Stock Investing Tips For Beginners

by on June 23, 2011

If you are planning to get started with investing in stock market then it’s important for you to know few basic but very important things which will help you to learn better and get acquainted with the stock market trend and how you can benefit from these trends.

Open a Stock Trading Account

This is obviously the first step you need to take to get started with stock trading but the important thing is to choose the stock broker wisely. It is because whenever you buy and sell stocks, you are charged with a brokerage fee which can be anything from 0.05% to 0.07% or even more, depending upon an individual broker.

Do some market research and look for a broker with minimum brokerage fee and open your trading account with them. The variation in the percentage may seem negligible to you but once you start trading stocks in bulk, it becomes really difficult to get profits excluding brokerage fee. Keep in mind whether you gain or lose in stock market you will be charged with a brokerage fee each time to buy and sell a stock. This is one common mistake which people make in the beginning, make sure you don’t.

Stock Investment Tips

Photo Credit: Inmagine

Kind of Platform Broker Provides

In todays world lots of trading is done in real time, people buy and sell stocks within seconds for a very little margin. A good stock market tracking and review platform is really important to study the stocks in real time. Some brokers provide easy softwares compared to others. Ask your friends who are active in stock trading for a good brokerage firm who has the best trading platform.

Imaginary Trading

Don’t start investing your money straight away in the stock market. Do some imaginary trading of stocks, this will help you understand stock market and you will also get know the waters before you jump right into it.

Research About Companies

Don’t buy a stock blindly just because you heard of it somewhere or by someone. The right thing to do would be to research about the stock. Get to know about how that stock has done in past and follow it’s movement for few days and see if it keeps to your expectations.

Start Off Small

Don’t go all in at the beginning, start with tiny investments so that even if you lose money it won’t give you a big setback. Once you get acquainted with handling the investments and the stocks you can slowly raise the stake in stock market.

Careful Planning

It is very important to plan your moves in stock market. Don’t buy and sell stocks just for the sake of investing in the stock market. Make a short term or a long term investment plan and follow it.

The advantage which you will have by planning is that you will get to know the behavior of individual stocks. Some stocks tend to do well in short term investments, where as other stocks yield good returns in long term investments.

When planning for short time you must also be prepared to take some risks as well because the risk factor is not a matter of choice. The better thing would be to invest for mid-term or long-term, which will provide you stability and security. For long term investment you do not have to freeze huge sum of money in stocks at once, instead you will need to be consistent in your investing. By consistently investing in the market you will gain knowledge and experience over time which will help you take calculated risks in stock market.

Perception

It is how you understand and how you look at the stock market. The stock market should be seen as an investment opportunity and not as a gambling platform to get rich overnight. The stock market is constantly fluctuating and it’s important to assess your investment and plan your moves carefully.

Investing in a stock just because you feel it will yield returns is not the right way to go about it. It’s important for you to look into the company’s background before you put your hard earned money on it. Observe the company’s growth over the years and how safe it would be to invest in it and calculate an estimated return on the basis of previous years of growth and then make your move.

Be Prepared to Face Losses

The stock market is not a one way road where you will only make profits, the losses will always follow you somewhere around the corner. You should be mentally strong and prepared to face these losses and also be smart enough to know when to give up a stock to avoid further loss.

When a stock tends to fall most of the people tend to hold on to it expecting the stock to rise after a certain fall but it’s always a risky business to expect good from a falling stock. It’s better to put a stop loss to your stock rather than hoping against the hope.

Knowledge and Experience Provide Success

Keep learning and apply your knowledge to sharpen your skills and don’t be afraid to experiment once in a while with a few tricks of your own, you never know when you may come up with something new that might work for you.

In stock market you cannot survive on chances and luck, you will have to count on your knowledge and skills after all it’s all about your money.

{ 2 comments… read them below or add one }

Peter February 22, 2012 at 3:36 pm

A good site to try out is kapitall dot com (i am in no way affiliated with them but have used the site to test my investing wits). I love how you put this: “The stock market is not a one way road where you will only make profits”. Kinda hard for us sometimes to understand that the market is not just there to give us money.
Peter recently posted..Stock Broker SalaryMy Profile

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Investment Advisor John August 19, 2012 at 5:37 pm

This blog contains some sensible advice on investing for beginners. However, in spite of all the warnings and the recommended ‘cautious’ approaches (paper trading, get to know the ‘behaviour’ of each stock etc.) it nevertheless remains a fact that it is far too easy for the novice to get badly burnt in the stockmarket.

Without a strong conceptual knowledge of risk factors, hedging strategies and diversification methodology direct investment in individual stocks remains a persuit suited only for those with a very high degree of tolerance to risk (and money that they can afford to loose).

– John

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