Recently, the stock market has not been going as it should. The investors are optimistic things will turn around even though rumor has been flying around stocks are near their end.
A lot of brokers like Charles Schwab, Fidelity and much more have been slashing their commissions with the intention to tempt you venturing into stocks.
Whatever the case may be, you need to be informed about the “DO’s and DON’Ts” of stocks so as not to fall prey of “Wolf of Wall Street”.
how to start stock trading . Below are top 5 steps you should consider before you start trading stocks .
1-Set your priorities
If you had the opportunity to buy the Chipotle shares before the scandal of E. coli, then you would probably know money invested on stocks does not come up in time of emergency, when you most need it.
Long-term goals such as retirement hold a position in stocks. It is also of importance to note that position should consist of exchange-traded funds and also index funds and they diversify based on the market segment they are following up. Compiling pool of stocks you can trust requires skill and as well research and time; only a few clicks are required to build that pool with index funds.
To cap it all: if you have been wondering why 401(k) plans decline access to stocks of individual is simply because the drop in the retirement savings that a lot of Americans are battling with would be worse, deeper than it is right now. Agencies like Roth IRA sell individual stocks, and if you must buy ensure it’s not with your life savings. It’s important you save enough for your retirement and ensure other savings goal are achieved before you consider stepping in to trading stocks.
Also read>> 10 Golden Rules For Stock Trading Success
Different people with different interest on how they pick stocks; but stock hardcore traders do thorough stock research.
It’s not necessary to become hardcore, but you must run a thorough research or a background check like price history, financial status and as well previous achievements of the company you want to put your money which will enable you to forecast the future. This process may involve a lot of analysis and calculations.
Learning how to do this has been made easy. There are a lot of brokers who are deeply rooted in educational resources, some with offices where you can meet and discuss with a pundit trader in person, some with webinars and videos. Some can also be found on stock-trading sites and forums.
3-Pick a broker
The commissions of stock have been slashed down, now is the time to give online brokers your money since they want it.
There are some things to consider when picking a broker. Price is not everything that matters. If your plan is not to trade stock day in day out – which is ideal, you should also concentrate on the attributes or qualities of the broker which include educational resources, great customer support, user-friendly to mention few.
Some brokers allow virtual trading which lets you trade with monopoly money instead of using real money. Though this money is not genuine, it actually worth it since it comes with almost no pain when lost.
4-Do not rush
Do not rush it. Do not be among those who jump into the market unprepared. Basically, there are two schools of investing thought: one has to do with throwing your money into the market all at once, while the second has to do with investing a particular amount at a particular time or interval. This is also known as “dollar-cost averaging”. Research carried out by experts has shown that the earlier you invest in the market the better.
Set aside a budget for buying shares at a particular time from companies of your chosen. When there’s a hike in prices, your budget will buy little shares; when there’s deflation, your money will buy more. This implies that you buy less at a high price and more when prices are low.
5-Plan for the unexpected
You should be flexible in the market. As you are in the market or about to go into the market, you should make plans for when and how to get out especially when things are going south. Have a drafted plan of how low your stock will fall or perhaps changes in the industry before you pull out. Ensure you do not deviate from your plan to avoid any form of panic.
moved from Forbes.com with modification
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