
Jesse Livermore, respected as one of the greatest investors of all time, has been featured in many investment books. The most iconic was "Reminiscences of a Stock Operator" by Edwin Lefevre in 1923. During the course of his life he made and lost millions, going broke several times before committing suicide in 1940. These are his seven greatest trading lessons:
- Cut your losses quickly.
- Confirm your judgments before going all in.
- Watch leading stocks for the best action.
- Let profits ride until price action dictates otherwise.
- Buy all-time new highs.
- Use pivot points to determine trends.
- Control your emotions.
John Paulson, a hedge fund manager in New York, led his firm to make $20 billion in profits between 2007 and early 2009. By betting heavily against first the housing market and then later financial stocks, his firm made a killing. Paulson's success netted him a paycheck of some $4 billion, or more than $10 million a day. His funds during this time had returns of several hundred percent. These are his eight investing lessons:
- Don't rely on experts; be skeptical.
- Always have an exit strategy.
- Debt markets can do a better job predicting problems than stock markets.
- Always educate yourself on new investment vehicles.
- Don't underestimate insurance (such as put options).
- Experience counts.
- Don't fall in love with any single investment; keep emotions aside.
- Don't risk too much on any single trade; diversify risk.
My three favorite stock tips
After completing more than a thousand stock trades, representing over 4,000 individual buys and sells, here are three tips I wish I'd known and fully appreciated on Day One:
- Think win/win. Psychology is a huge aspect of trading. If you have a big winner on your hands and aren't sure whether you should hold the shares to try for higher prices or sell them to lock in a profit, consider selling half and holding the rest with a stop loss (at worst) back at your original buy price. That way, if the stock drops back to your buy price, you still win because you sold half and made a profit. Similarly, if the stock shoots higher in price, you also win because you still hold half your original position. Heads you win, tails you win too. :)
- Set strict rules to help you stay disciplined.
- Always know the day and time (pre- or post hours) when your stock holdings are posting earnings next!
Can you teach yourself how to trade?
Yes. While mentors can help, you don't need to find a teacher to learn how to trade stocks. Whether or not you have a mentor, you still should read books, invest a small amount of your own money, and take advantage of free educational materials offered by the best beginner trading platforms.
You can also learn from your own successes and mistakes by maintaining a running log of your trades. Keeping a trading journal is an excellent way to learn what you did wrong and right, and use that information going forward. I've tested many journaling apps — here are my top picks.
Is trading easy to learn?
Trading is easy to do, but whether it’s easy to learn or an exercise in frustration depends on three things: first, your ability to spot patterns within a sea of seemingly random information; second, the style of trading you choose; and third, how curious you are about how markets work.
What is the best free way to learn stock trading?
The best free way to learn stock trading is to open a broker account and trade a virtual portfolio, also called “paper trading,” which lets you learn about the market without risking actual money. Follow individual stocks and financial news while observing how markets fluctuate. Always ask yourself why something is happening and, anytime you see something that you don’t understand, look it up.
Can I start trading stocks with $100?
You can start trading with $100 or as little as you want. Thanks to many brokers now offering fractional stock shares, these days you can buy part of one share of a $300 stock with as little as $5.
Which stock trading site is best for beginners?
TD Ameritrade is the best site for stock trading if you are a beginner. Not only is the TD Ameritrade website user-friendly, but there is also a vast selection of educational materials and courses with progress tracking to accelerate your learning. You can read a full review of TD Ameritrade and what it offers on our sister site, StockBrokers.com.
Can you get rich by trading stocks?
Yes, but it’s more likely you’ll become richer from patiently holding a diversified portfolio of quality stocks for a long time. There is no shortcut to accumulating wealth. Trading stocks involves risk. Usually, investors become rich by investing over a long period of time — years or even decades. Long-term investors don’t try to outsmart the market and avoid risky, short-term trading strategies like day trading.
Something that I always emphasize to new stock traders is that investing is a lifelong game. Take your time! There is no reason to rush into the stock market.
Start with a small amount to invest, keep it simple, and learn from every trade you make. If you find yourself emotionally charged with trading, then passively investing in the overall market with a simple index fund (see "Trading strategies" above) is likely a better choice.
I hope this helps answer some of your questions about stock trading.
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Explore our other online trading guides:
- 5 Best Online Stockbrokers
- 6 Best Trading Journals and How to Journal Successfully
- 20 Best Stock Trading Books
- 6 Best Free Stock Chart Websites
- 10 Great Ways to Learn Stock Trading
- How to Read Stock Charts
- 7 Best Free Stock Screeners
- Why Day Trading is a Loser's Game
- How to Invest (Beginner's Guide)
Also explore educational content for various topics at our sister sites:
- Best Trading Platforms for Beginners - StockBrokers.com
- Top U.S. Financial Advisor Firms - Investor.com
- Best High-Yield Savings Accounts - Investor.com
- Best Forex Brokers for Beginners - ForexBrokers.com
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