how to survive stock trading?

 Wherever you fall on the investor-trader spectrum, these four tips for how to trade stocks can help ensure you do it safely.

1. Lower risk by building positions gradually

There’s no need to cannonball into the deep end with any position. Taking your time to buy (via dollar-cost averaging or buying in thirds) helps reduce investor exposure to price volatility.

2. Ignore 'hot tips'

WallStreetHotShot4721 on the EZMillion$Trade forum and the folks who pay for sponsored ads touting sure-thing stocks are not your friends, mentors or bona fide Wall Street gurus. In many cases, they are part of a pump-and-dump racket where shady folks purchase buckets of shares in a little-known, thinly traded company (often a penny stock) and hit the internet to hype it up.

As unwitting investors load up on shares and drive the price up, the crooks take their profits, dump their shares and send the stock careening back to earth. Don’t help them line their pockets.

3. Keep good records for the IRS

If you’re not using an account that enjoys tax-favored status — such as a 401(k) or other workplace accounts, or a Roth or traditional IRA — taxes on investment gains and losses can get complicated.

The IRS applies different rules and tax rates and requires the filing of different forms for different types of traders. Another benefit of keeping good records is that loser investments can be used to offset the taxes paid on income through a neat strategy called tax-loss harvesting.

4. Choose your broker wisely

To trade stocks you need a broker, but don’t just fall for any broker. Pick one with the terms and tools that best align with your investing style and experience. A higher priority for active traders will be low commissions and fast order execution for time-sensitive trades. See our picks for the best online platforms for active traders/day traders to learn more.

Investors who are new to trading should look for a broker who can teach them the tools of the trade via educational articles, online tutorials and in-person seminars. Other features to consider are the quality and availability of screening and stock analysis tools, on-the-go alerts, easy order entry and customer service.

No matter what, the time spent in learning the fundamentals of how to research stocks and experiencing the ups and downs of stock trading — even if there are more of the latter — is time well spent, as long as you’re enjoying the ride and not putting any money you can’t afford to lose on the line.