Trading at first might seem a little intimidating, but once you enter the stock market, its constant hustle will fire up your enthusiasm and keep you constantly motivated to trade successfully.
We understand that you are anxious to commence trading but with a little research and advice you can avoid early losses that new stock traders can easily make. Here is a guide of 5 easy steps that will give you sufficient knowledge to begin stock trading in a very short space of time, taking advantage of the surging stock prices
1. Find a suitable platform
As you will start researching the nitty-gritty of the stock market, your web feed will be accentuated with brokerage advertisements such as Best Stock app UK; so select the one that suits your initial trading style, which could change of course.
Authenticate the platform, check its validation with SIPC, FINRA, and FDC. Examine the privacy facilities such as two-factor authentication and involvement of any third-party in the transaction process. Check the encryption and cookies settings to ensure data privacy.
For students just getting into stock trading, select a platform that offers an Education Saving Account. Check the minimum account balance, loan amount, margin rates, and trading commission fees. See if the platform facilitates customisation, real-time stock monitoring, paper trading, backtesting.
The platform must be compatible with your bank account to have an easy fund deposit and withdrawal. The platform must also offer portfolio-building guidance, technical mentoring with blogs, what-to-do articles, history of the stock market to take reference from previous strategies, and quick customer service for emergencies.
After analyzing all the above-mentioned features, open an online stock broker account in the selected platform that leverages your requirements.
2. Education and research
Knowledge has always been king, irrespective of the niche. Some stock markets have evolved over hundreds of years, changing with advances in technology. It's important therefore to be well-versed with all the technical terms relating to the markets you are choosing to invest in. Read books and trading magazines, join an online course, watch a series of Youtube videos presented by stock market experts and communicate with people involved in trading.
Follow the news to learn about the dynamics of the stock market and economic events that might effect pricing. Take up newsletters from various financial news agencies.
Understand the difference between two fundamental aspects of the share market namely, trading and investing. Know about the classes of stock orders like stop-loss order, limit order, and market order. Explore ETFs and mutual funds. Determine your zone of interest and invest accordingly.
3. Virtual trading
It makes a lot of sense when beginning to trade and making your first investment, to let the simulator trading software take early deals until you feel comfortable and confident in your abilities. This is just a process to let you buy and sell but with no stock movement and no losses if you trade the wrong way. No profits either of course but your experience grows. It's a good system that allows you to try out your early trading strategies before going into live trading.
Do not let the initial trading excitement encourage you to invest huge amounts in the beginning. You want to be in it for the long run, so begin small and never put your entire trading capital at risk with one deal.
4. Identify your strategy
Trading strategies define your trade book. Warren buffet described the most prevalent strategy known as "buy and hold," the flip side to this is day trading. Momentum trading, swing trading, and penny trading are other categories.
Diversification should be the main goal of your strategy. The aim is to spread the investment risk across different sectors, so if any one sector is performing badly, you still have others that will not necessarily be subject to the same economic bad news, or selling pressures of the stock that is losing money
5. Specify entry-exit points
It is essential to time your trade to give you the best chance of your investment increasing in value. Entry points depict the investment rate and should be determined based on the trade charts and candlestick patterns. An unanticipated surge in the stock volume should be tracked for a corrective trendline.
Exit points are best when market values exceed the face value. Always execute stop losses to secure the loss and automated squaring off the stock, in case of dampening of the market value of the stock.
