Trading stocks can be an exhilarating and addictive experience. Many casual traders approach it as an exciting hobby but, unlike most other pastimes, one that can make you money in both the short and long term.
This article was created by the experienced financial investment team at Investous. It is the perfect starting point for anyone who is new to the finance, stock and currency exchange market.
What is stock trading?
Stock trading involves the purchase and sales of company stock. Publicly traded companies offer a stake in their firms in return for your investment. This stake is called a stock and its selling rate reflects the perceived value of the company in the market.
If the fundamentals of the company are positive and it is expected to grow, its value – and that of its stock – increase. The reverse occurs when fundamentals are poor or when there is widespread uncertainty like the Covid-19 crisis.
There are two main types of stock trading: day trading and active trading.
As the name implies, day trading is the purchase and sale of the same stock within the same trading day. The duration that a stock is held can be as small as a few minutes. It is a very focus-intensive trading style suited to those who understand the market well.
Active trading involves buying and selling stock at least every couple of days. This style of trading is more suited to the enthusiastic beginner but also requires some understanding of market fundamentals and trends.
Top Hints to start
At Investous, our primary aim is to help you grow your money. We provide you with the news and data to understand not just stocks but also forex, currency rate, and commodities in the US and around the world.
How to trade stocks?
You need a good balance of patience, discipline and strategy to trade cfds on stocks successfully. Here is our step-by-step guide to start investing.
- Set a budget. One of the most common mistakes of beginner traders is a lack of discipline. Early success tends to lure them into investing more than they can afford and this situation can very easily backfire. We strongly advise you to set a stock trading budget and to stick to it.
- Choose a broker. You will need a brokerage account with an accredited trading company to manage your investment with the right protections. Investous allows you to start a stock trading account online within minutes.
- Learn with a practice account. It can be tempting to jump headlong and begin trading immediately. Investous allows you to do that without risk by using our practice trading accounts. The knowledge and experience you gain in using this account will serve you well in the long run when your money is actually at stake.
- Use benchmarks to adjust. Benchmarks like the US-based NASDAQ and S&P 500 or Europe’s FTSE and DAX are good indicators of market sentiment. Your stock investments should match and preferably exceed the gains of these averages over time. If they don’t, you have to reevaluate your trading strategy.
How to survive stock trading?
Stock trading holds the potential for amazing profits for the diligent as well as disastrous losses for the careless. Use these tips to protect your stock investments.
- Use the right broker. Always use an accredited and licensed broker like Investous to trade. There can be severe financial and legal ramifications for individuals who choose to trade with unauthorized brokers.
- Be disciplined. Many beginners expose themselves to severe risks and losses by abandoning an established and proven investment strategy in favor of ‘hot tips’. Too many of these are unreliable covers for scams. Always stick to your plan and discuss it with your broker before initiating a major purchase or shift.
- Maintain records. There are volumes of rules and regulations that a casual investor can unknowingly contravene when trading stocks. Always maintain credible records of your financial transactions to minimize risk if you are audited by the authorities. These records will also help you develop a better trading strategy in the long run.
These tips and tricks are a small sample of the expertise at Investous. Contact us for an in-depth assessment of your financial position and start trading stocks within minutes.