First steps to take if you know nothing about trading stocks

For most beginners, newbies, and the utterly clueless, trading stocks appears to be equally attractive and apprehensive. First, it is one platform to make money, accumulate wealth, and increase the value of your investments. Even the ones who know absolutely next to nothing about it recognize that wise investors can earn a decent living or at least passive income in stock trading.

Yet they also know that the unwise and the careless can lose their fortune overnight. That’s the part that makes it a source of anxiety and nervousness. The inability to reconcile both has caused many prospective traders and investors to just walk away from it all, or keep postponing their plans to finally play the stock market ad infinitum. However, this attitude is also a losing scenario. It’s best to decide once and for all not to enter the stock market anymore after one has studied it.

That attitude is a responsible decision made after studying all the factors involved, from risks to rewards, and determining whether you can afford to or not. The alternative – simply brushing aside the possibility of doing stock trading without putting the necessary time, energy, and opportunity into studying it – can very well result in lost opportunities that you might regret later on.

Trading stocks is not an easy job. (Source)

Fortunately, while stock trading is not a walk in the park, neither is it rocket science. It can be studied and learned, and skills to master it can be developed. The explosion of digital content can also open to you various tools that can make learning stock trading a delight, instead of a chore. Popular sites that range from business sites to finance content aggregators can give you solid knowledge and good advice about the stock, company, or industry you are interested in.

Yahoo Finance builds on this by giving several tips on how you can slowly enter the world of trading. First, learn as much as you can by reading. Don’t just stop at browsing sites like above but read good, extensive books on business, money, the markets, and finance. Next, enter a trainer trading program to get your feet wet in the actual business. Blue-chips, commodities, the dynamics of the market, and the other items and principles that are part of this financial ecosystem will become clearer to you. More important, a trader training program can help you make a few investments as part of your learning curve without exposing you to great risk.

Next, enter a trainer trading program to get your feet wet in the actual business. Blue-chips, commodities, the dynamics of the market, and the other items and principles that are part of this financial ecosystem will become clearer to you. More important, a trader training program can help you make a few investments as part of your learning curve without exposing you to great risk.

Tips for newbies trading stocks. (Source)

Yahoo Finance also advises getting involved with similar-minded people who can help you grow as an investor and as a stock trader. This can mean getting a seasoned stockbroker who knows the in’s and out’s of the business and who can serve you as your mentor. Make sure that the one you pick has two qualities: he does have a portfolio of successful clients who can testify to his expertise which helped them increase their net worth; and he has integrity, which means he is worthy of your trust.

Investors.com then advises you to monitor the stocks closely, day in and day out. You do have to know the various kinds of stocks, from the ones that are less risky but do not return a high yield, to those that do have a potential of earning you a lot but might disappear tomorrow. Analyze each stock and recognize its value; follow its movement, from the high to the low, every single day. Resources like IBD Stock Checkup can help you determine the value of each stock you are looking at. Its rating systems rank the leadership position (or lack of it) of that stock in its industry or sector. Monitoring its ascent and decline over the next few months should give you an idea of the stability and/or volatility of that stock. No matter how unpredictable the market may be, nothing can still beat the consistency of performance.

Resources like IBD Stock Checkup can help you determine the value of each stock you are looking at. Its rating systems rank the leadership position (or lack of it) of that stock in its industry or sector. Monitoring its ascent and decline over the next few months should give you an idea of the stability and/or volatility of that stock. No matter how unpredictable the market may be, nothing can still beat the consistency of performance.

After watching and playing with some of these stocks, you might want to create your must-watch list. Chances are these are the stocks you will be investing in. Yet, never have favorites or do not get emotionally attached to any stock or company. Today’s big winner may be tomorrow’s obsolete dinosaur. You do have to know when to cash in and quit, or when to ride it out in the knowledge that, based on certain probabilities that you have studied, the stock will bounce back.

Trading in the stock market is not a quick-rich scheme. It takes dedication, focus, and a lot of studying and hard work to hit the pay lode. The rewards will not just be worth it. They will sustain you financially in the long run.

(Featured image by DepositPhotos)