OK, so you want to start ‘trading stocks’ and earning a ton of money in the stock market. Sound like you? Great, this is exactly where my aspirations started as a young freshman business college student in 2015. The question most people ask themselves is “how fast and easy am I able to make significant return profits in the stock exchange market?”. The way I started was typical of any new investor, buying individual stocks of companies that ‘looked cool’ and seemed reputable enough at the time to purchase shares.
It is far more lucrative in building a solid foundation of knowledge to begin understanding the metrics and history of the stock market. It is better to be prepared than to blindly trade a lose money and time. Learning the hard way can be helpful, however it is advised to follow the more sensible path available to you.
The first thing to realize is the simple fact that it will take patience, strategy, and key decision making in order to make long-term profits in the stock market. If you are able to accept these conditions and roll with your strategy, then trading equities and other financial instruments may be a rewarding and lucrative path to take. It will take more willingness to learn than simply looking up the Dow Jones once or twice. I will explain 4 steps to getting started trading equities, these helped my portfolio and watch list take off in to hyper drive. Not to mention sharpened my skills for what was ahead.
- Understand the Foundations of Stock Trading
The first step to take is researching the basics of issued shares, the share price, trading cycle, and how the market generally operates. A share is an issued stock of a company that a privately owned company or government sector issues to the public. For example, let’s take a look at apple stock (aapl), the share price was $315.67, meaning that the current value of one share of stock ownership in the company currently was worth $315.67 at that point in time.
Now that you own a share of a company, what dictates the share price? What influences the price moving up and down? Very simply stated, the market and willingness to pay dictates the share price. As demand for stock ownership increases the share price goes up. When a company is performing poorly and shareholders begin dumping stock, the share price goes down because consumers are willing to pay less for shares due to poor company performance and/or other factors.
- Open a Trading Platform Account
After grasping a basic understanding of the stock market, it is time to put your portfolio on the map and execute your very first trade. Before you can do this you need what is called a ‘Trading Platform’. This will provide you the basis to the buy and sell shares along with other access to financial instruments (for advanced traders).
If you are a beginner in equities trading you will be better served with a trading platform that has $0 trading fees! Yes, there are no fees when executing trades (typically $3-4 to execute with an advanced platform). The insights on this platform won’t be as advanced, but hey the internet has all of this information anyway. I got started with ‘Robinhood’ a free trading platform with $0 trading fees. Here is a link to get started with Robinhood and gain access to easy to use trading. By using my link below you will receive a FREE STOCK when starting. This can be held for long-term gains or sold for immediate cash. Link Below
- Develop Your Portfolio Watch list
Now you are ready to begin your investment career! At this point you probably want to start buying shares of your favorite ‘big time’ companies (Apple, Ford, Disney, etc.). Don’t get ahead of yourself like I did when I first started out. There is far more growth value in playing the slow and pragmatic approach than to trade instant gratification stocks. Please note an example bond oriented portfolio watchlist on the ‘Firstrade’ platform, another excellent commission-free trading platform:
My trading strategy was non-existent, I began with stock purchases of GE, Casino Companies, and a pharmaceutical company that ended up tanking. No research, no strategy, no watch list, no restrictions, simply buying what ‘looked cool’. My returns on the limited funds I had invested were trash. It was a learning experience nonetheless. Now that you have read a real life example of this, please take the pragmatic path and plan what genre of equities and financial instruments you plan on trading.
- Play the Long-Term Game as a Beginner
Many people aim to earn quick and easy returns in the market without the necessary planning/work. Short-term returns are found in financial instruments however are subject to extreme risk and many advanced executives have taken just as many big losses as wins. If you want to take this route I wish you the absolute best and that you learn along the way, however almost every beginner will benefit from playing the long-term holding game.
Don’t rush in to volatile stocks that may produce extreme share price swings that leave you in the rubble. That type of volatile trading is for advanced and licensed individuals/corporations. Shares are always profitable in the long run. A term that you should hold close to heart. A sneak peak in to my portfolio, it contains a lot of ‘bonds’ which are fixed rate return instruments.
I hope this blog helps you get started trading stocks/equities, and for further coaching and consultation on financial trading options, please reach out to me.
Managing Partner @ IHG Management