A beginner’s guide to trading

When you picture an investor, you might imagine some wealthy bank executive with a black suit and a monocle, but nowadays, investing is a huge part of most people’s lives, and if you’re not investing, you’re missing out. Investors can be your neighbor, your coworkers, or your grandma! Anyone who wants to capital to work for them, rather than working for money. 

Admittedly, investing is a tricky place to get started in. The lingo, complex ideas, and mysteries of the stock market can make many people stay away from the wonderful opportunity of trading forever. Today, we’ll break down investing into easy steps.

1. Choose an online trading account.

Now is the time to find an online broker and open an account now. Usually, this is a matter of finding a simple, understandable brokerage firm. We recommend FXTB because of their great customer service, easy user interface, and overall friendly experience with new investors.

2. Figure out which stocks you want to trade

Now that you have a trading account, you’re in business! But there’s a multitude of stocks to choose from, and finding the right company from an endless list seems impossible. The best way to get around this as a beginner is to invest in a “exchange-traded fund”. These are like huge bundles of a bunch of companies, like the S&P500, Dow Jones, or NASDAQ. If you truly want to invest in an individual company, it’s best to see how well it does compared to its competitors. How have they been selling lately? How well have they done in the past quarter? You should get yourself very familiar with your stock before you decide to invest.

3. Know the expenses of trading stocks

Hopefully, you’re already aware that you need money to invest in stocks. What you might not know is that there are other costs to trading besides the stock itself. For example, most brokerage firms require a “commission fee”. If you’re trading individual stocks you might not incur any fees at all, but once you get into the world of ETFs, mutual funds, and other investments, it’s a different story. Another cost you have to think about is risk. What would you do if you woke up tomorrow morning and your stocks had all lost half their value? Would you sell? Would you buy more hoping that they had hit rock bottom? Would you hold tight and wait for them to return to their original value? Know the costs and have a plan for the risks you take while investing.

4. Trade your first stock –

Now that you’ve done your homework, it’s time to put some funds into your account and use them to buy stock! Place your order, and check up on it frequently. Make sure it actually executed, and see how it’s doing on a day to day basis. The most important lessons will be learned maintaining real investments. From there, you can branch out in your trading, buying new stocks/investments, and using advanced trading strategies.