Have you ever thought about trading stocks? Perhaps you have, but it certainly seemed like a frightening venture. It’s normal, because you haven’t been through this kind of an experience before and you are afraid of the potential risks.
Stock trading is actually a very simple concept consisted of purchasing and selling shares of public companies such as Google, Apple, Microsoft etc. These companies allow people to become shareholders or to sell the shares which they already own there.
The correspondence between the number of buyers and sellers on the market is approximately the same. However, in case the number of buyers is higher than the number of sellers, the price of the shares increases and vice versa. More sellers and less buyers results in decreased share price.
Therefore, you need to carefully follow the changes on the market and choose the right time to make a move in order to earn profit. You won’t have a problem in finding a good website which offers tips on becoming a successful trader.
You can also read the following tips on how to start your stock trading journey.
Educate yourself on the topic
The first thing you should do is to gather as much information on stock trading as you can by using various sources. You can purchase guide books for a reasonable price or read online articles on webpages which specialize on this topic. If reading is boring for you, you can find a mentor to teach you the basics. This person can be some of your friends, relatives or colleagues as long as he/she can explain you the stock market in a simple way.
Another way of learning information is attending online courses or joining social groups and forums where you can learn from other people’s experience. Additionally, you can follow the stock market on a daily level.
Compose a strategy
Before you start investing, set the goals which you plan to achieve. These goals will define you as a short-term or long-term trader. The former means that you plan to trade just for couple of months and have a low return on investment, which usually happens when you want to save money for less expensive things.
On the other hand, being a long-term trader means investing for a very long period of time and earning higher returns. It happens when you have long-term goals such as saving money for retirement or buying a new house.
Another important factor to consider is risk. It’s influenced by plenty of factors like: experience, time period, financial situation on the market and believe it or not your age. The younger the trader, the higher the chances to recover after experiencing a loss. Visit this page to read more about investment risks.
Do a research on the public trade company
Firstly, you have to read the financial statement of the company where you plan to invest your money. This statement is issued after every quarter and displays the revenue and expenses of the company, which show if the company is making profit.
Naturally, when there is a profit the share price is higher in comparison with the lower price it has in case of experiencing a loss. However, you can buy stocks for low price and earn plenty of money if the firm suddenly makes a profit.
Another thing you should check is the balance sheet, which shows how much the company owns and how much it owes. If it’s largely in debt and hasn’t got enough capital to pay it off, you shouldn’t make an investment. Moreover, you can check graphs of the firm’s stock price over the years.
In order to make successful forecasts, you should read news about the firm which may affect the share cost. However, beware of insider trading laws which apply for illegally obtained information. Click on the following link: https://en.wikipedia.org/wiki/Insider_trading, for more info on insider dealing.
In order to become a good investor you have to learn the basics before you start.
You need to set clear goals and develop a strategy.
Last but not least, make a good analysis of the company prior to investing your money!