I have decided to make a blog post to help people on;
how to invest in the stock market from all the experience I've gained. Posts dedicated to Josh for his birthday. Enjoy!
First of all, you must be interested in stocks and be able to devote a lot of time into research and learning. For me its really appealing, other than web publishing it can become a job which you can stay at home and sit in front of your computer all day while watching MSNBC. Another reason stocks are great to get into, is they're an awesome way to make money by investing. It's a fun game, and what's better than a feeling of winning? All those seasoned stock traders do leave an impression of successful rich people. Stocks got lots to do with
mathematics, and
physiologic calculus. What a great mix, my two favorite things come together!
People might tell you to play with "fake money" to see how well you do when you start investing in the stock market. Usually you won't keep interested in this since its not real money. If it was your real hard earned money you invested, each good stock investment will give you some nice cash to enjoy the stock market, while the losses will sting and make you get more motivated to research, study, and
beat the market.
To be able to invest, you'll need a
stock broker. The best way to invest is online and by yourself. Personally I use TD Waterhouse. Their trade fees are a little high ($29.00) but they haven't bothered me that much yet. Most brokers will charge about $15 a trade, and charge a monthly or annual fee. $10,000 is a good amount to start investing with. Anything under that, the fees can really pile up and you'll be investing just to break even and make your broker money. So make sure to know all the hidden fees and costs before picking your broker. Some brokers I would recommend are
Fidelity,
TD Waterhouse,
Scott Trade,
Sharebuilder, and
E-trade. Once signed up, its very easy to make orders and manage your portfolio.
Your next move is to
buy some shares of stock. What you'll need to do, is research stocks. To do this, all the info you'd ever need is out on the web. Sites to use are
Yahoo Finance,
MSN Money, and
Google Finance. News, quotes, charts, everything there. The jist of it is, good news makes a stock go up, and if a stocks expecting goods news, it will keep going up until the news hits and vise versa for a stock going down. Research books and learn from experience why stocks go up and down.
As a new investor, there is a certainty that your going to loose money. Don't let this scare you away from the stock market, just learn from your mistakes and gain experience to make it successful in the long run. Experience is what lets you understand the stock market.
Once you get into investing in the stock market, there are lots of smart people out there saying this and that. Be open to listening what they have to say. You shouldn't trust everyone as some of them are just market movers trying to make money off inexperienced investors like you.
Bashers will try to blow a stock down so they can buy low, while
pumpers will try to raise a stock so they can sell high.
You need to find a
stock strategy slash
niche your good at, and exploit it for all its worth and more. Maybe your niche is penny stocks, channel trading, reading graphs, technology stocks or even day trading. You cannot copy the same stock strategy of another investor. One of which strategies has hurt me and other newbies was listening to Jim Cramer and relying on his stock picks. Once he mentioned a stock, it usually went up a couple percent and it was already too high to buy. The wise thing to do, is look into the stocks he recommends and monitor them until its the best time to buy.
As a new investor, I would suggest to stay away from
penny stocks. These are very votile and a risky venture.
Being an investor you need to
maximize your gains, and
minimize your losses. Now that means two things. You can't be too
greedy or you'll end up selling the stock after its reached its high. The second thing is you can't have
fear, and sell a stock short after you've just bought it and it has fell a little. These two are big reasons why investors loose money in the stock market. Personally after I buy a stock,
my strategy is to put in an order which will sell right after it hits a price target that will have gained me a certain amount of money (always include the price of trades in this) and keeps me from being too greedy.
The
stock market might seem hard at first, but once you look back at how the market moved you'll say to yourself "
how obvious was that". Never give up, and if you do just come back to this blog here and follow all my picks ;-) NO THAT'S COPYING STRATEGY!
Good luck to all investors! if there's anything you think I missed, leave a comment.