Not everyone has a finance degree to know the best way to engage in stock trading. However, this doesn’t mean that you shouldn’t invest in the stock market. If you take a little time to learn to trade, you can soon be on your way.
For those of you looking to get your feet wet in the business of stock trading, here are a few tips to get you started.
Buying low and selling high may sound simple, but it’s not exactly clear cut. Investing isn’t a major part of our lives unless you’re a day trader or stock broker. So it might be difficult to be patient to watch the price of your stock rise over a long period of time.
Further, there might be some wobbles along the way. But if you learn to trade the right way, you should also learn when to hold on to your stock and went to sell it off.
You might think that certain stocks like Apple can never fall, but there are no certainties in the stock market. No investment is immune to the various variables that can have a negative impact on a stock.
There is no formula that’s a sure thing, but successful investors have been known to buy when a company’s stock is down and hold on to it over a long period of time to let the share price rise.
But you have to really know the ins and outs of the company to make that decision. If not, your investment can be highly risky.
Although some investors may boast about having a sixth sense for this, a successful investor will tell you to do your homework. So get ready to read through regular filings from public companies.
These documents will have all the information about company finances, risk factors, and conflicts. So you can make an educated guess based on the company data.
Short-term trading can come with the issue of taxes. Further, buying and selling shares based just on quarterly earnings is for automated platforms and not a novice.
Instead, hold on to your stocks over a period of time and earn some dividends. For stocks paying high dividends, you have to look at some of the top stocks on the market. But this doesn’t mean that others don’t pay.
If you look at S&P 500’s returns over the years, you can see that most of it came from dividends and not appreciation of the price.
So some of you who are learning to trade may want to invest specifically in companies that regularly share profits than just depend on the price to rise.