Trading with stocks is now a lot easier than it was a few decades ago. Instead of having to make phone calls and place buy and sell orders only in stock market trading hours, you can now do everything from the comfort of your home. However, this doesn’t mean everyone can start trading and make a fortune by doing so. If you want to have a shot at making profit, you first need to know how the stock market works and how to make the right trades. With that said, here’s a beginner’s guide to stock trading that’ll help you kick-start your career as a trader.
The basics of stock trading
If you want to become a trader, it’s necessary to understand the parties involved in the process. The term “stock exchange” refers to the body responsible for executing trades and listing companies that are looking to sell their shares. These are mostly companies that are in need of capital and have decided to raise it from the public. In order for these companies to do this, they first need to be registered with a stock exchange. Initial public offering is when a company decides to seek capital from the public for the first time. Of course, traders can also buy shares in companies that are already listed in the exchange.
Starting with a simulator
It takes a lot of time and effort to master the craft of stock trading. The problem is, once everything’s ready, how do you start trading if you’ve never done it before? Luckily, technology is constantly advancing and many brokers now offer their account holders a chance to use stock trading simulators. These things provide a safe and structured environment in which new traders can buy and sell stock without using real money. Do this and you’ll be able to teach yourself how to make the right trades before testing your skills in the real market.
Online trading
As mentioned earlier, one of the best things about being a trader in 2019 is that you can do everything online. As long as you have a working PC and strong internet connection, you’re good to go. In fact, you can even place trade orders using your mobile device. This means you can trade while riding on a bus or preparing a meal for your family. On top of this, trading from home also allows you to set your own schedule and create a balance between your trading career and your 9-to-5 job. Most people choose to trade in the evening and only check the stock exchange a few times while at work.
Choosing the right broker
If you want to trade with stock, you need a broker – simple as that. Your broker is tasked with creating a safe environment for you to trade in and helping you execute your trades. The number of brokerages continues to grow and you should be able to find them all on the web. Just bear in mind that not every broker charges the same and doing enough research before you make any final decisions is recommended. In case you’re looking to stay updated and learn more about some of the most popular brokerages out there, visiting websites such as AskTraders is guaranteed to do the trick.
Portfolio diversification
One of the most important things to remember when trading with stock is not to risk anything you don’t want to lose. Although every trade comes with a small dose of risk, you can minimize that risk by diversifying your portfolio. Instead of putting all your money in the same stock, you should look to buy stock in different companies and even different sectors. That way, if something goes wrong with your initial investment, you can still cover your losses. Another way to diversify your portfolio is to invest in things such as real estate, foreign currency, or precious metals. Spreading your investments also helps you reduce stress and allow you to focus on making the right trades at the right time.
Tracking your stocks
There’s no point in buying stocks if you’re not going to check them from time to time. After all, how else can you know whether you should sell the stocks you have or hold onto them? The best way to stay up-to-date with the stocks you have is to check the company’s website and search for the quarterly earnings call on a regular basis. Similarly, you should read the company’s annual report every April and try to predict how well it’ll do in the next twelve months. By staying informed, you get to plan your next move as early as possible and make better trades. Make it a habit of regularly checking the stocks you‘ve bought and you’ll become a more informed trader.
Final thoughts
Trading with stock isn’t tough and as long as you’re ready to put enough time and effort into it, you should be able to succeed. Follow this guide and there’s no doubt you’ll soon master the art of stock trading.
