There are several things to consider before jumping in and buying stocks. Depending on what type of investor you are, there are several risks involved when trading from home
Here are seven steps to help you get started:
Step 1: Get Educated
The first step is finding out how market economics work. It will determine whether you’re going to be a day trader or a long-term investor (trading based on an economic report). Day traders typically buy low and sell high within the same day, whereas long-term investors typically buy low-risk investments that they can hold onto for years without having to touch them.
Step 2: Set A Budget
There are several ways to make a budget. You need to set aside money every month for your expenses if you’re day trading. It includes food, rent, bills and transportation. If you’re going to be doing long-term investing, there’s no need for this monthly expense. However, buying an investment usually means that the company will charge commissions per trade. These can vary from $5-$10, depending on how much shares cost. To help reduce the number of commissions, you’ll need to set aside money for this.
Step 3: Open A Brokerage Account
There are many places to open up an online brokerage account. As long as you’re using a secure website that provides fast customer support, it should be fine. Most brokerage sites will either use the exact login details or email address and password as your bank (meaning no extra work, you could try here)
Step 4: Find The Right Investment
There are countless ways to make money on investments, but there is only one right way depending on what type of investor. Long-term investors typically buy shares, index funds or investing in real estate, whereas day traders mainly focus on buying low and selling high.
Step 5: Go Over Your Investment Options
The first thing you need to do is go over what an investment is. If you’re going to be day trading, you’ll want to look for a company with high volatility; meaning that its prices fluctuate quickly and often (think Facebook and Google). It’s also worth noting that higher volatility does not translate into more significant returns. For long-term investing, make sure that the company isn’t having any trouble selling its products because this means it won’t be around in five years. If both companies show signs of growth, it might be worth looking into indexes such as NASDAQ or S& P. These will give the average investor small gains that aren’t nearly as risky.
Step 6: Buy Low And Sell High
The hardest part about trading is knowing when to buy low and sell high. There are many ways to find this out, like keeping an eye on the company’s competitors or seeing whether your local news station reports any bad press. Once you know when it’s an excellent time to trade, use your budgeted amount of cash (from step 2) and place the order online, it doesn’t matter how many shares you get in that particular transaction because if you want to increase your stocks, then it’ll be up to you to hold onto them until they’re worth more money. Day traders usually purchase between $500- $2000 worth of stock per transaction.
Step 7: Get Ready For A Rollercoaster Ride
If you’ve been trading for a while, then you’ll know that the stock market is one of few places where your emotions can get in the way of making good decisions. It’s common to see volatility on days where companies announce something extraordinary about their business, but if you’re going to be day trading, then it’s important to ignore this excitement. Instead, focus on whether the company will benefit from an increase in stocks or whether they think a new competitor would impact their growth. This information is available online, and putting in the extra effort will give you an advantage over other traders who don’t feel like preparing before buying.