First things first, you need to know what you’re getting yourself into. So let’s talk about the stock market. Since you’re reading this article, you probably already know the answer, but what is the stock market?
Simply put, the stock market is where investors can buy and sell stocks. What are stocks? Stocks are made up of shares. Shares are pieces of ownership of a company.
So how does the stock market work?
The stock market is a place where buyers and sellers can connect and do business. Companies who want to grow get listed in the stock market, and then have an initial public offering, or IPO. Investors purchase shares through the IPO, and and then they can sell those shares when they think they’ll make a profit. Or they may decide to sell in order to stop themselves from losing too much money if the value of the shares is forecasted to plummet.
Before you begin to participate in trading shares through the stock market, you may also want to enroll in an online course. You can find plenty of affordable online courses at sites like FxMonopoly.com
Are you already investing?
If you have a 401(k) through your work, you may already be investing in the stock market! Many people invest their money in mutual funds, which is a relatively risk-free way to invest in the stock market. With mutual funds, your money is spread over a variety of different companies, therefore if the value of one company decreases, you won’t lose all of the money you had invested.
Answer the “why?”
So, if you’ve decided you’d like to trade shares in the stock market apart from what you may already be investing through your 401(k), then you need to make sure you understand what you want and why you want it. Do you want to trade daily? Or may just a couple of times per week? You can day trade, swing trade or invest, each of which requires a different level of commitment.
Figure out your finances
How much money to you have available? If you want to day trade, you need at least $25,000. So if that’s not something you can do right now, then you’ll have to consider swing trading or investing. Swing trading requires less, as you should have at least $10,000 available. Investing is generally considered a safer option than can require much less capital. When you invest, you’re going in for the long term.
Get an online broker
Unless you are already an expert in trading shares, which you probably aren’t, considering you’re reading this article, you should seriously consider getting a broker. You want to make sure that you find a broker with great customer support services, and with low commissions. Some other things you’ll want to keep in mind when choosing a broker are to make sure that they:
- Are reliable
- Are honest
- Provide free tools for online research on your own
Once you start searching, you’ll see that there are a plethora of broker options available. Some places to look to get started may include:
But there are many others available as well, the key is to do your research and shop around.
Find your stocks
After opening a brokerage account, it’s time to start researching and selecting the stocks that you are interested in. The good news is that you’ll probably already be familiar with many of the top names, due to advertisement or personal use.
When you begin looking for stocks, think about companies that you actually like, not just companies that you think will do well. Chances are, if you like them, then other people will like them too, and that’s pretty important.
Take a look at the company’s annual report so that you can see how the business is doing. Also, don’t hesitate to use analytical tools (provided to you by your broker) and to look at other information such as conference call transcripts and, of course, information you can find in the news.
Pick a number
After you decide what company you would like to invest in, you need to decide just how much you want to invest. You do not need to buy a lot, especially at first. Try buying a single share to get started and see how it feels. You can always buy more!
Choose your order type
You’ll want to work with your broker to understand this concept better, but you can choose between a limit order or a market order. A market order means that you have intention of biking and selling stock at the best available price currently on the market. A limit order means that you want to wait to buy or sell until the price is the best for you.
If you’re just starting out, you should consider investing in a wide range of stock, so that you are less likely to lose big due to one company’s losses. There’s no need to hurry, you can always put more money into the stock market. And make sure to choose a broker that you feel comfortable with.