How to Start as a Small Trader

A great advantage nowadays is that the cost of trading has been reduced significantly, and this activity, usually reserved for the very wealthy individuals or financial institutions, is now available to the regular person, with some savings in the bank.

If you are willing to start in the stock market trading, we assume you already did some research and have some basic knowledge on the subject.  Anyway, we will indicate some useful links, as we deem it needed, throughout this site. 

In this page, you will find all what you need to start trading with confidence in the stock market.

What is needed

There are some basic requirements that you will need to start:

Typical errors

There are two possible errors you may do, and both cost money when trading:

(a) Errors selecting an entry or exit of a trade. That is normal and you will do some will you learn, and even after you have learned a lot.  As you will see later, this is part of the cost of business in trading. Nobody, and I mean nobody, is error free in trading.

(b) Errors operating a trade. Stuff like buying more when you intended to sell do happens, specially when you are starting.  This is the kind of errors that you should ensure not happens at all.  This is achieved by mastering the trading tool you use, and establish automatic double-check routines to ensure that you don't do this kind of errors.

Key decision

Of all the above I think that choosing the right broker is most important thing, and a mistake here may make you start with a big handicap. Some so-called discount brokers charges you up to US$19.00 per trade.  Compare it against the US$ 1.00 of Interactive Brokers.  A high commission means that in any trade, you need to profit enough first to pay the broker's commission, and then you got your profit.  That makes most of your trades losers, even if the stock moves in your favor.

For example:  You invest US$ 1400 buying 50 MSFT shares (price US$ 28.00), plus US$ 19 of commission.  To sell it, you need other US$ 19, so the total cost for the trade is US$ 38.  With 50 shares, the price must climb up to US$ 28.76, just to pay your brokerage commission, ie, to not lose in the trade.  This is 2.7% movement, which is very significant.

With Interactive Brokers, the total cost of the trade is US$ 2, not US$ 19. The share must go up to US$ 28.04, or 0.1% to make the trade profitable.

Note: By the way, we are not part of Interactive Brokers, nor receive affiliate commissions from them. We are recommending them based on our actual small trader experience.