Grasping the basic concept of a stock market takes about 15 minutes (or as long as it takes you to read my complete guide to the stock market). There’s really not much to it at a theoretical level.
Learning how to operate in the stock market as an investor, however, is a whole other thing.
Some people grasp the nature of the stock market surprisingly quickly, while others live and invest their whole lives without really getting it.
There’s no certain time frame for learning that works for everyone. It’s practically impossible to give you specific time frames that it takes to learn about stock market cycles, for example.
However, I do think there are differences in how deeply you need to understand the market, and that depends on your investing style.
How Long Does It Take to Learn the Stock Market
The way I see it, there are roughly two types of stock investors in the world – passive and active investors.
While they both operate in the very same stock market, there are differences in how much knowledge and skill is required to succeed.
Passive Index Fund or Mutual Fund Investors
An investor who invests in widely diversified indices the stock market plays a medium role. On one hand, a passive investor doesn’t need to know all that much about the workings of the market.
On the other, the investor is fully in the hands of said market because he owns the market itself through index funds.
For a truly passive long-term investor, it’s enough to know that the stock market acts erratically and may decline in the short term, but eventually bounces back and goes up in the long term. The rest is up to the investor.
If one would invest regularly in a widely diversified index such as the S&P 500 for 30 years, it wouldn’t be necessary to know a single thing from the stock market to succeed. Because of its simplicity, passive investing is the easiest way to achieve long-term financial success.
In real life, though, maintaining an investment strategy for 30 years or more requires the investor to understand the basic concepts of long-term investing. Without understanding the basics it’s hard to stick to it during the bad times.
Active Long-Term Investors
The same stock market principles that apply to passive investors also apply to active investors. No matter how you operate in the stock market, it works the way it works despite your investment strategy.
However, being an active stock investor requires a lot more learning, effort, and skill than passive investing.
An active investor must understand the stock market and its cycles, and how the economy works overall. He also needs to learn risk management and know how to analyze different companies and their financial statements.
Not to mention that being an active investor requires tremendous amounts of emotional intelligence and self-knowledge.
It’s safe to say that becoming a successful active investor requires a lifetime of disciplined learning.
Therefore, as I’ve often stated before, it’s best to start with a passive investment strategy and eventually move to a more active one, if you’re so inclined.
Active Stock Traders
Since I’m not an advocate of technical analysis or stock trading, I have no hands-on experience with how long does it take to learn day trading or any other form of stock trading.
I can, however, tell you that learning different forms of trading such as swing and intraday trading takes a long time. Not only do you have to understand how the stock market works, but you also need more than a basic understanding of trading psychology and technical analysis.
Technical and fundamental analysis both require a lot of effort to master and most people will never truly master either one of them.
It’s not because investors and stock traders are dumb or anything, it’s just how difficult it truly is. It takes a lot more than knowing a couple of candlestick chart patterns to succeed as a trader.
Therefore, before you trade stocks for real, I would start by using a trading simulator to learn trading before you put your money on the line.
Overall, if you’re aiming to become an active stock trader, you should prepare for an extremely steep (and costly) learning curve.
What are the Best Ways to Learn about the Stock Market
Okay, so now we know that learning about the stock market largely depends on your investing style. But the question of how to learn about the stock market remains unanswered.
As you might’ve noticed browsing my site, I enjoy reading books very, very much.
So, as it happens, I also believe that reading is the best way to learn about the stock market. A while ago I made a list of the best books for long-term investors that can help you get the hang of things. My personal favourites are The Most Important Thing and Mastering the Market Cycle, both from Howard Marks.
It’s also always worth it to read on stock market history since, to some extent, the stock market tends to repeat itself from time to time.
There are also tons of material on YouTube and other educational platforms that will most definitely prove to be useful.
While educating yourself is the noblest of all pursuits, knowledge is nothing if it’s not applied.
You can read about stock market crashes and about “buying low and selling high” till you’re blind, but truly understanding the stock market requires a hands-on approach.
Therefore, you need to spend more than a few weeks in the market to observe and understand different market conditions. The key to a successful learning process is a combination of theory and practice.
The longer you invest, the more you learn from the market and yourself as an investor.
