Stock Trading 101: Stock Market Basics
For most of us, the world of stock trading has never gone beyond watching the news and hearing about the markets. However, trading company shares have proven to be a very profitable area of business for both the seasoned trader and the beginner. Some of the richest people in the world such as Warren Buffet have built most of their fortune by analyzing markets every day and finding out what shares they should sell and which ones they should buy. Fortunately, buying stocks is a relatively easy process. As such, it can be done by a majority of people without the requirement of specialized technical skill. Here at FinanceDoneRight, we created Stock Trading 101: Stock Market Basics to elaborate how you can be part of those making a profit in this field. In this post, we explain how to buy any publicly traded company’s stock.
Begin Stock trading by opening a brokerage account
Step 1 for Stock Trading 101: Stock Market Basics. Setting up an account with either a physical or online broker is a relatively straightforward process. The account will resemble a bank’s; only you will use the money you deposit to trade on the stock market. The broker you select will be your link to purchases and sales in the markets on a daily basis. That means you should consider far much more than trading commissions in taking your pick for a broker.
Consider how frequently you want to be trading, the amount of support you would want in your trades and the amount of money you have to invest in the stock market. In case the amount is relatively small, it would be advisable to seek the services of an online broker since they charge lesser fees. They also have a $0 minimum requirement to begin trading. That means you can start with whatever amount you have. For a more detailed look at what to consider when picking a broker, read our post here.
Choose the best stocks you want to buy
Step 2 for Stock Trading 101: Stock Market Basics. Once your brokerage account is all set up, it’s time to immerse yourself into the world of stock trading. The best way to begin your stock market experience is by conducting research on firms you are already familiar with. In the research for buying stock, however, remember that your principle focus is simple: You are picking companies that you would want to be a partial owner of. That said, do not let the huge amount of statistical data found online overwhelm or confuse you.
Decide on the number of shares you would like to purchase
Step 3 for Stock Trading 101: Stock Market Basics. After you have identified a company you would like to buy into, the next step is considering how much of the company you would like to own. Rid yourself of any pressure to buy a specific number of shares so as to fill your investment portfolio as soon as possible. Our advice is to start small. That way, you can analyze your reactions to changes in the market and know if you really have the heart to trade stocks. Additionally, you can learn to control your stress and build on your stock market knowledge. As you improve your investment expertise, you can add your shares in different companies.
Choose your preferred order type
Step 4 for Stock Trading 101: Stock Market Basics. There are many different order types available from brokers. However, most stock traders have profited from mostly limit orders and market orders. Limit orders give you more control on the price you can sell your stock. Market orders, on the other hand, execute your purchase or sale of shares at the best current market price.
Once your order is executed, you will be the proud owner of new stocks! From here, you can begin building your portfolio and trading consistently over time. We hope this Stock Trading 101: Stock Market Basics helps you get started. Good luck!
