Stock trading can be intimidating for beginners as it has a lot of technical terms that are hard to grasp if you haven’t studied them. We all know the risks that come with trading which make some people wary about exploring stock trading. We have heard stories (or seen movies) of people who made an enormous profit by stock trading. While these stories may be true, they are not the norm, as stock trading is usually a long-term investment. You don’t have to go to the New York Stock Exchange to start your stock trading career, as this guide will show you how to start from the comfort of your home.
Choose an Online Broker
To start stock trading online, you have to sign up with an online broker. The online broker will help you open a brokerage account. However, don’t sign up with the first online broker you find, instead, do your research. Read reviews about different brokers, find what features they offer, and see if their platform is easy to use. Some brokers will offer a demo account that will make you practice stock trading without real money. New traders should also look for good customer support, educational resources, commission fees, and trade minimums. Choosing the right online broker for you will make your experience in stock trading much better and more enjoyable.
Set a Budget
You shouldn’t invest money in trading that you can’t afford to lose. It doesn’t mean you should expect to lose all your money when you start trading, but beginners usually suffer some losses before grasping the idea of trading. If you have debts, it is better that you pay off these debts as you might not win enough money from trading. Don’t use any money that is necessary for tuition, installments, household expenses, and so on. If you have a steady income, take 10-15% from it and put it into your retirement savings account. After sorting out all these calculations, invest as much as you want in stock trading.
Educate Yourself
Mistakes in stock trading can be costly, and the more knowledge you have, the less likely you will make a mistake. Invest in learning about stock trading in your spare time whenever possible. There are free online resources that will help you learn the complicated technical terms of stock trading and how to trade efficiently. It is not enough to learn about stock trading, you should also read about market-related ideas and concepts even if they are not relevant to you at the moment. You should familiarize yourself with terms such as diversification, how to trade a retrace, reversals, and different types of stocks. When you keep learning, you will use the acquired knowledge in your favor to make efficient trades and maximize your profits.
Research Stocks
It might seem easy to start trading once you set up your brokerage account. However, choosing the right stocks for you can be tricky. Individual stocks may not be the right option if you are a new trader. Expert traders advise that beginners should start with exchange-traded funds (ETFs). ETFs are bundles of stocks that investors can buy and they are perfect for people who are not sure of which companies to invest in. it is essential to diversify your trading portfolio by investing in different assets, bonds, and stocks in different industries to lower your investment risks during stock market drops.
Learn Market and Limit Orders
Different types of trade orders are put in place when you buy or sell a stock or an ETF. The most common types are market orders and limit orders. A market order buys or sells a stock immediately at the best available price at the moment. When using a limit order, you specify a price at which the order will buy or sell a stock. For example, when you set a buy order for a stock, you specify the highest price you are willing to pay, and the order is completed when the stock falls to or below that amount. Limit orders give you the most control over your tradings to get the most profit possible.
Following these points will get you started easily, yet the learning curve is steep, so start small and don’t invest heavily in the beginning. After you have learned the ropes of the trading game, you can experiment and take more risks. The online broker can make or break your experience, so make sure to do your research and pick the right one for you.
