People avoid the stock market because it feels like high stakes gambling. However, with research and guidance, you can turn the odds of earning a profit in your favor. It is not a gimmick. Millions of people make money in stock trading each year. Start out slow. Learn as you go. Learn everything that you can before you jump into the deep water.
Consider avoiding individual stock purchases.
There is a reason that many people make a living as a stock broker. Making consistent successful trades in the stock market requires huge amounts of research and background knowledge. While it is possible for an individual amateur trader to do this, you are not likely to be very good at it for very long. Mutual funds and other ways that stocks are sold in groups make investing much safer for most people.
Find references about available brokers in your area.
Regardless of whether you plan to buy individual stocks or mutual funds, someone who is licensed to trade stocks has to make the transaction. At this point, you can choose to pick your own stocks or ask the broker to guide you. You do want to be referred, if possible, to a good broker who has a reputation for not bilking clients by charging excessive fees. Bankers and friends who invest may be able to help you with this.
You can trade stocks online.
If you choose to go it alone, use an online broker. Most major stock trading companies have a good online presence. These sites are usually user-friendly. The fees charged are almost always a bargain compared to person-to-person stock trading. Fees can vary from broker to broker. So, look at several and find the one that fits your needs best. You may have to switch later after you understand more about how your personal trading habits work.
Become acquainted with your options for trading and types of stock to purchase.
With the Internet, gaining a good beginning knowledge of how stocks operate is available to anyone with Internet access. You need to know about the various types of mutual funds, like domestic, energy, foreign, etc. Learn how to research potential stocks to buy.
You need to know if the insiders are buying, selling, or holding.
If insiders are dumping stock, it is a good indicator that the company is having problems. The reverse is also true. You may want to leave trading in futures and commodities to the experts that have extremely deep pockets.
Start by doing theoretical trading.
Decide a realistic amount to invest in the stock market. On paper, but in reality, write down the types of stock that you want to buy and the quantities until you use up all of your money. Track these stocks for a few weeks. Buy when the stocks are low and sell when the stocks are high. Keep researching historical stock performance as you buy and sell to make sure that you are taking advantages of the natural up and down swings in the stock prices.
When you feel you have an idea of what to do, buy some stock.
Do not over invest at the beginning. You can always buy more, later. Use a set amount of money to invest. When you gain additional money from selling stocks that have appreciated in value, buy more stocks. As you gain confidence and understanding, add to your initial investment to expand your portfolio.
Try not to get greedy.
It is all but impossible to time stock transactions to always buy stock at the bottom and sell it at the top. Buy when stocks are below their moving average and sell when they rise above it. Or, do this based on other peaks and valleys that a specific stock chart may form.
Sell losers when possible to offset some of your stock gains.
You only have to pay taxes on the total capital gain or loss for the year. So, by dumping losers near the end of the year and selling winners at the beginning of the year, you have your cake and eat it, too. The losses will keep your taxes down. Selling the winners in January gives you a whole year to use your profits to earn more money.
