A newbie do: Learn and do some math.
As someone new to the stock trading game, you have lots of questions. One way to get answers to questions is with math. And it doesn't have to be hard or complicated math. Let's say you have an IRA with $20,000. You are going to retire in 20 years and you would like to have $1 million. Is that realistically possible without hitting the big one? How much money are you going to need to contribute? What kind of returns are you going to need to get? All very valid questions that if you aren't going to be just be wandering aimlessly without a plan, you need to answer. Get your calculator out.
Believe it or not you don't need to contribute any more money to the IRA. Yeah, but I would have to hit the big one then right. Nope. Do the math. What kind of yearly return do you need to turn $20,000 into $1 million after 20 years? A whole bunch a bunch right? Nope. It's higher than the average return, but let's make it easier. Divide by 50 to find out what kind of weekly return you need. That looks much easier doesn't it. Say you're trading a $20 stock. How much do you have to make a week after commissions? A couple dollars a share?? Several quarters? Nope. Get your calculator and do the math. Answer below.
One dime. What??? How can that be. Did you do the math? Starting with $20,000 and making .5% a week for 20 years is over $1 million. A $20 stock at .5% a week is .10 after commissions. If you can't consistently trade slow boring stocks for .5% a week, trading is probably not for you. In that case, just put your money in an index fund and forget about it. But if you're willing to learn and do a little math. And willing to learn about the stock markets. Then over the next 20 years, make yourself $1 million.
