Investing in Stocks and Shares – How to Get Started
Shares trading can be a very profitable business if you pay close attention to the detail and are able to see the big picture. To be successful in trading shares you need to closely monitor the shares you are interested in.
What You Need to Know About Shares Trading
If you have never traded shares before, the thought of buying and selling shares can be a little confusing and a bit frightening. Truth is, investing in shares has become much easier and cheaper today.
Basically, there are three ways to buying shares is through a stock brokerage firm which are offered by your bank, over the telephone using a traditional stockbroker, and through the magic of high speed internet, an online broker.
If you choose to do online shares trading, the first thing that you will be asked when you log into the site is you username and passwords. Then you will be asked if you have a company that you wish to buy into, how many shares, or what cash value of shares. You will be given a quotation of a price and about 15 to 20 seconds to make a decision if you want to do it or not.
This may be a little intense for first time users and traders, but the more you use the site, the better you get acquainted with the ins and outs of it and gradually you will feel comfortable using it without hesitance. If you do not want to get into a deal, then you can just wait, think about it and come back later, however, there might be a different price when you come back. Prices can sometimes change in seconds in some cases.
To free yourself from worries, you can opt for a limit order which simply means that you do not buy within a certain price, or you can sell below a certain amount, or you could opt for a stop loss order which means that your loss will be limited if the market prices move against you. Once you have placed your order, your online broker will send you an email to confirm the transactions of the order, and then, that is it. The deal is done.
But, before you begin any online shares trading, if you are a newbie or a rookie to this type of trading, it is best to read everything there is to know about shares trading. Get yourself educated before doing any deals. This is the only way that you will get familiar with the terms that are used for trading, get familiar with the charts that are on the screen, learn how to speculate, how to trade, even learn about pips. You could never be too careful when it comes to money.
How to select the best stocks
If you are new to stock trading or a seasoned investor, there is one thing that every successful investor needs to know; trading stocks is not a past time it is a real business that has a real impact on your pocket. So when you are picking your stocks you need to consider a number of different aspects of a company to ensure that you are investing in a company that is going to give you a solid long term return. It is not simply a case of relying on information that you may have seen online or have heard from someone you know. Before you take the step to invest, you need to thoroughly research the potential company and follow the following tips to ensure that you make your money work as hard as possible:
- Take stock investing seriously – Before you embark on trading in stocks and shares, you need to remember that successful trading takes a lot of time, dedication and commitment. Trading in stocks should not be treated as a mere hobby, but rather it should be treated as a long term business with real goals and objectives. Many people fall into the trap of thinking that stock trading can be treated as a hobby but unfortunately many of these people quickly learn the hard way that the trading requires much more commitment than the occasional “flutter”. So if you are serious about making money in the stock market, the first thing you need to do is to get prepared to commit a lot of hours for every stock that you are preparing to buy. Remember nothing in life is free and anyone that tells you that stock trading easy is probably not trading themselves or very inexperienced.
- Get Educated – One of the most successful investors in stock market history, Warren Buffet, has been an ambassador for buying solid shares that show potential of long term growth and promise high returns. He has successfully over the last few decades with a simple philosophy of researching each stock thoroughly to ensure that the fundamentals and long term growth is strong. This has led him to become one of the richest men in the world and his philosophy gives a strong message to any share trader who wants to be successful; get educated and research every share thoroughly. Warren Buffet advises people that to become a success, you have to be able to at least grasp the basic principles of accounting. That does not mean that you have to become a fully-fledged accountant, but at minimum you should be able to understand the figures that are reported by companies and be able to read the potential growth trends that are indicated in the figures. A grasp of the basics of annual reports and stock market trends should be understood at minimum and obviously the more you can develop this knowledge the better.
Understand Diversity – Have you heard of the saying “don’t put all your eggs in one basket”? Well this saying could not apply to share trading strongly enough. When you buy shares, it is highly advisable to make sure that you don’t allocate ALL of your money in the same company. You need to have a selection of stocks that have the potential to give you high returns. If you have selected a number of different stocks that have the potential to grow on the long term but for some reason one or two fail but you have a good diversified portfolio, you can at least have the safety of the other stocks potentially growing to cover any losses you may have incurred from any bad stocks.