How to start stock trading
With savings accounts offering little to excite investors, many more people are turning to the stock market to make their money work for them. But while share dealing is no longer the sole territory of city traders, it can be daunting to make a start.
Before you even consider jumping in ask yourself, what would happen if I lost the money? If this would be a problem, investing in the stock market is not right for you. While every investor hopes to earn a decent profit, the chances of losing your cash always remains a possibility and it takes just one violent swing in the market to inflict heavy losses. Stock market investments should only ever be made with cash that is surplus to requirements and would not cause financial hardship if it were lost.
Once you decide the market is right for you, you need to decide what stocks you want to trade and how much to invest. Starting with a market you have some existing knowledge of can be a big help as it`s important to understand the underlying drivers for the industry. Every different market is affected by different factors, although there will undoubtedly be some elements that are shared.
There`s no magic formula for making money on the stock market and for anyone seriously hoping for a return, hours of careful research are needed in advance so you understand your target well. It`s also important to formulate your own strategy and make sure you stick to it, regardless of how you are feeling once you get going. Human emotions have a nasty way of hijacking a well thought out plan and can lead to poor decisions.
You`ve done your research, you`ve been watching the market like a hawk and have been practicing your strategy on paper, so what next? To actually get the ball rolling you will need to find a broker. There are quite literally hundreds available to pick from and your ultimate choice depends on personal taste to some degree. Ensure whoever you pick is regulated and licensed and has been established for some time. Handing over your money to a firm that could go bust could leave you in a very sticky situation.
Different brokers offer varying fees and commission charges for their services and it`s important to look round until you find one that represents a competitive deal for your money. They should tick all the other boxes too, such as security and good customer support etc. A good way to help trawl through the companies on offer is to search forums or see what other users have to say about them. There will inevitably be some negative reviews, as some people tend to blame the broker for their own losses, so it`s important to look at the consensus of opinion rather than be concerned by isolated criticism.
What you want from your broker will also determine your final choice. Some brokers offer a more comprehensive service and include daily tips as well as traders who publicize their movements so novices can learn more quickly (as well as hopefully be more successful).
Most brokers allow online registration although some may ask you to email or fax through copies of your documents to verify your identity. Once you have registered with a trader and deposited your money in your account you are ready to start trading. While it can be tempting to dive straight in, make sure you wait for the right opportunity rather than squandering your money because you are over-eager. While you wait, keep practicing your trade and keep a track of how often you were right, as well as what you did wrong. Sometimes spotting what mistakes you made can be a better learning experience than making money.
Taking the time to become familiar with the platform as well as investigating all of the charting software and news feeds is a good idea. Once you are in a live market condition you don`t want to spend your time trying to work out what buttons to press when you should be concentrating on your trade.
One of the major benefits of online trading is that you can track your account at any given time and many brokers now also offer multi-market accounts. This means that if you decide to diversify from the stock market into an investment such as currency trading, you can access everything from one place. With the amount of technology available to help novices, there really never has been an easier time to get into the market for the first time.