If you’re thinking of growing your wealth in the trading landscape, then stocks may be one of the most appealing avenues to start with. Stock trading is growing increasingly popular these days, because of a lower barrier to entry, and a process that’s relatively easy to understand.
However, just like any wealth development strategy, it’s important to educate yourself before you get started. Knowing how to do your research and find the kind of securities that you want to trade is a must-have when you’re getting started in this area. The following tips will help you to make some important first steps into the trading world.
Start by Finding Your Broker
The first step in researching investment opportunities is opening a brokerage account with a company that can help with getting you in and out of investing positions. Just like you would take your time to choose the right penny stocks to buy or securities, make sure that you take your time to find a broker that you can trust too. Remember, there are different kinds of companies out there, and each have their pros and cons to consider.
For instance, some solutions might have higher commission fees than others, while others have a minimum on how much you can trade each day. You can even find some companies that allow you to access the market at different times of day. Choosing the best solution comes down to research and personal preference.
Make Diversified Decisions
Once you’ve got a reliable brokerage behind you, then you can use the tools that they have available to search through available securities and assets. You might decide during this process not to start with stock trading at all, but to focus on ETFs instead. Exchange-traded funds allow you to buy bundles of different assets at once, which can help a lot with your initial diversification.
Many growing traders that are just getting started in the market also expand their holdings by buying assets beyond stocks, such as bonds, so that they can hedge their risk. As you’re making your choices, think carefully about what kind of circumstances you would need to be in to sell the assets you buy.
Knowing when to buy and sell is an essential part of becoming successful in this field and having a strategy in place from day one will make it easier for you to avoid making decisions based on fear alone.
You’re Almost Ready to Start Trading
With your broker, a good view of the different assets you can buy, and an idea of what your strategy should look like, you’re almost ready to begin buying and selling. However, before you jump in, there may be one additional decision to make, whether you’re going to be a full-time active trader, or you’re going to allow for long-term investments. A long-term investment sits in your trading account for weeks, months or even years at a time, but other more active investors might prefer to trade every day. Knowing whether you’re going to be trading on a constant basis will help you to make the right investment decisions.
Samantha uses her BS in Finance and MBA to help others control their finances through budgeting, saving, investing, side hustles, and travel hacking. Due to following the FIRE Movement’s principles, she was able to quit her high-stress job in the financial services industry in July 2019 to pursue her side hustles. She is now a full-time entrepreneur, freelancing coach, and blogger.