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Are You Ready to Learn How to Trade Stocks: 3 Questions

Have you ever looked at the stock market or the Dow Jones Industrial Average and thought you would like to learn how to trade stocks? Have you ever looked at the wealth the stock markets create for investors worldwide and thought you would like to create some of that wealth for yourself?

If you have, you're not alone. According to recent surveys, amateur stock investing is one of the fastest growing hobbies in the United States. With new online services and more successful investors willing to share their secrets, more people are willing to learn how to trade stocks to improve their financial position.

To be candid, however, trading stock can be a bumpy and sometimes risky road. Going in unawares can spell certain doom for your investments and even your future prosperity. To find out if you're ready to join the biggest, most potentially rewarding game on the planet, read the following checklist of three things you should have before becoming an amateur stock trader:

1. Cash to Spare -- Successful investing never involves dumping your life savings into one basket and then hoping it takes off into the stratosphere. That's called gambling. To begin investing is to understand the delicate balance between risk and return.

Higher risk equals higher returns and vice versa. Most fortunes are made by responsible individuals putting away money for rainy days in safe investments and then taking the remainder, to be determined by the risk tolerance of the individual, and putting it into potentially higher earning stocks.

When you start investing, especially while you are still learning the ropes, make sure you are only spending cash that you don't need for anything else. Pay mortgage and your other bills. Put some money away for a rainy day in a CD or a savings bond. Then, take your extra money and start learning to trade stock.

2. A Mentor -- No one walks through the door of the New York Stock Exchange and masters it all by themselves. The top minds in investing all admit to learning their skills from past mentors.

You can save yourself a lot of stupid, expensive mistakes by finding someone who has been successful in stock trading, someone you trust, and asking for their guidance.

3. Time -- Learning the ins and outs of stock trading does not happen overnight. It can't be contained to one book or one seminar or lecture. It takes years of experience and bad decisions.

Before you invest your money in learning to trade stocks, ask yourself if you are willing to dedicate a significant amount of time to learning. If you do not have the time to dedicate to do it right, you may want to consider changing your schedule and trying it later when you have fewer commitments.