A Guide for Newcomers in Stock Markets
Today we will discuss a Model of learning developed by me for new comers in stock markets . Its very logical and obvious way of learning .There are 5 things a new comer has to do , I will call it CLOPS model of starting in Markets .
- Calm Down
- Learn
- Observe
- Practise
- Start Small
This model of learning is totally obvious and logical and applies to all the areas of life. Stock Markets are no different . Lets see each of them separately and what they mean in Stock markets .
Calm Down
The first thing a newcomer has to do is calm down and not rush . Just be where you are . Most of the people come in stock markets and its totally a new place for them and every things looks like a great “get-quick-rich” opportunity to them and they want to make most of that once-in-a-lifetime opportunity . They don’t know its every-day thing in stock markets. Markets are like a wonderland for them. Markets are no going anywhere and its more true for the opportunities they provide . When you calm down first and don’t get excited, you are doing an important thing , which is not jumping in without thinking and making yourself ready for another important things which are discussed below.
Learn
The next step is to Learn , Learning is an ongoing process which will never stop as far as Stock markets are concerned ,but before at the starting level you need to learn lots of basic stuff , Read how Stock markets are structures , what are different indices , what is Nifty and Sensex ? , What are the factors affecting markets, How do analyse a company , what are important things to consider while investing . Read books , Read blogs, Read anything you can get on the subject. Some of the good resources are
Books for Value Investing (Thanks to Rohit Chauhan to provide the names)
Blogs for Value Investing
Books for Trading
Blogs for Trading
Observe
After learning, the next thing is to Observe the markets. See markets movement, watch how prices are behaving on each news or with volumes , see what kind of patterns are developing on charts and does it behave every time in almost same way. When you observe things , you will develop some understanding on relationship and you can validate those with what you have learned so far . A good amount of time should be given to this , markets have different faces and you need to see all the faces , just one good up move is not enough , see at least all different kind of moves . Up-move , Down-move , trading in range . All of these in different time frame .
You can actually start this early and do it side by side your learning . Collect charts for each day for later reference so that you can see it later . If you know some programming , make a small program which can download the charts from yahoo customised to your purpose . I have downloaded 15,000 daily and weekly charts for all the Nifty , Midcap stocks and Asian Indices. I can go back to them and test any of my strategy on those charts . Keep History to learn about the future 
.
Practice
Now come the fun part and very important part , Practicing what you will do in real . So you have learned things and observed things , now is the time to practice . Before you try out anything in stock market with real money , just see if you able to make any money with practice or not . I would recommend just have an excel sheet and put important information about trading there . These are the statistics you should keep and see how you are progressing each week . Don’t concentrate on each trade too much , better have a weekly target while you are practising . I would recommend at least 2-3 months of practice . This step is important because when you get into market to trade , its totally a different thing . Your reactions to markets movement will be too different than what you had thought . If you jump in markets without practice, you will do lots of mistakes . Better practice before getting in real .
Download this Free Ebook to read more on How a Newcomer should Start in Stock Markets
Start Small
Now after you have learned things , Observed things and Practiced , here comes the last part , Starting Small , Start putting money in markets in small quantities , Grow gradually . View your self as a small baby who has just born , first start moving , then crawl , finally stand up one day and walk , once you can walk with speed then try Marathon . The same thing applies to Stock market . But most of the new comers just want to win the marathon and start running fast without understanding that there body is not ready for marathons . they need to first know how to crawl and they want to win marathon .
lot of people may go for learning and practicing part , but when they start with real money , they start too big , and that’s because of there over-confidence that are now ready to make money. First crawl baby, Marathon is long way to go . Make yours legs healthy first, then dream of running .
Conclusion
Each and every newcomer in market should understand that Stock markets are places and from centuries , people are trying to make money from it consistently , but very few people are successful , this profession has very less success rate if you compare it with other professions like Medicine , Engineering , Computer Science etc etc . There has to be some reason why you need to give time to it and learn things here . Take it as another professional course like any other and work hard on it . I think one should seriously give around 2 yrs for learning purpose .
See it as a career , not just another place to get-quick-rich, that doesn’t happen in Stock Markets . Its a gradually getting rich place rather than get-quick-rich place . There is a famous quote in markets that “There are old traders and bold traders in stock markets , but not both” . that’s true
Download this Free Ebook to read more on How a Newcomer should Start in Stock Markets
This post is written by Manish Chauhan of http://www.jagoinvestor.com
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