Stocks
Stock Trading: The Beginner’s Guide
Stock trading is a risky venture and not for everyone. If you are up for the challenge, however, you could glean some great rewards.
If you are new to stock trading, there is much for you to learn. Trading stocks on the open market is not for the faint of heart. It can be rewarding, though, if you garner the basics and build on other people’s experience before delving into the deep end of the stock trading pool.
So, where do you begin? You should start by applying some simple habits that will position you for potential success.
Some beginning measures should be as follows:
• You need to decide whether you will exercise do-it-yourself investing online or if you will be submitting your trades to a stock broker to make the trades for you – keep in mind that it is cheaper to do-it-yourself and there are free online tools available that enable you to do the same research that a stock broker would do
• You need to consider how much you can afford to invest – you might want to start with a nominal amount for your overall investing
• You might want to consider investing in mutual funds over stocks, since many mutual funds have proven to be safer over the long-haul – or you could invest in a combination of both
Online Stock Trading Basics
If you think you will be doing your own investing, you’ll need to register with an online brokerage or trading company in order to complete do-it-yourself online stock trading. Scottrade charges $7 per online trade, and there are other online trading companies that charge even less. Check all the fees, though, before you begin trading stocks with a company. Sometimes you’ll be charged a low up-front fee only to discover more expensive fees tacked on upon the completion of the transaction. Try to find one that has a local office, in case you have problems that need a more personal touch.
Do a search on the Internet for online stock trading companies. Check their website for all fees, and call them if you still have questions. Navigate through the website to see if it is user friendly. Make sure the site you select has real-time trade information. You will eventually be placing online purchases, so you’ll want to make sure you’ll have real-time stock pricing available.
Tips and Tricks To Online Stock Trading
Before you actually try your hand at trading stocks, talk with friends, families and acquaintances to find out if they have investments that are working well for them.
Begin a practice of researching the market at least two hours a day before you even consider online trading, and create separate portfolios for potential stock purchases. Websites like Yahoo! Finance and others allow you to create portfolios of the stocks that you want to watch. Keep a daily running tab on the stocks in your portfolios in an Excel spreadsheet with columns that detail your daily stock activity – day’s low/high, previous day’s close, 52-week low/high. This will arm you with all the stats of stocks in which you’re interested for quick reference. Make separate tabs in your Excel spreadsheet for different stock headings, like technology stocks, health stocks, energy stocks or others to help you in your organize your online stock trading.
Do the following to find some good investment stocks:
• Read web message boards/forums to see what other people are saying about specific stocks – whether they’ve had good success over a period of time with a particular stock
• Watch financial news programs on TV – MSN, Fox News, CNN and CNBC’s Jim Kramer
• Watch financial videos posted on Yahoo! Finance home page about stock trading
• MSN Money posts top ten high/low stocks weekly – research those stocks to see if you might be interested in them (rating, company information, etc.)
• MSN Money provides a stock scouter that rates the company on a scale of 1-10, 10 being the best – try to stay away from stocks rated under a “6″ – the stock scouter also sometimes gives direction as to whether to buy, hold or sell
• Study financial information found on MSN Money, Yahoo! Finance, Stockwatch and other financial websites about companies featured and other stock trading information
Use the following criteria to determine whether you are interested in a particular stock:
• Watch a particular stock for several months before you buy it to see if it is stable and only buy it when it appears to be at a low, but stable
• Only invest in stock that has steady growth or is stable – never buy stock that fluctuates significantly on a daily basis
• Check out stocks that people have stated they have had good success with over time
• Don’t let “bashes” impact what you think about a stock – sometimes money makers try to drive a stock down, so they can buy shares at a lower cost
• Watch certain stocks that suddenly fall to see if they will stay low but steady out – don’t buy the day it drops, but invest a day or two later if it seems to stabilize
• Only do online trading with companies that have a market capital of more than $110M
• Never do online trading with new companies – less than 52 weeks of history on the stock market
Yahoo! Finance is the easiest forum in which to create/manage portfolios in order to be organized to do online trading. Some financial websites to use as resources are MSN Money, Yahoo! Finance, Scottrade and Stockwatch, but there are a multitude of others available.
You’re Ready To Take The Plunge And Invest
Don’t invest too heavily in your first stock purchase. It’s good to start slow when trading stocks until you get the feel for investing and hone your investing skills a little bit. And, finally, don’t invest in any stocks until you’ve watched them over a period of time – six months should be a safe timeframe. That way you’ll have a good handle as to whether it appears to be a stable stock in which to invest.
Keep in mind that you have to know going in that you will lose money.
If you follow all the guidelines to the tee, you may lose around 20 percent of all that you invest. You have the potential, though, to make significant income on the other 80 percent. Trading stocks is a risky business. If you do your homework and research the stocks like you should, however, you could end up making mucho, major money.
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