How To Start Trading In Stock Market

You don’t need to be hardcore, but there’s a lot to be said for researching where you put your money. That means digging into the bones of a company and its financial status, or looking to price history and past movements as a way to forecast the future. It involves time, complex lingo, understanding of various analysis tools and, in some cases, the calculator you used in 10th-grade algebra.

There are plenty of ways to learn how to do this. Most online brokers have deep educational resources, complete with videos and webinars. Some have offices where you can speak to an expert trader in person. There are also online forums, stock-trading websites and ForexSQ’s guide to how to buy stocks.

3. Pick a broker

As noted above, online brokers are fighting for your money at the moment, so it’s a good time to give it to them; costs have been driven way down.

But costs aren’t everything when choosing a broker. If you don’t plan to trade frequently — and you shouldn’t, as that kind of churn drags down returns — you want to focus on a broker’s other attributes: the above-mentioned educational resources, a user-friendly trading platform and tools, free research and good, accessible customer service.

Some brokers and trading platforms also offer paper or virtual trading, so you can place a few initial trades with Monopoly money rather than the real thing. While earning fake money isn’t so exciting, the minimal pain that comes with losing it makes this kind of practice worth it.

4. Take it slow

There are people who jump into a cold pool head first, and people who use the ladder, jump up and down, yell and wince with every cold inch.

That also pretty accurately describes two schools of investing thought: The first is to throw your money in at once; the second is to do something called dollar-cost averaging, which essentially means investing set amounts of money at regular intervals. Research shows that the earlier you get your money into the market the better, but when you’re just learning the ropes, it can pay — literally — to go with the latter approach.

To do that, decide on a budget and then use that money to buy shares of your chosen company — or companies — at a set interval. When prices are up, your money will buy fewer shares; when they’re down, it will buy more. That means you’re naturally buying more at a low and less at a high.

5. Make a plan for when things go south

You certainly don’t want to sell at every blip, or at any blip. But if the above is a plan for how to get into the market, you also need a plan for how and when to get out — rules for how long you’ll tolerate a dive like Sears stock experienced due to years of down sales, for example, before jumping ship.

Decide in advance how far your stock can fall before you want out, or what major changes to the company or industry would cause you to go back to that aforementioned analysis to re-evaluate. Then stick to that plan to avoid panic selling in other, less dire, scenarios.