Getting Started in Stocks and Options
Do you want to earn money through stocks and either:
1. Don’t know where to start trading stocks and options
2. Don’t know how to trade stocks or options
3. Don’t know when to trade stocks or options
We will start things off with a couple announcements:
DISCLAIMER!
I AM NOT A FINANCIAL ADVISOR. All OF THE INFORMATION HERE IS ONLY FOR ENTERTAINMENT PURPOSES.
AFFILIATE DISCLAIMER!
THE ARTICLE CONTAINS LINKS TO EXTERNAL WEBSITES. I DO NOT OWN THOSE WEBSITES. THESE LINKS ARE CALLED “AFFILIATE LINKS.” WE MAY BOTH MUTUALLY BENEFIT FROM YOU USING THE LINKS WITHIN MY ARTICLE. IT WOULD BE MUCH APPRECIATED IF YOU USE MY LINKS IF YOU PLAN ON VISITING ANY OF THE WEBSITES LISTED BELOW.
Risk Management:
Avoid putting all of your money into one trade. That is not a good idea.
You have limited day trades if your account balance is under $25k (3 per trading week).
Use multiple types of trades to secure profits (buying/selling calls, day trades, swing trades, take profit target prices).
Use technical analysis or have a reliable source before entering into a trade.
1. Where to trade stocks and options
The two major platforms that I recommend trading stocks and options on are Robinhood and Webull.
Robinhood
Has a user friendly user interface and very low learning curve. Good for tracking multiple stocks and pretty good for stock related news. The options market is easy to use as well.
Sign up and deposit $100 to receive two free stocks valued $3-$500 each and begin trading.
Webull
Register and download the app and get 4 FREE stocks valued up to $3700!
Deposit at least $100 to have a decent trading portfolio.
Webull is great for higher level traders and offers excellent market analyses. Webull premium also offers level 2 market data which may help you with target prices.
2. How to trade stocks and options
Trading a stock is fairly simple. You just need to select the stock you wish to buy, choose the type of trade (market, limit, ect) and make the buy. In general, you will choose to place an order using a limit trade to ensure you get the stock at that price and not a higher price.
A walkthrough on how to trade stocks on Webull since the interface may be a bit more complicated for those that are unfamiliar with advanced trading interfaces.
Buying a stock
1. Click the markets button located at the bottom.
2. Click the search button in the top right.
3. Type the name of the stock you wish to trade and then select it in the menu.
4. Click on the trade button.
5. Choose limit (or your choice).
6. Choose the price range by either typing it in the box or using the slider.
7. Chose the quantity by either typing it in the box or using the slider.
8. Click buy and confirm the transaction.
9. You can monitor your position in the my positions screen at the bottom.
Trading an option is quite similar. The difference is that options are a contract and also give you the option to sell them. Executing an option will either give someone the right to buy or sell 100 shares of that stock at the marked price. You may need to work your way up to this one, but selling options will be one of the best and safest trading strategies you will find in the stock market.
You can check the trading volume, high, low, current bid quantity, and current ask quantity in the trade menu for an option.
Buying a premium call option:
Buy the call when the graph is at its low and pointing down and check the statistics to ensure that you are buying at the low value, then simply sell after when you are in profits. In general, stocks are going up, but it is still a risk to buy a call.
Selling a premium call option:
You may also sell a premium call option. I recommend that you choose to sell premiums to get cash out of your shares instead of just staring at stocks and not getting any money (or only getting pennies in the case of dividends).
Note: You may also want to ensure that you do not sell a premium before a stock breaks out (rises past a resistance level), but rather after it has broken out.
Example: You own 100 shares of Amazon. You do not think Amazon will close at or above $3,190 when the market closes this Friday. The price is currently $3,166.
Getting to the stock of your choice is similar on Robinhood. Let’s walk through selling a premium call.
1. Go to the stock of your choice.
2. Click on trade.
3. Click on trade options.
My example shows Amazon. They have weekly options for the upcoming two months before moving into monthly options for the rest of the year and bi-annual options over the next two years. It’s best to find a stock with weekly options to sell a premium call for the current week. If it has monthly options then I would not sell until the expiration date is within a week or your crystal ball tells you what the price of your shares will be on the expiration date.
4. Choose Sell.
5. Choose Call.
6. Selection a premium price high enough above the share price so that the contract will be less likely to be exercised.
7. Click the price range to see the statistics of this option.
8. You can check the price range and statistics of the premium in this window.
9. Exit this screen when you finish. Click review and then swipe up to execute the trade. The credit is immediately applied once you make the sell.
Use this money to either: secure immediate profits in a day trade, swing trade a stock, or invest it back into the current stock for more shares, or withdraw it and buy something.
Holding 100 shares of a stock that has an options market is far superior to holding stocks that do not have options. I welcome examples of better strategies than this.
3. When to trade stocks
Most stocks with high volume seem to adhere to technical analysis. You can make use of trading view for a great technical analysis
A good thing to remember is to buy low and sell high. Buying low makes it very easy to make money. Going fomo in on a stock after it reaches its peak is a good way to lose money. You will only lose money if you sell the stock for lower than what you paid. The chances are that it will be weeks to several months before the stock reaches that peak value again, so it is just a better choice to buy low and sell high. You will know what the low and highs are if you are using technical analysis and making use of trading view or a similar application.
TA note: Use the hour or day timeframe when choosing the trade. Only use the lower timeframes when placing the trade.
I will post updates on this later.
Until then, you may also be interested in getting started in forex. You don’t need any money to start and the potential for high profits are very high with leverage up to 3,000 (you may want to start at 100).
Getting Started in Forex
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