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Part One of this course deals with the fundamentals or basics of trading. In part Two, more advanced lessons build on what you learned in part one and extend to explain not to use our TradeFinder subscriptions to add artificial intelligence and other tools.
We will provide two ways to receive the instructional material throughout our courses.
1) By way of a downloadable PDF file, and 2) By way of a video that will play and deliver the instruction. In all of our courses, you may use one or both.
Lesson: Introduction to the Modern Trading System
The Modern Trading System is the name given to an evolutionary process that has developed over decades and contains the wisdom of hundreds of highly experienced traders. As such, there is no single author; it could be considered a history of corrections stemming from great mistakes and damages incurred by these traders. As they watched the markets jerk up and down and then settle into often long periods of rising then falling, when they looked back at the fallout and damage done to traders (investors if you like) and inquired how these poor folks wound up where they were, common traits emerged. The antithesis of these reasons for failure began to form a set of rules that have resulted in what we today call the Modern Trading System.
Lesson 1: What Is the Stock Market?
It is a bustling marketplace where people buy and sell tiny ownership in big companies. These little pieces are called stock shares. Companies like Apple, Tesla, and Amazon sell these stocks to investors. When you buy a stock, you become a part-owner of that company until you decide to sell the shares. Most of the time, these shares are only owned briefly. Say days or weeks; however, some people will hold onto the shares of stock for many years. It depends on your strategy for stock ownership. More on that later.
Lesson 2: What Is Fundamental Analysis?
Imagine you’re buying a used car. You’d check its engine, mileage, and history to decide if it’s worth the price. Similarly, fundamental analysis examines a stock’s intrinsic value by considering economic and financial factors. It’s about finding a stock’s actual or “fair market value”. This may be what you always thought was how to determine whether to buy a stock. It is the most traditional way for the average person to understand it.
Lesson 3: What is Technical Asset Analysis?
Technical analysis involves forecasting future financial price movements based on past price movements. Price movement (also called price action) is usually studied by technical traders using the various charts available for a stock. Starting with a basic candlestick chart, the trader can view the general movement of the stock. If the chart tends to rise over time, it is said to be in an upward trend. If it is moving down, it’s called a downtrend.
Lesson 4: What is Quantitative Trading Analysis?
Quantitative analysis involves using mathematical, statistical, logical, and artificial intelligence techniques to analyze data, understand patterns, and make informed decisions. Let’s delve into the details.
Definition – Quantitative analysis collects, evaluates, and assesses data to understand past, present, and future behavior. A quantitative analyst will study an asset’s past data for as long as two years, which can require downloading and modeling millions of data points.
Lesson 5: Risk Management Techniques
Understanding risk is critical to all traders. If you think of trading as an exercise in probability, the worst you can do is fifty-fifty, as in a coin toss. Of course, those risks will quickly break your account. So, we need to improve our probability as much as we can. There are proven ways to do this, which are listed here. Set profit and loss thresholds at the start of the trade.
Lesson 6: How Long to Hold a Trade Open
Talking about the strategy a trader should use can confuse some since the word strategy is used in differing ways. So, I will not call this segment a strategy; instead, we will call it a trading preference. The stock market trading methods can vary greatly depending on when a trader or investor intends to hold a position. Their preference for holding trades at different times results from many factors. Let’s discuss them now. There are generally three timeframe groups—short, medium, and prolonged holding of trades.
Lesson 7: The Psychology of Trading
Many traders face the challenge of removing all emotions from stock trading. Here are some strategies that can help. Remember, it’s about creating a disciplined approach to trading that minimizes the influence of emotions on your decisions.
Establish what you want to achieve with your trading activities and ensure these goals are attainable. If you wish additional monthly or quarterly income, make that your goal. If you’re going to build up money for a downpayment on a new home, document that. It is essential to focus on your goal. Consider writing the goal down and placing it near your trading area (computer, etc.). So that you can focus on the goal and only set one goal at a time. Two goals will give you cause to be ambivalent. You want to be laser-focused on your trading goal.
Lesson 8: Choosing an Online Brokerage
An online stock brokerage site is a software platform that allows individuals to buy and sell stocks and other securities online. There are many; some deal only with stocks, while others enable trading many assets, including stocks, cryptocurrencies, and Forex. Recently, trading of stock options has been allowed on some.
In this course, we will only deal with stock trading. An important distinction needs to be made here. While they all allow for buying and selling stocks, only some allow for connecting stock sale management software. To do this, they must support these computer-to-computer connections. They must have an API, which is an Advanced Programming Interface. Also, the API must be sufficiently advanced to be integrated into our trade automation software; more about that later.
Part Two of this instruction deals with more advanced topics.
Take the time to go through our Modern Trading System Classes. You won’t regret it.
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