Trading in the stock market can be very profitable or painfully inconvenient. Many professional merchants manage to earn from a few hundred to a few hundred thousand euros a year, depending on their skills and the system used to deal. You can too: you just have to know what to do. This article will show you how to earn and keep your losses at an acceptable level.
Steps
Method 1 of 4: Learn to Trade Stocks
Step 1. Consider using a broker
The simplest way to trade stocks is to pay someone to do it for you. There are many well-known stock brokers and you shouldn't have a problem finding someone to manage your trades and give you advice.
Step 2. Choose a site or service to use to trade shares
For those determined to go it alone there are many sites that will allow you to trade shares online. Being your own broker will give you ample discretion and save you some money. E * Trade, Fidelity and Ameritrade are some of the most used sites.
Pay attention to the other services offered by some of these companies. Some offer additional advice, manuals, debit cards, mortgages, and other benefits. Compare the benefits of each service and decide what's best for you
Step 3. Use market orders
When you trade in stocks, you can buy or sell with a market order. It means that they will be traded at the best market price available at that time. However, it is important to remember that a transaction takes a while to complete and if the market changes very quickly, you may get a very different price than what you originally saw.
Use stop losses. They are similar to market orders except that the shares will be sold when they reach a certain amount, to avoid losing money
Step 4. Use trailing stops (variable blocks)
You can use them to set an upper or lower limit at which shares are sold or bought. Unlike a fixed price, it is a fluid limit, determined as a percentage. It is an extremely useful tool that protects you from large market swings.
Step 5. Use limit orders
Another option is to place orders with a fixed limit, i.e. with a price window outside which your shares will be sold or bought. This can help you get better prices but there is usually an additional commission on this type of order.
Use stop limit orders. That is, a fixed limit order that is triggered when a certain block price is reached. This gives you even more control but, as with limit orders, you risk not being able to sell your shares
Step 6. Deposit your money between transactions
Many brokerage firms, such as the ones mentioned above, offer accounts where you can deposit money between transactions, and they often give you an interest as well. This is very useful and you should really take this into account if you are using an online service.
Method 2 of 4: Trade Stocks Successfully
Step 1. Always keep enough money in your account
Make sure you always have the amount required to open and maintain an account. E * Trade usually requires the lowest amount to get started, around € 500. Control institutions require that you have at least half the amount in your account corresponding to the price of the shares you are buying, and that your fixed assets be no less than a quarter of your investments.
Step 2. Make sure you have updated quotes
Remember that the market changes quickly and the odds you are looking at may be old. Find a service that shows you prices in real time so you can make the best possible investments.
Step 3. Read the stock charts and quotes
Charts are a great way to evaluate stocks, but they can be difficult to read. You will need to learn how to interpret them and what the most important numbers are, in order to prioritize and make the best decisions.
Step 4. Know when to buy and sell
Common sense says to buy when stock prices are low to sell at a high price later. It would be a good idea, if it were common and likely, but it really isn't. There is no way to know if the shares will go up in the future. The best method is to look for stocks that have great momentum. Get them at the start of the upside and sell them before they relentlessly go down.
Step 5. Ask for reasonable figures, offer reasonable figures
If your expectations are unrealistic, you will struggle on the stock market. Just ask for a reasonable amount and don't expect to find anything much above or below its market value.
Step 6. Don't just look at the stock price
You can't just look at the price of a stock, you have to look at the entire company. Check turnover and performance. A stock can be expensive, but if the company has ever-increasing profits, it's worth it.
Step 7. Start with blue chip stocks
They are the safest stocks, of companies that have excellent balance sheets and are known for their profitability. These are the right actions to start with. Common examples are IBM, Johnson & Johnson, Procter & Gamble.
Step 8. Don't get caught up in romance
We've all seen movies where stock agents get incredibly rich with a little determination and cunning. The problem is that investing also requires a good deal of luck. Don't get romantic, don't think you're in a movie, and think the next small company you'll invest in is the new Microsoft. Make sensible decisions and choose safe options if you want to be successful in the long run.
Step 9. Avoid scams
There are many people in real life and on the internet who want to sell you some bad stocks. Use your judgment: if it sounds too good to be true, it probably is. Place safe bets rather than go for the easy money.
Method 3 of 4: Know the Market
Step 1. Do your research
Read everything you can, constantly inform yourself about the market, practice fake money before actually investing. Even when you start investing you will need to continue to keep yourself informed about market developments and the companies you invest in. You will also need to inform yourself about the competitors of your companies! It may seem like being in school all the time, so think again if you don't have the will to pay attention to the market.
- Read the annual reports of the companies, as well as those of the supervisory institutions. They will give you important information on the progress of companies and clues to any problems on the horizon.
- Read reliable sources in the field of investments, such as Standard and Poor's reports, the Wall Street Journal, Il Sole 24 Ore.
Step 2. Take your time to learn about the market
You may want to take some time to just look and understand how the market works. See how stocks rise and fall and the events that trigger market reactions. When you feel like you understand how it works, you can start getting your hands dirty.
Step 3. Check carefully the companies you invest in
When you invest in a company, you need to make sure you thoroughly investigate their balance sheets and make sure they are what they say they are. Look for problems, and if you find any, retrace your steps.
- You will have to look at the earnings, the sales, the debts, the assets. Sales, earnings and assets should go up over time, debts go down.
- You will also need to look at the ratio of prices / earnings, prices / sales, return on equity, earnings, and total debt to total assets. These indices will give you a more comprehensive picture of the company, as well as their earnings and debts.
Step 4. Think about the product
It is good to invest in those things that people need and will continue to need, not the fashion of the moment (even if that fashion is growing very rapidly). Examples of basic necessities are fuel, food, medicines, and certain types of technology.
Step 5. Think about the results in the long run
The safest way to do business when investing is to earn slowly over time. Stocks that rise rapidly are likely to fall just as quickly. Especially if you are a beginner and are trying to understand the market, be sure to look for companies that have a long and stable history and that should continue to do well.
Method 4 of 4: Get Great Results
Step 1. Consider using analytics tools
Learn to use technical analysis profitably. It is simply a matter of using past indices and prices to determine future results. For example, if a stock has risen in the past six months, assume that it will continue to rise unless the chart tells you otherwise. The more technical trade based on what they see and not what they hear. Arrogance kills. Search the internet for "stock market for beginners" for more information on technical analysis.
Know that technical analysis differs from fundamental analysis, which is another school. While both have their purported benefits, neither has historically proven to be better than the other if you keep your money invested in safe stocks
Step 2. Recognize the ups and downs
Understand tension, or the concepts of support and resistance. Support and resistance are considered critical indicators for price continuity, stalls or reversals. They are displayed graphically at the top and bottom of actions. For example, let's say a stock trades between € 55 and € 65. The next time the stock sells for $ 55 (the foothold), you'll expect it to go up to $ 65 (the resistance point), and vice versa.
If a stock rises to around € 68, well beyond the resistance point of € 65, you will no longer have to expect it to drop back to € 55 again. Instead you will expect € 65 to be the new foothold and for the action to go even higher. The same thing in reverse, if the stock falls below € 55
Step 3. Respect the rules you have set yourself
This is crucial for your profit. You have to have systematic rules, rules of the game that you have to follow. These rules tell you when to stay in and when to get out. Follow these rules strictly even if it involves losing every now and then. For example, if you force yourself to limit your losses to 10%, and the stock loses 10%, you sell. There is no question with the market.
Step 4. Don't feel compelled to trade stocks every day
If you don't trust yourself to trade, just wait and watch.
Step 5. Practice and learn
Find an investment simulation game that uses fake money. Sign up for a course on the subject. Do whatever it takes to learn how to analyze financial situations, make decisions, and move forward.
Step 6. Read all the books you can about the stock market
Over 95% of stock traders are at a loss because they read outdated books, rely on outdated systems and indicators, unaware that all these old techniques are used by big investors to strangle small fish. Read the latest work from top investors to learn from them.
Step 7. Start small
Start small and increase your business volume along with your knowledge and confidence. Don't be discouraged by early losses. One day you too can be successful, make profits, if you get help from outside advice, doing business with winning investors and with your personal teacher.
Step 8. Invest for the long haul
Sure, it's not sexy, but will it make you money? You can bet. Holding your investments over the long haul, as opposed to daily trading, will make you raise a lot more money over the long haul, for a variety of reasons. Broker costs, unexpected ups and downs, and the general upward trend in the market suggest that the patient investor will eventually be rewarded.
Advice
- The primary market is where new stocks are traded. The secondary market is where stocks that existed and were previously traded are traded. The “normal” investor invests in the secondary market, because the risks are greater in the primary market.
- You will often hear of "bull" or "bear". The bull is an emerging market, while the bear is a falling market. If you have a hard time remembering which is one and which is the other, remember: You can take a bull by the horns, but if you see a bear you better run away as fast as possible.
- Specialize in certain markets and learn about them. Find out about the latest developments and try to guess the trends.
