Almost every financial expert agrees that investing on the stock market is the best way to make money, but putting that first dollar down can be scary. You don’t know what stock to look for and there is always risk involved.
This article will take things slow and introduce you to the world of investing.
How to Start Trading.
Trading stocks is easy once you know how to start. The very first thing you must do is sign up with a broker. This will act as the portal to the stock market. You will buy and sell all your stocks from the broker’s website. Not only that, but most brokers have tools that help you monitor how the market is going.
Select a broker and fill your account with money. Some brokers have a minimum account value. You will also want to check commission fees that might be applied whenever you buy or sell stock. From there, you can check for any stock and buy as many shares as you like. You can also sell stock if it isn’t performing well or if you’d rather buy another stock with the money.
What are Options?
Most people involved in the stock market are thinking about stocks. These are shares of the company and effectively makes you a small owner of that company. While stocks are the most commonly traded item on the market, there are other ways of investing. Options are perhaps the best way to quickly gain profit. Options trading for beginners is really quite easy once you understand it.
Unlike stocks where you are directly buying a piece of the company, an option is basically a contract saying you’ll buy a part of the company later and at a specified price. Options are cheaper than the actual stock and sell in packs of 100. Not only that, but you are guaranteed the price that you agreed to. So if the options say that each stock will be $50 when the contract expires, then they will be that price even if the real stock price is $100 or more.
On top of that, you can sell the options contract before it expires. Since options cost less and you can easily buy hundreds of options, even a small fluctuation in price can lead to huge profits when you sell the options. You can decide if you would rather hold the stock at the regular price or sell the options for quick money. It’s up to you and this makes options trading very flexible.
What Stocks to Start Buying.
This is always a tough decision as stocks are always fluctuating. In general, it’s best to focus on long-term companies that have been around a long time. While they won’t have explosive growth, you can count on them being around. Dividend stocks are good because you’ll receive some money just for being a stockholder. You can also concentrate on major sections like energy, technology, retail and so on.
If you are interested in making more money, then watch the market and see how it flows. Everything might seem random, but there’s usually a logic behind it. Prices often swell before major products or earnings are released. They might remain stable after that or go down as the excitement goes away. Holidays are also times where stock prices rise. Buying when the market is down can also help you get good stocks at a discount.
Investing might seem tough, but it’s really not that hard once you get started. Just choose a broker, consider options trading and think about how much risk you’re willing to tolerate before buying your first stock.