You Need Money to Trade

In addition to your goals for trading, you also should be well aware of the resources you bring to the trading table. They will play a big part in the stock market you can trade and in the way you trade them.

Here are some resources you have to consider as you ponder what and how to trade:
Money
In stockmarket you have to have money to make money. You also do not want to have the pressure of having the funds for trading come from money you need to pay the rent or buy groceries or from funding the account with your credit card. Your trading money should come from discretionary funds that you can afford to lose without affecting your lifestyle.
Having money to invest is just not enough. You should not seriously consider investing unless you had satisfied at least one of the three following conditions:
You have six months income worth in savings.
Your current assets equal to your current liabilities.
You have just acquired a sudden windfall or inheritance, which should be thought as capital and not as current income.

If you think you`re ready to start trading, look carefully at where you`re getting your money from. Maybe you`ve been considering trading for a while and built up some savings. That`s good planning. Or maybe you`re considering borrowing money. This is generally a bad idea. Maxing out your credit cards is a quick and easy way to get cash, but the effects can be devastating. Any investor, who does not diversify his investments and puts all his eggs in one basket, especially when he invests all his money in equities, is likely to bear the brunt when the market falls. Short-term investors who take loans to invest in equities suffer most. Trading and investing in securities is always risky. For that reason, you should trade or invest only "risk capital" -- money you can afford to lose. While this is an individual matter, we recommend that you risk no more than 10% of your liquid net worth -- and, in some cases, you should risk less than that. For example, if 10% of your liquid net worth represents your entire retirement savings, you should not use that amount to buy and sell securities. Trading in stock market involves HIGH RISK and YOU can LOSE a lot of money.

Greedy stock traders risking ALL their money in stock market, but smart stock investors invest within their surplus in savings. It is just a common sense, but you will be amazed on how investors around you get greedy when stock market appear to be very bullish.