How To Trade Stocks ?
Learning how to trade is your best lifetime inversion. It is the most useful skill in today’s society. The fastest way to financial wealth is the right stock market investments. There is an absolute consensus on this matter. Once you learn how to trade stock, you become a powerful money magnet. If you have ever gone to a financial planner, or a banker or any other money expert, for sure, all of them had suggested that you must have to invest in the stock market to become wealthy. This article will explain you the basics on how to trade stocks.
What is the stock market and how can I trade stocks?
·The Stock Market is the name given to a place where investors buy or sell companies stocks or shares. In this market, brokers can buy or sell public or private company shares with a license to operate in it. In addition, notice that in the stock market nowadays, investors can buy or sell commodities such as gold, oil, corn, crops, etc. additional to forex. Furthermore, most stock markets are fully available online for worldwide investors.
·Company shares. A company share also known as an action, equity or stock; it is the smallest portion own of a company. It is made available to be traded when the company reaches a certain profitable level, and it needs to increase its capital or money. E.g., imagine you are the only owner of the Pear computer company, which means you have 100% of the company ownership and you want to increase the company money. Now you divided the total value of the company into the number of action you wish. Now the total company value is 1000 USD. You assign 1000 shares or actions, which means the company has a value of 1 USD per share. You go to the market, your company Initial public offer or IPO is 1 USD per share/action, and you put 47% of the company action in the market. Now anybody could buy your company actions or sell them if they already bought it.
Step By Step How to Trade Stocks
1. Understand the different main types of shares: Basically, there are two of shares.
a) Common Stocks are most desirable stocks. They entitle company ownership and bestow voting rights (if you own enough shares). These actions pay the highest return, and it may vary depending on the company financial performance, but they have the highest risk level.
b) Preferred stocks are similar to the common stocks. You own a part of the company. However, they do not give rights to vote no matter how many you own, and they paid out a fixed amount.
c) Action class. To reduce the rights to vote or be part of the company board. The company makes different shares’ classes. These share classes can have different privileges, and it can be any of the previous types.
2. Set the amount of money you wish to Invest on the stock market
You need to determine how much money you want to invest in this financial instrument. You need to go over the investment risk and understand it completely. Be sure to put apart any amount, which you may not need for a long time.
3. Investigate the company from which you want to buy shares
Reading, researching and comparing is required to make any stock selection before you buy it. One the most difficult part of learning how to trade stocks is to learn to pick your shares. You need to review the company shares’ price history and its recorded profit; additionally, you need to investigate the future business financial projections. If you want to invest in any other asset, you need to do the same research for it.
4. Be sure you understand shares dividends
Dividends are the profit a share paid to its owners or the amount of money a shareholder gets for having a share over time. These benefits are paid by the company to promote the longest ownership time for its shares.
5. Set your investment reasons and financial goals
This is critical to learning how to trade stocks. There are many reasons to invest in the stock market. However, this investment set is referred to your expectation for a long-term profit or a short-term profit. Imagine your reason to invest in the stock market is to pay for a holiday in 12 weeks, for this short period, you might wish to buy at low price and sell at a higher price in very short periods to increase your money quickly. On the other hand, if you want to save for retirement or the long term, you might buy steady and stable stock, which will give you dividends and increase its value over time. Some people called trader, those who make profits in the short term and investors those who keep shares for a long time for profits and dividends.
6. Learn how to read price charts and market indicators
Learning to identify market indicators and understanding the meaning of the most common market index is critical to take advantages of the trading opportunity. You need to devote time to study and go over these topics. Research and practice are the keys factors to learn how to trade. You need to make a schedule in your day for this purpose. You can read our articles about it. We have collected the most efficient articles to explain it systematically.
7. Select a broker
Before you choose any broker and pay any money, you need to research the broker professional trajectory and success rate. Additionally, you need to review his broker’s license and be sure; he can trade in your desired stock market. Furthermore, you have to ask the broker’s fees, the minimum amount of money needed to buy or sell stocks, how frequent can you put your orders, how long does it take to withdraw your profits, etc.
The Best Broker on the market for trading Stocks/Crypto/Forex/BinaryOptions its IQ Option.
“General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.”
8. Practice with fake money (Try ideas on demo account)
Thanks to the internet and the great broker’s competition. There are several trading platforms and websites, which offer a free virtual trading account. Singing in free trading accounts allow you to trade with fake money on real shares with real time price updates. Using it will empower you with the best assessment to you current trader level, you have to trade and consider it as real money to be sure that you are ready to invest real money in the stock market. If your selected shares increase their prices and you want to trade in short periods, you are on the path to monetary wealth. On the other hand, if the results are bad. Do not get sad, you only need to study harder and practice more, or you can learn from the experts by copying what they are doing. Trading the stock market is like any skill, it requires practicing and time.
9. Setup Strategy
Never trade without any strategy, there is 2 ways to build your trading strategy. One is to trade by using Fundamental Analysis, the other one its to use Technical Analysis (or use both).
Fundamental Analysis base on economic news relesed by companies, for example financial report or quarter financial results.
Technical Analysis base on technical indicators or technical tools like trend lines or horizontal.