How to correctly open a deal on the stock market? Universal instructions and beginner's mistakes
Beginning traders lose money or don't make as much as they would like in the stock market for three main reasons:
- They come to the exchange with an unfree and uncomfortable amount of money;
- They are non-initiative;
- Do not know how to compare different types of assets and their opportunities, i.e. do not know how to analyze the market situation sufficiently.
If these causes of losses do not concern you or have already been eliminated by you, you should not relax. There is one more reason that can reset your account to zero, and that is inability to handle the trading terminal!
"Oh yes, I have a problem with stops. The activation price, the condition, the market, the limit... Yes, and I confuse buy with sell!" you will say, sarcastically. No, my dear novice traders, the fact that you confuse the "buy" and "sell" buttons is a trifle. The killer of the account is the inability to keep track of limits. Simply put, 90% experienced, let alone novice traders, do not know how to properly assess what they have in their wallet (briefcase) at the moment.
As a result, I constantly see how a person unknowingly opens positions five times the size of his portfolio, and then wonders why his stock is down 1%, and drawdown made up 5%. But it is worse when one is not surprised, because one cannot even look at the final score of the portfolio.
Universal instruction on how to open a deal in the stock market
The editors at Fortrader asked me to write step-by-step instructions on how to make a trade. Both they and I wanted to do it without too many preambles. I even saw an article for myself in the form of "screenshots," but, pity, yesterday I was again sorting out the client's portfolio with positions for 1.5 million rubles and only 350 thousand in collateral, and I changed my plans.
By analyzing the account, I opened the man's eyes to the true state of affairs on his deposit. I gave him a mini heart attack, although all this could have been avoided by applying simple worldly logic. And even if I seem to you for the hundredth time as a tedious grandmother, but the scheme of opening of the transaction in the style of "here pressed, here adhered with scotch tape", "maybe the system of sticks and ropes will pull" - will not! I will write a universal instruction, which you can apply when working with any broker.
So, we are going to the market for oranges. What is the sequence of our actions?
- We check to see if there are oranges in the fridge.
- We check if there is money in the wallet for oranges.
- Let's think back and see if you and I told our family to buy oranges.
Okay, oranges are out of stock, so we went out and bought some. What do we do next?
- We check that we put the oranges in the purse.
- Count the change.
- We text our homies that oranges are in the lodge.
- Put the spending in your personal budget notebook.
The buying and selling of securities should be done in a similar way. It is the same scheme!
- Checked the availability of the stocks in your portfolio for which you want to make a trade. This is especially important if you plan to the short game.
- Let's see if you have free money in your portfolio, or if you use borrowed funds, then assess your credit capabilities.
- We check the table of orders and "stop orders". Maybe earlier you have already expressed to the terminal your wish to make a transaction with oranges.
After the deal.
- Checking the portfolio - are there shares in it? You need to see a specific number of shares. Many terminals, before buying/selling, when an order is first placed, start to broadcast the name of the paper in the trading portfolio. But they are not there yet! Make sure the trade went through and the portfolio displays the number of securities you want.
- Next, in the portfolio, we check the balance of funds or collateral, for those who trade on borrowed funds or "shorts".
- Again we look at the table of "Bids", "Stop Bids" and this time "Deals".
- Record the history of the transaction in the exchange diary.
Naturally, we will not now go through the process of analyzing the supplier of "oranges", everyone has his own criteria for making a decision to buy securities. But the transaction procedure is always the same. Of course, if you don't want to lose money foolishly.
How to open a deal incorrectly!
For example, let me tell you how inexperienced and sometimes experienced traders usually make deals in terms of execution mechanics.
"Oh, here we go, here we go, here we go, here we go - slamming the schedule request function. How many papers are displayed there? It does not matter how much they buy/sell - for that amount we will make a deal. Oops, the evil system says "not enough funds / securities. We must urgently call the broker and complain about the "greedy terminal". Or just put a tick "use credit", in general I'm not supposed to use credit by strategy, but otherwise the deal does not pass. Everything is ready! A short has been opened instead of a long? Yes, what does it matter. It will rebound and I will go back to the position I wanted originally, well, not now, but in a week or a month. I will be patient. Let's close the terminal.
Do you recognize yourself? Don't feel bad. All skills come with experience. Take your time. Feel free to print out my algorithm and hang it in front of your terminal. Only then with a guarantee 100% technical errors will not overtake you.
Only sweet oranges to you and good deals!
Other articles by the author
- Trading volume on the securities market or how to buy stocks to sell them later
- "The "Evil Teacher" at Finam, or How to Deal with Porridge in a Trader's Head
- 3 truths of stock trading, forgetting about which, you lose your deposit
- 5 signs that your brokerage account will not live till the end of summer