Trading the stock market is easy if you know how to start.
How to start trading? First of all, never do it on your own. Ask to be advised by some experts. It is always best to access a financial advisor who will tell you how you should invest or trade, established in your financial situation, and risk appetite. Talk to others who invest.
Read books, journals, and newspapers for recommendations. You can talk to your stockbroker for advice but don’t listen to everything he says.
Always take a second opinion as brokers might have vested interests. In the beginning, it is best to go for known brands and big companies that have a good business status.
What do you need to know before you start trading?
Without knowledge, you may feel lost. Let’s make clear the basics because you’ve decided to join the crazy world of trading stocks and shares.
You have to know that shareholders usually have a right to vote at company conferences.
Of course, if you own just one of the three billion Facebook shares don’t expect Mark Zuckerberg to listen to your ideas!
Another thing you need to know is that a company’s shares are indivisible.
You cannot buy fewer than one share.
Shares were pieces of paper that shareholders kept in a safe but since the ‘90s, this all changed to virtual shares. Before you start trading stocks, you have to buy them! You can do this in many different but easy ways.
Some companies allow you to buy their shares directly from them but If you can’t purchase the shares directly or you’re not sure which company to invest in, ask your bank. Also, banks offer an online trading service connected to your existing accounts.
Ask your bank to see if this option is possible. If your bank doesn’t offer a trading service, you can buy shares through a brokerage company. You can find many of trusty brokerages, just do a search. But be cautious. Never pick the first you find, read some reviews, ask around, visit forums.
Brokers buy and sell securities in exchange for a commission. You can set up a simple brokerage account online or hire a so-called ‘full-service broker’ who will trade stocks on your behalf. They can be a consultant or advisor for you. This will cost a little more but it is worth it because you know nothing about shares or stocks or trading or investing.
How to start trading?
So, you want to start trading stocks or CFDs, but you have always remembered three things:
- Never invest more money than you can afford to lose. With shares and CFDs, there is a risk of losing all the money you have invested.
- Follow your head, not your heart. Your heart will always pull you towards certain stocks. Stop and think. Only invest in companies that seem able to grow their profits, despite your emotions.
- Never invest your savings in just one company. ‘Never put all your eggs in one basket,’ as the mantra goes. Place your investments across many different companies.
This way, you’ll significantly decrease the risk of loss, and increase the chance to multiply your investment.
When you set up your online broker account, simply take the leap and make your first trade.
If trading with real capital isn’t viable, start with a simulator for virtual trading. Numbers of different online brokers offer virtual trading for practicing and learning.
It’s too easy to lose money in a stock exchange, so start with a virtual where the money is virtual, but the stocks, stock prices, are real. Maybe the best way is to start your trading journey with virtual money, understand how they are performing, recognize when you can sell them, is it the right time, etc.
Before you start putting your real money, you would learn the tricks of the trade with virtual money. Take it slow. You’ll need time to understand everything. Not even the most experienced traders know everything. Most important for beginners in trading is to have a trading plan, trading strategy, and to stick to them. Also, never forget to keep up your trading journal. That is an amazing tool. Add to it all your entries, exits, price of assets you trade, at which price you bought it, and at which you sold it. That will provide you a full picture of how successful your trades were. Do it with virtual trading in a demo account, also.