Millions of people are trying their best in the stock market every day, but most of them walk away with a bad result. The stock market is no doubt one of the best markets to earn money.
However, the loss is often blamed on the market instead of their own skills and capabilities. Most people make the same mistake of entering the market without mastering basic skills.
Apart from skills, you need to have knowledge about the market too to become one of the best stock traders. You will need adequate time to learn the details and increase the success rate.
If you are new and planning to get into the stock trading market, you need to know the simple 5 steps before starting your journey.
5 Steps You Need to Know: How to Start Stock Trading?
Do you know when was the stock market created?
It was created in the year 1611 by VOC in the city of Amsterdam. Apart from that, some basic rules of stock trading will help you a lot in the journey.
Here are the following steps you need to know, how to start stock trading:
1. Be Prepared
One of the things that you need to make sure of before entering the stock market is that you are prepared. The most common mistake people make is entering the market without knowing the basics.
If you think you will be able to learn the basics while in the market, it is a big misconception. People spend years learning about the market before entering it. So, by the time you will understand the market, you will already be one loss.
Here are some of the most important things that you need to check and be prepared about.
- Make an emergency fund to have at least 3-6 months of expenses saved in case of any huge loss
- Save some money to pay your credit card debt before investing it all into stock market trading
- The money that you are investing will not be available any time soon as it is a long time process
2. Learn More About The Market
As mentioned earlier, the most important thing is that you need to consider learning all the basics before entering the game. Even if you are hiring a broker, a basic understanding is necessary to take your steps and understand the investments. Otherwise, you will end up buying the most undervalued stocks.
Some of the things that you must know include:
1. Basics – First, learn all the basic fundamentals of the stock market and how it works. You can take a look at the types of investment methods, securities, financials of high-level companies, metrics of fund performance, and others. Your broker can help to understand these basic things.
2. Buying Shares – After deciding on the company to invest in, you will need to purchase the shares. You will need to know about fractional shares, individual shares, dollar-cost averaging, and others.
3. Choose Investments – Find out how to choose stocks, funds, and bonds. You have to learn a lot of things about the company before investing in it. Learning the name and products is not enough. According to well-known hedge fund manager and Fidelity investment veteran George Noble, picking stocks to invest in shall be based on fundamentals, stocks’ financial history, and their price.
3. Get A Broker
If you are new to this industry, you might not know where to invest and the future of the company you are thinking of investing in. For example, companies that manufacture pearl necklaces with gold might be very popular now, but you have to look at the future. You will need to invest based on how the company will do in the next 5 years.
To help you with that, you need to have a broker. You have hundreds of options available but make sure to choose the best one to get the best results. You can also choose an online broker who helps you to educate and is very user-friendly.
4. Fund The Account
Once you have chosen your broker, it is time to fund the account to start the investment process. You have to link savings or checking accounts with the brokerage account to start transferring money automatically. It will help you to start investing right away. However, make sure to create a strategy before investing. It is recommended to start slowly and invest in a few stocks at the beginning.
5. Have An Exit Plan
Last but not least, you need to make an exit plan before entering the market. The stock market is not always sunshine and rainbows. There are times when you will stumble upon it. You have to make sure that you have a plan to get up and keep walking. Set your point and reach only when stocks reach that price.
Stock Market is very beneficial if you know what you are doing and are familiar with the market. Unfortunately, people who have years of experience still struggle in this market and make wrong decisions.
So, Before you start your journey, you need to do your part very well to prevent making any wrong choices. Here are the 5 simple steps that can help you to achieve your trading goals.