So you are among those who want to invest in stocks but clueless of where to begin ya? You probably searched a lot but ended up with results which are aligned to you right? They seemed to be more advanced and uses words which you never heard of before. And now you don’t know where to begin as you are clueless and confused. I will tell you in details how to invest in stocks .
The stock market may seem to be mysterious for beginners. You will come to words that you might have never heard of before.You might feel frustrated at times.You might think that it should be left to the professionals as only they can do it.
But the reality is quite different. Of course, a person knowing finance has an advantage. But I can bet , anyone can do it.All you need is the hunger in you.The hunger to learn and get in this business.
How to buy shares ?
You need to open a trading account along with a demat account first. The trading account will enable you to buy and sell stocks from the stock exchange. There are many stock exchanges worldwide. Each country has their own stock exchange. America has New york Stock exchange (NYSE). India has National Stock exchange (NSE) and Bombay Stock exchange (BSE).
You need to open a trading account with a stock broker in order to buy or sell stocks from a stock exchange. You need not be physically present to buy or sell stocks today.When you place a buy order of stock, the order goes to the exchange and is matched with a similar sell order at your specified price and the buy is executed.All this happen within seconds.Similarly, when you are selling a stock, there is someone on the other side who is buying it.The stock exchange takes care of buying and selling of stocks.You need not worry.
Choosing Stock Broker
Now the question is which stock broker you should choose. It is a legitimate question as there are many stock brokers to choose from and they charge different amount of brokerages.Brokerage is the commission of money the stock broker charge.There is a wide gap between the brokerages charged by different stock brokers.
Choosing the right stock broker is very important as you will be able to save a lot of brokerages. The thing that should be kept in mind while choosing a stock broker is whether you will be trading stocks or investing in stocks. Trading and investing are totally different types of activity. Read my article ‘ Trading vs Investing ‘ to know the difference.If you will be trading then you will be buying and selling stocks frequently.So if the brokerages are too high then it will be a big problem for you.Then, in this case, you can go for discount brokers.The brokerages charged by them is low compared to full-service brokers.Saving brokerages are important for a trader.But if you are investing in stocks then brokerage is not a factor of your concern. Investing is passive and you will be buying and selling stocks occasionally. Most of the time you will be holding stocks for long term.In this case, full-service brokers will be suitable for you.
You can buy and sell stocks with a phone call to the broker, logging in online into your account or by using the mobile App the broker has provided to you.
Now that you have opened your account, you can buy and sell stocks.You should have decided by now that you want to trade Stocks or you want to invest in stocks.
You might have decided to trade as well as invest in stocks simultaneously. In that case, it will be wise to keep both your trading and investing accounts separate.As both are quite different activity.
Now that if you have decided to trade then you should learn technical analysis first.Money management is also a very important aspect of trading stocks.The psychology needed to trade stocks also plays a big role. Learning is very important. Don’t jump on to earning first. Short selling is an important aspect of trading in stocks.The art of short selling should also be learned by a trader.
If you have decided to invest then you should learn fundamental analysis of stocks. Learning fundamental analysis is rewarding.A single multi bagger stock can change your life.After analyzing, holding the stock is also an art.It requires tremendous patience to hold the stock till the stock yields the maximum.
Some of the mistakes that a newbie make are they buy and sell stocks based on the recommendations of their friends and brokers.Before trusting your broker ask them based to what evaluation they are recommending the stock.Check the past reputation of the broker.Even you make money or not, your broker will be making money.Don’t trade blindly on your broker’s advice.If you are trading on your broker’s advice ask them based on what technical analysis they are giving the call to trade.Don’t do anything that you don’t understand. There are no shortcuts out there to make money quickly.
If you are investing in stocks ,don’t buy and sell stocks frequently. The broker will probably ask you to buy and sell stocks frequently. Don’t just listen to them.The more you buy and sell, the more amount of brokerages they make.But you will gain nothing in this process.
Don’t just react to every news in the market.Most of the times they will be just noise.If you are an investor then you need to be bullish.You need to be very optimistic about the economy and the company.You need to be greedy when others are fearful.When markets are in downtrend then you should be buying, unlike others.The stock market is probably the only place where buyers runoff during the sale.
Whether you want to be a trader or an investor, your main objective is to make money from the market. Try to read and learn first.Don’t Jumpstart ?If you Jump start then you will be probably blowing up your account.The risk is when you are not knowing what you are doing.