Getting into stock market trading can be intimidating. The images of men in suits running on the trading floor, screaming buys and sells, and a lot of quickly rolling numbers, can be a little overwhelming. Everyone knows the stock market can be a great place to make a lot of money. Once more, when used by a novice, it can be an easy place to lose your money.
Before you jump into the trading ring, take a little time to educate yourself about stock trading basics and how to maximize your investment, large or small. Not knowing what you are gambling on, could cost you big.
Stock Terminology
When investing in the stock market, you are going to encounter a lot of new terminology that you may not understand.
Here is a list of some common words and phrases you will hear and their meaning:
Share: a share is an amount of part ownership in a company. These shares are assigned value congruent with that of a company’s estimated worth. Buy: a buy is what it sounds like, a purchase of a share or shares Sell: a sell is selling off shares. Also called a trade. Bull Market: a period of time in the market where there are significant increases in trading volume and market value. Bear Market: a period of time in the market where there is low trading volume and stock value diminishes or is stagnant. Dividend: stock holder payment of a share out of the company’s profits.
Video: Stock Trading Basics
Be Aware of the Risks
While it is not common for an investor to lose all their money in the stock market, be aware it can happen and does. Only invest what you can afford to lose, and invest slowly at first until you learn more about the variations in the market. Remember to allows focus on the long term investment benefits. Chances are nearly certain that you will not buy a stock today that will double in value in a month. It happens, but it’s rare. That same stock, based on historical increases in stock market share value, can double in worth in say 5-10 years. Don’t bet on the short term, you are almost certain to fail.
Video: Investing in Stocks for Beginners
Where to Start
Getting into the stock market has never been as easy as it is today with the advance of the internet. Companies have moved away from the days of pursuing big investors with private portfolio managers. Today’s stock market brokers work almost exclusively online with average investors looking to make some money. Instead of making money off your earnings, these companies profit in a different way.
Most internet brokers charge a simple per trade fee, usually from $9 to $15 each. This makes it easy for anyone with a bank account to start investing today. Look at these companies when deciding where to make that first investment:
Sharebuilder.com: A large sized broker with a history in the industry. Great website with a lot of built in user account features to show you what your investments are doing.
Charles Schwab: Good pricing for trade commissions. A large selection of stocks to choose from. Easy to navigate website.
TradeKing:Cheapest share trade commission out there. Also ranked in the industry as number one in customer service.
E-Trade: Newer to the industry, but a good place to start for new investors. Easy to use website and the process for opening an account is simple to follow.
Things to Keep in Mind When Investing
You should start slow when investing, and watch where your investment value goes. Only put into the market an amount that you can live with. Take care not to get in the habit of watching your stocks daily in hopes or fear of rises and falls. Think of the long-term investment value and wait. When you have reached a comfortable profit return, make the sell happily and on your terms.
