Stock market for beginners, every beginning is difficult like the saying say, the same as investing in stock market for the new investors.
When you feel you want to play and try your luck in the stock market, and don’t know how and where to begin. What will you do?
The first relevant thing the new investor should do is asking the basic question of what a stock is and its implication.
A stock is a symbol ownership of a company. Some people view stock as certificates. Actually the more stocks people own of a particular company, the more share of the company they own. And the more the company they own, the bigger the influence they have in running the company. This is called equity investment.
The next thing to do is familiarize newcomer investor with financial terms such as ‘price-earnings ratio’, ‘margin’, ‘option’, ‘earnings per share’ and ‘leverage’.
After that, it’s on to knowing where and how to actually buy stocks.
There are two ways to buy stocks:
- brokerage service
- online exchanges.
Brokerage services are rendered by brokers. These middlemen do all the work for the investors. They do research in the stock market, give advices, also buy and sell stocks according to the wishes of their clients. These brokers earn a commission from the stocks bought or sold.
Exchanges are services that allow investors to access stocks all over the world. Here, investors can buy and sell stocks without the need for a broker. Certain banks allow you to set up your own stock portfolio and buy and sell stocks online using the money you have in these banks.
Once you have chosen how to buy and sell stocks, the next thing to do is to open an account. As stated earlier, exchanges allow you to monitor and control your stock portfolio personally. If you choose to enter the stock trade with a bank, then ask your bank the specifics of setting up your own account.
If you choose to trade stocks via a broker, find a reputable broker and ask them to open and manage an account for you.
After investors have successfully set up an account, it’s time to study the stock market and plan your strategy: will you be conservative in investing your money? Or will you be aggressive? Are you in it for the long term? Or are you a day trader (short term investor)?
After you have identified your plan, it’s time to do some research on the stocks offered in the stock market. Having a broker will significantly make it easier for you as they will do the research and give you advices. But, it is still best to study the stock market yourself.
Remember that the stock market is volatile. Be prepared for a roller-coaster ride.
