- 1). Open a stock market simulation account or simply trade a virtual portfolio for a few weeks or months until you gain some experience with price fluctuation. Some brokers provide simulator or "paper trading" accounts to their clients. These trade like a normal account but use fake capital. Other Internet sites offer free stock market simulation accounts or games that are similar, such as Think or Swim, How the Market Works, and Market Watch (see References).
- 2). Chart any stock that interests you. You may use the built-in charting software included with your brokerage account or utilize any of the many free stock charting services available on the Internet, such as Stock Charts or Big Charts (see Resources).
- 3). Study the chart's price fluctuations. All stocks move up and down in price over time. Charles Dow, the world's first influential stock chart technician, identified the characteristics of a price "trend" nearly a century ago in his "Dow Theory." If a stock's high points are sequentially rising along with the lows, then the stock is in a trend. A trend is one of the strongest chart patterns you will encounter when studying stocks.
- 4). Buy shares of the stock only when you see it is trending. This is a straightforward strategy with good odds for the beginning investor, unlike much more complicated methods that may take years to master. Purchase these shares in your virtual trading platform so there is no money at risk.
- 5). Monitor the virtual stock position. If the trend breaks, sell the shares. The sequence of "higher highs and higher lows" characteristic of a trend is no longer in play if a recent high fails to take out a previous high, or a new low is lower than a previous low.
- 6). Paper trade for weeks or months until you are comfortable with the fluctuations of the market. Then, you may open or use a standard funded brokerage account and commit real money to your transactions.
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