Stocks for Dummies

You might think that beginning to trade stocks is a complicated and lengthy process but it’s actually very simple.  All you need to do is follow three important steps and you’ll be on your way to achieving your financial goals!

The first step, of course, is to learn what the stock market is and how it works.  There are several very good tutorials on this subject; most are free of charge on the internet and some will charge a nominal fee.  Those that are not free usually include some software to help you understand the lessons through illustrations, charts, etc. and might even have charting software to help you pick stocks.

As you discover how the market works and the factors that drive it, you’ll see that it’s not as complicated as you thought.  The reasoning behind it is very simple and it is, in many ways, just a giant retail store with various products.  Some are on sale, some are in the clearance bin and others are in the upscale section that you rarely venture into!

You might even want to spend a few minutes to become familiar with how the stock market began; it’s a revealing look into the concept that developed into our current trading system.

The second step to stock trading is to put your new knowledge into effect.  No, you’re not going to start trading, you’re going to start practicing!  Since you’ll be dealing with your financial future, you can’t afford to make costly mistakes and you won’t if go through this step properly.

Find a free online virtual trading account-there are many of them-and set up a virtual account.  You’ll receive virtual money and can start buying and selling the stocks of your choice.  Any losses you suffer will be in cyberspace, not in your brokerage account!

This step is essential to developing your skills and judgment as a trader.  Practice until you are confident in your strategies and your ability to pick good stocks.  Is your online portfolio making a healthy, steady profit with few losses?  If so, it’s probably time to go to the next step!

Your third step, now that you know how the market works, is to find a suitable stock broker.  This is a very important part of the process!  You must choose a broker that suits your needs, not your short term budget.  If, after step two, you are insecure about choosing your own stocks you will want to choose a full service broker who has a research department and offers stock advice.  The researchers will investigate a stock for you and your advisor can tell you whether he thinks, in his expert opinion, it would be a good buy or sell.

If your practice has made you confident in your skills you may prefer a discount broker.  This type of broker is much less expensive than a full service broker but confines the firm to buying and selling with no extra services.

With these three steps you’ll quickly be on your way to building a profitable portfolio!