How to Get Started in Share Trading
No matter whether you invest long term or trade for a living, finding a brokerage that fits your style is crucial. Frequent traders should look for brokers with low trading commissions.
Transfer funds from your bank account into your trading account using the broker’s website.
How to Start
Saving is about stashing away money; investing is about putting it to work. Though investing can seem intimidating for novices, even the most successful investors were once novices themselves. With some education and patience from experienced advisors, novice investors can begin their first journey onto Wall Street.
Investing is the purchase of shares with the intention of profiting from their growth or dividends. Share prices fluctuate based on news, fundamental analysis, technical analysis and other factors relating to individual businesses; it can be hard to anticipate movements in share prices due to news events. Day trading can provide short-term gains but is best left to experienced traders as this involves placing your money at risk; newcomers should invest only what they can afford to lose if investing heavily – losses on the stock market can be significant so diversifying a portfolio is key!
Basics of Share Trading
The stock market is an exchange where those who own shares in companies can sell them to other investors. Prices rise and fall depending on a variety of factors such as global economic conditions, changes to currency values (currencies are traded 24 hours a day), oil price changes and trader emotions such as greed or fear which can influence decision making processes.
To trade stocks, the first step in opening an investment account, also known as a brokerage account. This usually only takes minutes and requires your driver’s license and Social Security number for identification purposes. Once this step has been taken care of, selecting an online broker to fund your new account should follow. Once funded, start trading!
Buying Shares
Trading shares is an ideal way to invest in companies you believe have growth potential. By becoming part of their ownership structure and sharing in its profits (some even offering dividends!), you become part owner and can reap dividends as part of ownership benefits. In addition, purchasing shares helps diversify your portfolio across companies and sectors by spreading risk over different investments.
But it is important to keep in mind that investing and trading shares involve risk. Share prices could decline and lead you to losing some or all of the money invested.
To minimise this risk, a stop loss order allows you to give your broker instructions about a certain share price limit that works for you; should this value fall below, shares will automatically be sold so as to preserve only what was originally invested. Alternatively, Exchange Traded Funds (ETFs), which provide diversification across multiple stocks with reduced risk profiles may also help.
Selling Shares
Purchase of shares makes you part-owner of a company, and when selling them you do so through the share market (also referred to as stocks or equities).
Providing your company performs well and the share price rises, you could potentially make money from selling off shares – this is called capital gain. Some companies also distribute additional income in the form of dividends as a share of profits.
Stock markets can be extremely unpredictable and it is easy to lose as much as you make; therefore it is vital to only invest what you can afford to lose. A stop-loss order can help limit heavy losses by being added on top of your regular order and only activating when the price falls to your set level (known as your stop price) set before selling your shares for less than expected. But keep in mind that even using stop loss orders doesn’t guarantee they will trigger as they could still end up selling below expected values.