Stock trading is an investment route that can yield high rewards. It’s also one that carries risks, so it helps to understand as much about stock trading as you can before you put your money in. Are you looking to start investing in stocks? Perhaps you’ve come into an inheritance and want to put some of your money into stocks and shares? This brief introductory guide looks at the stock market itself, how to get started as an investor, and what you need to know to make the best of it. Let’s start by explaining what the stock market is.
What is the Stock Market?
The stock market is, in simple terms, a market in which financial commodities are traded. There are many trading stock markets in different countries. They trade in stocks and shares, for example, in bonds, and in commodities such as precious metals and others. The price of such commodities varies depending upon many different factors, hence a stock may be a higher price one day than it is the next.
This gives investors the opportunity to buy stocks in the hope the price improves, and they can then sell at a profit. It is essential that before you take the plunge you understand the risks involved, as prices do fall and there are certain indicators you will learn that give you an idea of when you should get out of a given stock. How do you invest in the stock market? Let’s explain that in brief.
How Do I Invest in the Stock Market?
Stock markets do not operate in the same way a shop, for example, does in that you cannot simply buy some stocks. You have to follow a series of steps which we have outlined below:
- The first step is to open a trading account with a broker or on a brokerage platform. This is the account in which you buy and sell your stocks.
- The broker then opens what is known as a ‘demo account’ for you. This is simply the account in which the stocks are held in your name.
- These two accounts are now linked to your personal bank account to allow trading to take place.
- Once you have provided the required identification and proof of who you are the accounts are all activated, and you are ready to trade.
- You can instruct your broker buy or sell digitally or by telephone.
Now you know how to set your account up, what should you buy?
What Should I Buy as a Beginner?
The first consideration is that of risk, and how much you are willing to take. Imagine a single person who has plenty of money to live with. They will naturally take more risk than someone who is, for example, the sole breadwinner with a family. Risk is determined by the volatility of the stocks involved.
Your broker will advise you create a diverse portfolio of stocks. This covers you in the event that a high-risk investment collapses, as you have the lower risk elements to fall back on. Talk to your broker about what you intend to achieve, and they will help you find the optimum portfolio to cover that intention.
Are their Tools that Can Help Me?
The digital age has brought stock trading closer to the masses and designed to help you see which way stocks are going at any given time. This is a great example of a stock brokerage platform that can give you a head start in terms of getting the right stocks for your beginner’s portfolio.
It is explicitly designed to be easy to use and is a great starting point, with excellent information and analysis tools for helping in investing in stocks and commodities. If you are new to investing, we strongly advise you have a closer look at it as it will help you understand how trading works and what you need to look for when starting to invest.
Enjoy Your Trading
Investing in the stock market always carries a risk but by researching and learning in advance and getting to know what influences a market you can start trading cautiously and see how it goes. Use the brokerage platform as an aid and it will certainly make your investing experience more fulfilling. Make sure you learn all you can about investing before you put your money in, as that will allow you to enjoy your trading to the full.