Buying and Selling Stocks: A Beginner’s Guide
For people who are looking for a way to make their money grow, buying and selling stocks can often be a great way to reach their financial goals. However, despite the never-ending claims of so-called experts who try to convince inexperienced investors that they have the perfect stock for them, the fact is being successful as an investor takes much time and research. But if you have the desire to learn everything you can about stocks, the returns on your investment can be well worth the effort.
Research the Companies
The best stock investors learn everything they can about the companies whose stock they wish to buy. Companies involved in technology, energy, and other high-demand industries are always in the news, so visiting the company’s website or reading other news reports about them will provide key insight that may help when it comes time to buy or sell.
Online Brokerage Houses
Most trades today are conducted online, so you’ll need the services on an online brokerage house. Many banks offer these services at discounted rates to their customers, so you may want to explore this option first. Prices for individual stock trades can vary, ranging from free up to $10 or more per trade.
One of the most useful tactics for a beginning investor is the limit order. When you use this, it guarantees you won’t pay more for the stock than the price you enter as well as not accept any less than that price if you are selling. Considered a smart way to decrease the chances of big losses, these can quickly become your best friend during a tough trading day.
One of the biggest mistakes beginning stock traders make is buying or selling stocks at the wrong times. Some people believe if they buy a stock and the price drops the next day they have made a bad decision, which is rarely the case. Most stock prices have peaks and valleys along the way, but if you investigated the company prior to purchasing and feel confident about them, staying the course is usually the best approach.
Decide On a Strategy
Before buying or selling stocks, it’s always a good idea to know what type of strategy you plan to employ. Some investors choose very conservative investment paths, while others choose to focus on more volatile stocks that offer the possibility of larger, more immediate profits. Whichever method you choose, make sure you have the money available to make the trades you want, and also have enough of a financial cushion to absorb any potential losses.
Success in buying and selling stocks not only requires a financial investment, but also an investment of time spent doing research and asking questions of potential brokerage firms. By taking the time to develop a strategy that will enable you to meet your investment goals, it’s quite possible you may find yourself with a stock portfolio that will be bigger and more profitable than you ever dreamed possible.