Trading for Beginners

There are a number of things you must do before trading in stock. Learn to trade, before you place your money into the market, would be my first suggestion. It isn’t enough to just make a correct pick once or twice. Understand paper trading and practice until you can regularly pick nine out of ten trades correctly.

Join your local library. Old library books can teach you a lot about trading and the knowledge is free. There are many web sites with free educational excerpts. Plus your local stock exchange will also have a beginners guide to trading and investing in stocks.

There are different ways to trade, from reading charts, to understanding a prospectus and a company’s financial reports. It will take a little time, but given that time, you’ll find you have a preference, as to which method will best suit. If you’re good with numbers you may like to study the financials of a company. If you’re a visual person, you may like looking at the charts. The more study you do, the more you’ll see which method will work best for you, which method you’re most comfortable using.

You need to invest only what you can afford to loose. If you’re going to loose sleep at night, due to the amount of money you have in stocks, then you probably purchased too many. If you are a complete novice, it’s better to place less money into the market, until your knowledge base builds.

Understanding what a sector is and which direction the sector is moving, plus the strength or weakness of the sector is very helpful for you to know. Knowing which sectors are going up and which are going down gives you an idea of which companies are best to trade. It’s also important to know that you can trade for a company to fall, as well as rise.

Once you have a basic understanding of how to trade, you can start to search for a broker. A broker will place the trade in the market for you. There are brokers who will give advice, for a fee, and there are brokers who don’t give advice. Work out which one you’d like to use.

If you’d like to go it alone, Internet sites are the cheapest way to go. However if you think you’ll want some help in picking a company, or if you feel you’d like a more personal approach, a full service broker would be best for you. You can type share brokers’ into your computer search engine and a list of broking firms will come up. Ring a few and find one you feel comfortable with. Ask about their fees, how much they charge and what you get for their services.

Then all that’s left to do is to open your trading account and learn how to navigate around it, if you have on line access. Learn what to click on to buy and sell and what the codes are, for each company you’re looking at purchasing. Understand how to read the different pages within the trading platform you’ve chosen to use. Make sure you know which company you’re purchasing shares with and how many shares you can afford. It’s easy to get the codes and figures wrong. Double-check every trade you make.

Given time and knowledge, trading becomes easy and like driving a car, trading can become automatic. Once you have the knowledge, you can see at a glance, which companies are going to move and in which direction. At first it will seem to take you a long time to work out what you’re looking at. As you gain experience, however, it then becomes very quick and easy to spot a potential trade.