Contributed by Timothy Sykes
I hear this all the time: “Tim, I want to learn stock trading, but I don’t have any money. What can I do?” And what the people asking this forget is that I was once exactly where they are. I didn’t have a mentor, and I didn’t have some special training program to help me uncover the trading patterns that have made me successful.
I worked hard, and I did it on a budget. Here are three ways you can do the same:
- Take advantage of free resources.
There are so many great training videos, blogs and other resources that will help you get started that you have absolutely no excuse for not jumping in today.
Can you imagine where you’d be as a trader if you took the time to go through all of those videos? Say you took two hours a day to study my stock-trading advice. You’d get through the videos in under two months, and I guarantee you’d be in a better position than the people out there who buy into big-ticket courses, then never act on the information they’ve purchased.
I wish I could show you all the hours I spent when I was first getting started, sitting at my computer and studying stock charts until my eyes glazed over. I started from “square one,” too -- and I didn’t have access to nearly as many resources as you do. Fifteen years ago, the Internet was a totally different place. If I could pull it off with my limited access, you can do much better now, with all the different resources out there today.
- Set up a practice account.
With all the different free resources out there, I want you to go crazy. Read every blog post or book you can get your hands on and watch every video. Learn about the fundamentals of stock trading, what it means to watch price action and how to execute trades.
But I also want to caution you that there’s a point where you have to translate all that education you’ve invested into action. Reading about trading isn’t enough. You aren’t a trader until you, well . . . trade.
If you don’t yet have the money to open your first brokerage account, at least start practicing. Find a website online that lets you set up a practice account and actually execute a few test trades. Practice the strategies I teach, but do it in a low-risk way. While practice portfolios aren’t perfect mirrors of real-world accounts, they’ll at least get you used to the feeling of researching and executing a trade.
- Start saving for your brokerage account
As you research and run trades in your practice account, take a look at the brokers I use, because I want you to think ahead for the future. One of the great things about penny-stock trading is that you can get started with a small account. Let’s say you’ve got just $2,000 to invest. With that money, you could buy about 16 shares of Apple stock at $120 a share or you could buy 2,000 shares of a stock trading at $1 a share.
And since you make money when you enter and/or exit a stock based on the number of shares you hold, which of these options do you think will help grow your account the fastest?
Penny stocks are a great fit for beginners, but I do want to caution you on one thing: Don’t use your last $2,000 to open your brokerage account. Set it up with money you can afford to lose. If you don’t have a few hundred dollars or a few thousand you regard in that way, cut your expenses or earn a little extra pocket change until you do.
When you’re ready to start actively trading, find a mentor who'll help you make the most of the money you’ve been able to save. While that isn’t always free, the amount you’ll save by not making stupid mistakes and avoiding unnecessary losses will help start you out on the right foot toward long-term profitability.