4 Steps Beginners Should Take When Stock Trading

by James on January 19, 2016 · 0 comments

office-581131_640So many people want to start stock trading, but thinking about trading is usually as far as people get. Are you one of those people who wants to invest on your own, but isn’t sure how to do it so you give up? It’s time to stop dreaming about a diversified portfolio, and to start putting a plan into action. It doesn’t matter if you’ve never traded independently before, you can do this.

Step 1: Take a course in trading

Your first step in the right direction should be educating yourself. Unless you’ve done the research on stock trading there’s no possible way to understand its intricacies. Educators, such as Simpler Trading, will answer your most common questions, including:

How do I choose stocks?

What is a portfolio and how do I manage it?

Is it better to work independently or with a professional?

How do I further diversify?

Which broker should I choose?

An education will provide you with more than basic knowledge; it will provide you with advanced knowledge and a competitive edge. Both of which will help ensure you do well in the stock market.

Step 2: Find a broker

You need a broker if you want to purchase stocks. Stockbrokers are licensed to purchase securities on behalf of their clients. Investopedia lists that there are four types of stockbrokers: online/discount brokers, discount brokers, full-service brokers, and money managers. In general, you want a full-service broker or a money manager. If you’re highly educated on stocks, you can use an online broker because with the service you don’t receive advice, recommendations, or support.

Remember: not all brokers are great people. In fact, any mistake you make has the potential to line their pockets. This is why an education in investing is such a worthy investment. It costs little to take a few classes, but it can help you spot a broker that wants you to fail.

Step 3: Determine the worth of your portfolio and diversify accordingly

A portfolio is a group of financial assets that include bonds, stocks, currencies, shares, funds, real estate, and whatever else you’re investing in. A professional or group of professionals can help you manage your portfolio, but sometimes it’s better to manage it yourself.

According to US News, just seeing your wealth build helps you spend less. “You may realize how much your investments can earn over long stretches of time, which will motivate you to contribute more to your stash as early as possible.” The site also warns that some financial advisors will sense that you’re uninformed and find loopholes to legally take your money; moreover, financial advisors cost money that is better put toward more stocks and investments.

Have you ever heard the phrase, “Don’t put all your eggs in one basket?” This is something that applies to diversification in investing. Split your investments up between a few good stocks and some other investments, such as real estate and bonds.

Step 4: Stay informed at all times

Finally, it’s important that you always keep a watchful eye on your stocks and other investments. It doesn’t matter if you’re investing a few hundred dollars or thousands of dollars. Your money is important and watching it closely will ensure its safety.

Do your research. If you’re considering investing in a company, get familiar with their numbers and cash flow. Research the company and its ability to remain profitable in the long-term. Keep your ear to the ground. Make wise choices and know your stuff. There are many resources that are available to help guide you in every way possible. Take advantage whenever possible.

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