Stock Market Investments For Beginners
The Stock Market can seem like a place to make big money fast and easy. You often here in the news how a stock went up four, five or even six points. And you hear yourself say: "If I had gotten in on that one I could have made a killing". Yeah, if.
You can make money in the Stock Market, but it is seldom 'Fast and Easy'. Slow and easy is the way to go. Making money by investing in the stock market takes practice, skills, work and education. You start with the basics and work your way up. It's like reading a book. You can't read without learning the letters from the alphabet. But once you've mastered the alphabet, there is no limit to what you can read.
Investing in the stock market is just like that: learn the basics and there is no limit to your success.
Once you've started your education, one of the first questions you want to answer is how you are going to trade. Making this decision is going to tell you what you're next level of education will be about. Are you going to scalp, day trade, swing trade, or buy and hold for the long run?
Scalping involves buying large quantities of shares in a stock, and you are just looking for a small move in the stock price.
Day trading is similar to scalping but you are looking for bigger moves in the price, and you do not hold the stock overnight.
Swing trading is when you buy a stock and hold it for a short period of time looking for a substantial move in the price.
Buy and hold
Buy and hold is when you plan on holding on to the stock for a long time. You believe the company is going to grow in value and the price is going to go much higher.
Next thing you'll need to understand is what fundamental analysis and technical analysis are all about. Fundamental analysis relies on information about what's commonly known as supply and demand. Examples? Stocks annual growth rate and quarterly earnings. This takes time. A lot actually. You'll have to read (and understand!) each company's financial reports. But there are some shortcuts. A paper called Investors Business Daily for example can be a great help. A search on the internet will give you more recourses.
Technical analysis is different. It is all about keeping a close watch on things like time, price, and sentiment. All data is merged into charts. Just by looking at the chart, an expert can see everything he needs to know. With practice you can become an expert too, but it takes time and study.
The next thing you are going to need is a plan. A system. Many beginners jump in without a plan. It's the number one reason for failure. You MUST have a plan in place. The plan should be about why you are going to trade. When you are going to buy, when you are going to sell and so on. You must not only have plan, but you must stick to it as well.
Test your plan by trading stocks on paper. See ho well you are doing. Be honest. Don't go looking for excuses when you lose some money. Don't blame the market, blame your plan or your decision making skills. If you lose money on paper, you will lose money in the real world too.
Once you are doing well on paper (making a profit!) then it is time for the real deal. With your system ready and tuned, all you need is some money to start with. Do NOT get into the markets with money you can not afford to lose. Let me repeat that, just to make sure you've read that line: Do NOT get into the markets with money you can not afford to lose.
Be prepared: now that you are investing with real money, it will emotionally feel different then when you were investing on paper. Now it's real money on the line. Your money. But be patient and be confident. If your plan worked on paper, it will probably work in the real world as well. But it is going to take some time and you will lose some money. We ALL lose some money every now and then. It's a fact of life and you'll have to learn to deal with it. Once you've mastered that you will be well on your way to becoming wealthy.
by Tom Johanson