5 Simple Things EVERY Investor Should Do to Get Better at Trading
Updated: Nov 27
1. Check market futures before the trading day
The NYSE’s trading hours run from 9:30-4:00 every week day. Before that opening bell rings, you should check futures such as the Dow, the S&P 500, and other major indicators, as they are a good measure of how the market will move that day. If any economic indicators came out (or are coming out) that day, stay up to date with those too. These often affect the market in big ways depending if they are positive or negative, especially in the current pandemic climate.
2. Stay up to date with market news
This is a big one! It’s advantageous to constantly stay up to date with the latest news in both the market as a whole and individual companies. Knowing and learning how the market reacts to news is vital to get a better understanding of what you are dealing with. Also, keeping up to date on news for individual companies allows you to expand your radar and be on the lookout for possible buy ins and good investments. It’s also important to be aware of how good/bad news for a company will affect others in their sector or potentially the whole market. Simply watching financial channels and maybe signing up for a daily newsletter will help you stay up to date.
3. Understand why and how your investments are moving
Especially for beginners, it’s important to have an understanding of your portfolio movements in order to better comprehend how the markets move. If one of your stocks shoots up in price, take a look at the news and figure out why. Learning how your investments move will make you more in tune to the market and will create better trading habits. Every time one of the stocks in my portfolio goes up by more than 5%, I’ll look up the latest news regarding it and read a few articles.
4. Do some light research on your stock picks
Although research can be daunting, it’s so important. Now, I’m not talking about anything too crazy here. Some basics you should know are a company's P-E ratio and how it compares to others in their sector, and the general trends in earnings growth. More qualitatively, you should research the company's plans for growth and just understand the basics of the company (eg. how it makes money, where it stands within its sector, etc.)
5. Create (and constantly update) a watchlist
A watchlist is a list of stocks you want to keep close tabs on. This list is usually readily available to you on your investing platform: for example, Robinhood has a feature where you can add securities to your watchlist, which shows up under your current investments. Securities on this list should consist of ones you possibly want to invest in and/or stocks you are watching the price movements on. This will not only make your trading session easier, but will allow you to swoop in and buy at the exact right time for stocks you’ve been eyeing.